Will your employer downgrade your hotel in 2016 to save some cash?
Business travel accommodations are generally negotiated between corporate travel managers hotel chains long before employees ever learn they are headed to say that conference in the second fiscal quarter. With all of this back-and-forth happening well before business travel season even begins, industry analysts are privy to detailed information about trends in room rates, and even which hotels are uncoupling amenities like Wi-Fi or gym access. And already, 2016 is looking seriously pricey.
Corporate hotel rates for 2016 are poised to increase by 6.5 to 7.5%, the biggest jump since 2006 — or possibly even 1987, depending how the details shake out. The higher rates will cause many employers to set traveling employees up at lower scale hotels, or even to move activities and conferences to more affordable cities altogether. NYU professor Bjorn Hanson explains his projections:
“This forecast accounts for after negotiations, meaning if everyone stayed in the same cities and same hotels as last year this projection would be even higher. Business travelers are thinking, ‘we think we did a great rate negotiation but we realize we could have stayed at a great place at a lower price.’
Fueling the surge in rates is the entire U.S. hotel industry’s booming business. Occupancy rates average 65% across the country, meaning hotels have little incentive to offer enormous discounted blocks of reservations for companies. And travel managers rightfully worry that even reaching a deal doesn’t guarantee that their companies will actually book at the agreed upon rates. Hotels, like airlines, have learned how to use blackout dates and availability limitations to ensure that they are always renting rooms for the highest possible price.