Does your travel policy address non-refundable hotel rooms? It should because your stance on whether or not your employees can book non-refundable hotel rooms could be costing your company significant sums of money. What appears to be an opportunity to save on hotel costs doesn’t always have the intended effect.
As part of their pricing structure, hotels offer non-refundable hotel rooms at a discounted rate, on average about 10% off the price they are charging for that same room booked as a refundable rate with the ability to cancel the reservation in accordance to their cancellation policy. The discount can vary, however, based on the individual hotel property. So, why shouldn’t you allow your employees to book these discounted rates?
The issue, of course, arises when an employee must cancel a hotel reservation. As an example, if an employee books a $135 non-refundable hotel room (originally $150 with the option to cancel) and then cancels it, their company loses the $135. That $135 is the equivalent of nine non-refundable hotels rooms booked with a savings of $15 each. Can you guarantee that out of every nine hotel bookings your employees make, they will never make a cancellation? One cancellation wipes out any savings and cancellations beyond that put you in the hole. For these reasons, many companies state in their travel policies that employees shouldn’t book non-refundable hotel rooms.
Companies that are partnered with a travel management company (TMC) to manage their travel programs have alternative ways to save on their hotel costs. First, a reputable TMC should have a hotel discount program whereby their clients’ travelers can book discounted refundable hotel rooms through the TMC. Furthermore, TMCs have technology that can rebook hotel reservations if the rate that was initially booked drops. Finally, TMCs can provide hotel spend visibility to identify individual properties and hotel chains where the company might have enough spend volume to warrant the company receiving a contracted hotel rate.
There are several ways for companies to save on their hotel spend, but non-refundable hotel rates are often not a good option. For assistance with optimizing your hotel spend, contact Travel Leaders / Destinations Unlimited.