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Lesley's Column

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13th March 2015

Watch out for the small print in hotel contracts

The hotel market seems particularly bullish at the moment, with PwC now forecasting that London will have its highest occupancy rates (84.4 per cent) for 20 years and revenues growing by four per cent. 

Many organisations will already have contracted their rates for the next 12 months, with others hoping to avoid the annual autumn rush of negotiations, preferring to run their hotel programmes to different calendars.

If you’re still finalising your hotel programme for 2015/16, here are a couple of examples of what I would term ‘sneaky’ contract variations that some hoteliers are currently trying to include.

Firstly, changing the cancellation deadline from 2pm on the day of arrival to 2pm the day prior to arrival.

It’s very easy to miss amendments like this, and some hotels won’t highlight them either. Business travel arrangements do change regularly and travellers are used to being able to cancel their rooms late up until at least lunchtime on the day of arrival.

If you believe you’ve done well by restricting the annual rate increase to three per cent, think again: just one cancellation fee per month on a 500 room programme means that the real increase is 5.5 per cent – well over the rate of inflation.

And secondly, the removal of last room availability.

Hotels have been trying to remove LRA for years and this is likely to become more prevalent. No LRA effectively means the hotel can charge what they like, contact or no contract.

Some hotels offer to soften the blow claiming ‘special availability’ if clients call the reservation manager directly when contracted rates aren’t available. You might get the room you want, but the hotel then makes extra income by avoiding paying GDS booking fees or commissions.

Rate negotiation isn’t everything. Before you sign a hotel contract, check those terms and conditions too.