In a managed business travel programme, accommodation expenditure often exceeds air travel costs. In fact, for most businesses in South Africa, local accommodation can account for 30% to 50% of the total travel budget, compared to air travel which averages 20% to 40%.
The public sector is the largest local hotel accommodation consumer and has recently changed its policy from a fixed rate model to setting city-specific rate caps. This change enables hotels to align prices more closely with market rates, which will likely drive up rates at 3- and 4-star hotels in 2025.
It stands to reason that proactively managing your company’s accommodation spend can deliver significant savings for your travel programme. Here are some practical tips to develop a local hotel programme.
What is a hotel programme and why do I need it?
Simply put, a corporate hotel programme is an essential tactic to help companies manage their accommodation spend for business trips. This programme can include negotiated rates with specific hotels, identifying preferred hotel properties, and centralised booking processes for employees to optimise this component of the travel programme.
Benefits include:
- Cost savings – Preferred supplier agreements can drive savings of between 10–20% through negotiated agreements.
- Improved duty of care – By partnering with reputable establishments, you can ensure your travellers are safe and comfortable when on the road.
- Better amenities – You can negotiate perks like free Wi-Fi, including breakfast or parking in the rate, etc., to improve the traveller experience.
- Improved compliance – By using chosen suppliers, you can ensure your travellers are using accommodation that fits the budget and meets their requirements.
Top tips to help you set up your programme
- Assess your needs: Analyse existing travel data, what properties you use, what contracts are in place, your current spending in this category, and then identify areas for improvement.
- Identify goals: Identify the objectives of your hotel program. This can include cost savings, employee safety and comfort, support of sustainable properties, etc.
- Research options: Research hotel options that meet your travel goals. What location is best? What amenities are required? Does the hotel meet your safety requirements?
- Negotiate rates: Once you understand your goals and needs, negotiate rates with selected preferred properties to ensure they fit into your budget.
- Update your travel policy: Include booking guidelines so that travellers know how to support your programme. This can include a list of preferred partners, rate caps per city and how to book.
- Implement the programme: Communicate the details of your hotel programme to your travellers so that they are up-to-date with the required processes to improve compliance.
This is an area where your Travel Management partner has extensive experience and can leverage their supplier partnerships to your advantage. For example, specific to South African legislation, we pioneered the Red Stamp Club programme in South Africa in partnership with the hotel industry and corporate businesses. The programme addresses the client’s essential needs, such as quality products, safety for travellers, standardisation of processes and links businesses to B-BBEE suppliers to transform, uplift and develop Exempted Micro-Enterprises (EMEs) and Qualifying Small Enterprises (QSEs) in the tourism industry.
How to keep your hotel programme relevant
Once your accommodation programme is implemented, you need to regularly assess the progress to ensure that it continues to add value and remains relevant.
We recommend that you track your program’s effectiveness by comparing the average room rate before and after the programme was implemented. If any properties are not adding value, you can either re-negotiate the rates or simply opt not to renew your contract.
To monitor travel policy compliance, you can track the number of bookings made through the approved process (e.g. via your Travel Management Company or online booking tool) vs the number of bookings made outside of these channels.
And lastly, to ensure that your travellers are happy and support your programme, you can conduct employee surveys to assess their satisfaction with the properties and change these if necessary. Ultimately, your accommodation programme will only be successful if your travellers support it.