September 04, 2018

TMC: Four steps to control hotel rate distribution framework


Successful hotel program negotiations require a solid distribution framework to generate savings for a company. Here's how TMCs check hotels behaviours and ensure they respect their commitment towards a company.

Four key questions can drive buyers to achieve this goal and answering positively to all of them will be key to avoiding anything that could go wrong.

1. Are my rates loaded?

First and foremost what you have negotiated must be properly loaded. This basic must-have of any successful hotel sourcing process is actually still too often missed as being one of the most important steps. What would be the point of spending months in supplier negotiations if you don’t get what you bought?

Overall rate loading by suppliers has become better over the years, thanks to more automated systems and improved supplier behaviour. However initial audits after sourcing continue to present, on average, a quarter to a third of rates non- or wrongly loaded. It may take two to four chases of non-compliant suppliers and additional audits to reduce this share to less than 5%. This goal should be the target for any consistent hotel programme in order to maximise its impact.

The end of the sourcing process is the most important period to conduct GDS rate loading audits. In case of two-year deals, audits are also essential right after the end of the first contract year because industry systems may not correctly support this duration from the start and suppliers then need to reload rates that remain contractual.

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