How travel managers can maximize savings with non-refundable hotel rates

Mark Masuda, Senior Director of Sales, Hotel Solutions

If you aren’t including non-refundable hotel rates in your travel policy, you could be missing out on significant savings.

But is this approach right for your travel program? It often boils down to a risk vs. reward equation. Non-refundable hotel bookings can unlock substantial savings for your corporate travel program, but they also carry the risk of financial loss if travelers need to cancel. However, in many cases, the savings can far outweigh the potential risks. Here are five questions to consider when deciding where to incorporate non-refundable rates into your travel policy:

1. How far in advance do your travelers book their reservations? Non-refundable rates are great for bookings made within a few days of travel. In fact, according to BCD data, only 5% of reservations that are made three days or less before a trip get canceled. For trips booked within this short window, consider pushing travelers toward non-refundable rates as the chances of them canceling remain extremely low and the savings can be big.
2. How costly are the hotels being booked? On average, non-refundable rates offer a 10% discount. That means the higher the rate or the longer the stay, the greater the savings potential. Consider encouraging non-refundable rates for stays of four or more nights, or when nightly costs are above a predetermined amount.
3. How often are your travelers booking single-night stays? Short stays, especially single-night bookings, can also be a good opportunity to opt for non-refundable rates because the potential loss is minimal if a cancellation happens. For example, if a traveler books a non-refundable rate for one night at $150 and ends up canceling, the loss is just that amount. But if the trip goes as planned, the savings from the non-refundable rate can really add up, especially if your travelers often book short stays.
4. Are there external factors that could increase the chance of cancellation? Assess the likelihood of needing to cancel trips. If there’s a high chance of changes in plans, especially for bookings far in advance, a refundable option might be more suitable despite the higher cost.
5. Are travelers booking with non-refundable airline tickets? If the traveler is confident enough to book a non-refundable airfare, then it is highly likely that the trip will happen. This makes booking a non-refundable hotel rate a smart move to maximize savings.

Communicating with internal stakeholders

Before adding non-refundable hotel rates into your policy, it’s important to communicate with internal teams to ensure your strategy is aligned with the financial goals and needs of your organization. Start by engaging with your finance and accounting departments. Will they be willing to cover the cost of canceled rooms? It’s essential to present the overall savings benefits to them and use concrete examples and data to illustrate the financial advantages.

Engaging your travelers

Once you’ve decided where non-refundable rates can have a positive impact on your program, be sure to communicate these changes with your travelers. It’s important to ensure they understand when it’s appropriate to book non-refundable rates and that they won’t be penalized if they have to cancel a booking. To keep travelers informed it’s important to reach them across multiple communication platforms with updates to your travel policy, from email notifications to targeted messaging directly in the online booking tool.

Incorporating non-refundable rates into your corporate travel program can be a simple way to stretch your travel budget further. However, it’s essential to carefully weigh the potential risks and benefits alongside the specific needs of your organization. By doing so, you can make informed decisions that balance savings with flexibility.

Looking for more ways to drive savings in your hotel program? Our team of spend management experts can help! Contact us today.