It’s time for a strategic makeover when it comes to hotel rates,” says Greeley Koch, director, travel services, Acquis Consulting. He is not alone in thinking that the availability of more and better data, the emergence of AI and heightened leverage for buyers is reshaping the landscape for corporate travel.
Evidence of a transformed hotel rate environment is that the perennial seesaw around static vs. dynamic rates currently seems to have static rates – traditionally favored by buyers – weighing down the teeter-totter. “The overall trend is strong for static or traditional corporate rates,” says Bjorn Hanson, adjunct professor, New York University’s Jonathan M. Tisch Center of Hospitality. Nationally, he says, “The sell side just does not have a strong enough negotiating position to prevail with dynamic pricing.”
Static rates, says Tim Wagner, senior vice president, procurement and supply for HRS Group, a corporate hotel platform, “work out best for corporate customers that are providing significant volume and want to gain the benefits of planning security, somewhat guaranteed availability and more transparency.” In North America last year, he says, the average static rate was $154, while the dynamic rate was $172 and the public rate was $192. Notwithstanding, says Wagner, where there is an abundance of inventory and less travel than expected, dynamic rates can prove superior.
Beyond the Dollars
With all that said, it’s not always as simple as just looking at the dollar amount per night, says Erik Sabato, vice president, global sales at Wyndham Hotels and Resorts. For example, he says, some travel managers are looking for partner properties where they can send employees regularly. In that instance, he says, “It’s a great business opportunity for a hotel to consider a static rate because it can result in repeat business, long-term relationships and stable revenue over a period of time.”
Outside a market like New York, where everything is very fluid and dynamic, says Susie Park, executive vice president, asset management, JLL Hotels & Hospitality Group, static rates are preferred and make it easier for travel managers to better predict their budgets.
As always, Park says, there are exceptions. In instances of compression (like a heavily booked city), dynamic rates might enable a manager to snag a room that might not otherwise be available. Hotels, says Park, “have gotten very creative about offering a discount off the best available rate (BAR) during highly compressed travel dates even during blackout dates.”
According to Mark Sergot, senior vice president-global sales at IHG Hotels and Resorts, “We continue to see value in both static and dynamic pricing, and the right approach often depends on market conditions and a company’s travel patterns.” The choice between static and dynamic, he says, “is increasingly market- and client-specific, especially for companies with significant volume in certain locations.”
Static rates make up the bulk of preferred hotel programs for clients of BCD Travel, says Ambra Christie, vice president of hotel spend management and customer success. Leverage is the name of the game, she says, noting that in secondary and tertiary markets where volumes are not significant, hotels often hold firm to dynamic rates.
Dynamic pricing can fill the gap between static rates and chainwide discounts, explains Michelle Kocina, senior consultant, CWT Solutions Group, especially in second-tier cities with fewer than 250 room nights, where the dynamic option may offer additional room types and inventory availability during high demand dates.
Two Buyers Walk into a BAR…
“It’s a march toward better data, and more sophisticated travel managers are moving with it,” says Wagner. “They are getting better results from the data, and there are not as many people around doing things in legacy ways.”
Even with all that available data, there remains debate about Best Available Rate (BAR) – the price that is the benchmark for corporate discounts. Some are skeptical. The buy side, says Hanson, is learning that BAR “is often a defined term that does not guarantee ‘best available rate.’” If BAR were trusted to truly be the lowest available rate, he says, the buy side might be more accepting of dynamic pricing.
Data transparency has improved significantly, but it still varies by program and provider, says Sergot. BAR pricing, he says, fluctuates based on demand, seasonality and other factors, but with the right reporting tools and partnerships, buyers can gain better visibility into how their negotiated rates compare. That is why, he says, strong partnerships with hotel providers and leveraging third-party rate auditing tools remain crucial.
With the vast amount of data available, says Christie, travel buyers have more visibility than ever – but true transparency continues to depend on how that data is interpreted. The key, she explains, lies in understanding the specific inputs used, how they shape analytical outcomes and drawing actionable insights. Without this clarity, Christie cautions, even comprehensive data can lead to misleading conclusions that impact cost control and strategic decision-making.
Longing for LRA
Another perennial sticking point – last room availability (LRA) – is also seeing shifts in the marketplace. From the hotel side, that option is significantly less prevalent than it was just five years ago, says Leah McFarland, senior vice president, revenue management for Crestline, a hospitality management company. As most hotels have significant peaks and valleys in demand and LRA corporate accounts can impede a hotel’s ability to maximize profits during periods of high demand, she explains, it has become less common to offer that option during peak periods.
At the same time, Wyndham is seeing some managers streamline the number of hotels they are contracting with, resulting in more targeted business for those hotels, Sabato says. That’s a situation where hotels might be more willing to agree to an LRA rate to remain competitive, he says, because they are more likely to earn a greater share of business over time.
In high-demand locations, LRA can be more challenging for hotels, particularly when occupancy is consistently strong. At IHG, Sergot says, “We work with our customers to create balanced agreements that reflect their travel patterns while ensuring availability where it matters most.”
Some customers demand 100 percent LRA, says Wagner, and that can be achieved. However, he says HRS advises a cautious approach, because LRA can mean higher rates, so it should be used judiciously, perhaps on a market-by-market basis, or even hotel by hotel.
LRA remains a valuable contract element but is becoming harder to secure, especially in high demand markets, says Richard Johnson, vice president and global head, CWT Solutions Group. Hotels may limit LRA through blackout dates or offer it only to high-volume accounts. One option, he says, is for buyers to leverage the additional content negotiated by their TMC on behalf of multiple clients.
AI and Beyond
With all the potential applications of artificial intelligence, rates are a natural and logical area where that technology might create a revolution. Some hotels, says Christie, are using the AI tool to analyze large data sets so they can increase revenue by adjusting rates in real time based on trends, occupancy and industry data. These types of algorithms can also be applied on the client side to agency and third-party data to predict which rates will drive a better traveler experience and reduce rates.
At IHG, says Sergot, “AI helps us predict demand patterns, allowing for more dynamic and responsive pricing strategies,” while on the buyer side “We see companies leveraging AI to track rate performance, identify booking trends and optimize their hotel programs in real time,” he notes.
“The role of AI in corporate travel is only going to expand, bringing greater efficiency and smarter decision-making to both hotels and buyers,” Sergot concludes.
But caution is still called for. Many companies have long had predictive pricing tools, but in markets like New York, where rates might vary based on the neighborhood and time of year, “you will always require a human touch no matter how much you teach AI,” Park advises.
McFarland agrees, noting that AI is not currently making any pricing decisions, with humans still at the helm determining rates. However, she says, “Business intelligence platforms powered by AI give us the tools and information we need to make better decisions faster than ever before.”
Convergence & Compliance
While it has long been a subject of discussion, convergence – combining all spending at a hotel during negotiations – seems to be taking a more frequent place at the negotiating table. The motivated and savvy buyer, explains Wagner, can wrap his or her arms around meetings-related data and leverage that in combination with transient volume. “Especially when buyers haven’t deployed convergence in the past,” says Wagner, “they can really achieve significant savings.”
Volume will always be key, says Park, but ultimately rates depend on the program as a whole. “Will there be meetings and F&B? Will guests be driving in and create the potential for parking revenues? How long is the program, and when are they planning to travel?”
Sergot agrees with the importance of a mutually beneficial relationship, arguing that the best way to measure savings is by looking at real booking behavior. Are travelers consistently getting access to the rates they expect? Are they booking within policy? “By working closely with our clients, we ensure that the value of a negotiated program extends beyond just the rate on any given day, providing transparency and efficiency that help buyers maximize their travel investment.”
Clients who promote and drive booking compliance to their partner hotels are more successful in minimizing price increases, says Beth Harrison, senior manager, CWT Solutions Group. This is achieved, she says, through strategies like online booking (OBT) messaging, direct e-mail campaigns to convert non-preferred bookings, OBT display preferencing and securing internal support from executive management to encourage teams to book with preferred suppliers.
Beyond rates, says Koch, “companies need to think about the full digital traveler journey.” With preferred hotel program compliance historically hovering around 40 percent to 50 percent, he says, travelers need to see the value in booking within the program. That’s why, “the future isn’t just about negotiating static vs. dynamic,” he says. “It’s about building a more strategic, mutually beneficial relationship between companies, hotels and travelers.”
