I've procured accomdation buy side professionally (working for large organisations to drive down the rates for hotels).
They will and they won't give a toss if you use their rates to get a booking, because additional volume gets them more leverage in negoitations - right up until the moment where capacity controls deny additional bookings at that rate. I am not currently involved in procurement decisions, but an example with my current employer. We have an extreme discount at the Park Hyatt Sydney, but there is also significant capacity controls on that rate and availibility is limited (we have rates with a number of other hotels in Sydney as well, as PHS's ability to meet our demand is not sufficent). So if heaps of non-employees are booking our rate and shutting our real employees, we'd be likely have a stern chat to the hotel about exactly what the hell is going on.
But overall, the buyers won't do anything about it - really. To hard.
The hotel on the other hand will get pissed, and if the discount is BIG (like the PHS one) you get asked to produce some pretty pressing evidence that you are an employee. Where our discount isn't nearly so big - the Westin Sydney for example - I've yet to be asked for ID.
As for the pricing policy discussions, pricing models on persiable inventory is complex, but the basics is this. The hotels have a capacity plan about how they are going to sell rooms and who to. It will look something like
Price A: Airlines
Price B: Sophsiticed Corporates
Price C: Unsophsiticated Corporates and Governments
Price D: Discount Rates for soft periods
Price E: Other discounts (like the AAA one)
.
.
.
Price H: Walk up rates
etc
And they will have a certain number of rooms in each bucket - and they will manipulate the rooms availible in each bucket to maximise overall revenue in response to demand. For example, in high demand periods as availibility in the hotel drops, they will bet they can sell more rooms in a higher cost category (and their models are pretty good), so they will move the rates showing on hyatt.com up to higher cost buckets, so you get charged more. In low demand periods they will free up more corporate rates to try and get additional volume that way.
Originally Posted by
SFOLIS
Never realized that they have such policy. Interesting. Maybe Park Hyatt Sydney is different, but how can they be certain that all their room inventory will be sold at new higher rate to achieve their target average room rate? If they are so confident, why do their even bother to sign a discounted corporate contract to began with? Or at least reduced the corporate discount they agreed to?
As a matter of fact, I was just checking rates for Park Hyatt Sydney, "NC12624" produce rates that's half-price from public available rate. It turns out I could book the date I wanted with BWB and GP points for my dates, so it's moot. But it was very eye opening.
Basically they have 150 rooms (or whatever). Let's call it 100 in our mythical hotel. At the start of the year, I'll do my demand projections from 'most predicable demand' (who get the cheapest rates), to 'least predictable demand' and say (in a peak period):
20 rooms to airlines
45 rooms to corporate customers
20 rooms on sharp discounts via travel agencies or hyatt.com
10 not so discount rooms for leasiure travellers
5 rooms for walk ups (or whatever, a premium rate)
Now, say I sell 55 rooms to corporate customers, this is good and bad for me. My response will be to reduce availibility in the next cheapest room rate - I'll take it out of the sharply discounted category. Now the 20 people who book via travel agencies come in - 15 will still get the cheaper rate, but there will be 5 left over who cannot get it.
These 5 guys are getting stung for a more expensive rate. Of course, not all of them will take it (if they would, I would have moved more capacity to the higher revenue bucket anyway). Some of them will book the more expensive rate, some will not.
However, these guys who DO take the high rate will bump people out the next revenue bucket, because my walk up demand is projected to remain the same and I don't want to discount a higher rate I can sell at the higher price, so more people will get stung for a higher rate.
They will bump people out of the next bucket up, etc.
In a non peak period it doesn't matter - the hotel will flog off as much capacity it can anyway at the corporate rates (they still make money, and the inventory is perisable, so they'd just push it out the door anyway), but during a peak period 'overselling' a corporate rate will either block out real employees from getting the rate or drive up the average rates experinced by everyone else.
There are other complications to this - Most of the airlines could fill an entire hotel, but hotels only want some airline business (to provide solid volume). Similiarly, a previous employer I negoitated on behalf off could have filled up any given hotel in sydney every weekend of every day of the year. Was any hotel actually intresed in that proposition (not that I suggested it)? Hell no - couple of reasons
A) They can extract more money from leaisure travellers, why would they discount all roooms
B) Filling up the entire hotel with IBMers (not my previous employer) or whatever effects the look at feel. The PHS for example clearly aims to be a luxury hotel and a bazillion corporate travellers would impact this image.