Don't let rising hotel rates bust your budget

Life in the hotel industry is looking a whole lot better thanks to a resurgence of business travel, but this can be bad news for company travel budgets.

The bottom line: It's costing business travelers considerably more to stay overnight at almost all major business destinations, especially those on the East and West coasts. And it will be a year or two before new hotels in the construction pipeline emerge to soften the trend.

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New York City hotels in particular have made a significant comeback, with occupancy rates running as high as 85 percent to 95 percent midweek. Leisure travelers are filling hotels on weekends, and both business and leisure foreign travelers, spurred on by a weak dollar, are filling rooms throughout the week in major cities across the country.

The rebound is not as robust across the country, according to Susquehanna Financial Group lodging analyst Robert LeFleur. At least not yet.

He theorizes that recoveries tend to start on the coasts and work their way in. His conclusion is borne out by a recent AAA survey that pinpoints current high-priced hot spots like Washington, D.C.; New York; Providence, R.I.; and Boston, Mass. The survey notes it is still possible to pay economical prices for hotels in places like Nebraska, North Dakota, Kansas, Oklahoma and Iowa.

What does this mean for companies that are trying to rein in travel costs? For one thing, travel policies relating to hotel stays should be reviewed and tightened where needed. Travel expense reports should be scrutinized, and old "we've always done it this way" habits should be evaluated and changed if necessary.

Here are some tips that can lead to sizable savings on hotel rooms:

Define hotel usage needs and make it part of corporate travel policy. This might seem simple enough but many companies overlook this first step. Travelers should be encouraged (better yet, mandated) to choose hotels based on planned usage (no frills for a night or two, full-service if meeting or business facilities are required). Specific language like this used by a Madison-based banking organization helps clarify company expectations: XYZ Corp. follows the practice of a good hotel, not necessarily the best. The hotel category that is acceptable is called the "moderate" level hotel. These would generally include Ramada Inn, Holiday Inn, Days Inn, Country Inn & Suites, Comfort Inn, AmeriSuites, Fairfield Inn, Hampton Inn and Baymont.

Evaluate multitiered chains such as Marriott. (Marriott Inter-national operates and franchises hotels under the Marriott, JW Marriott, Ritz-Carlton, Renaissance, Re-sidence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Ramada International brands.) If you believe your hotel volume is consistent and substantial enough to qualify for lower rates at one or more same-company brands, expect to substantiate room-night projections with reports detailing past usage.

Book two-room suites for two same-sex travelers instead of separate rooms. Use suites for small meetings as well.

Use suburban rather than downtown hotels. A recent study by Runzheimer International showed savings of up to 56 percent when business travelers avoided downtown hotels. Taxes account for much of the difference; for example, the hotel tax in Manhattan is 13.25 percent plus a $2 per room occupancy rate while in nearby New Jersey, the tax is 7 percent.

Evaluate extended-stay options in frequently visited destinations. If you are engaged in a long-term project requiring repeat visits, hotel chains such as Candlewood, Hawthorne Suites and Stay-bridge Suites could be cost-effective

alternatives.

Don't rent a hotel room if your stay can be brief. Instead, schedule same-day meetings at airports. Use conference rooms, airline member clubs or business centers (most major airports have them). Limited-time stopovers (airlines usually allow four hours) can be long enough for meetings if details are worked out in advance.

Use all available discount rates (AAA, AARP, industry and professional affiliations). If you're working with a travel agency, make sure all applicable membership numbers are in your travelers' computer profiles and ask the agent to research all hotel databases in the system. Rates for the same room can vary substantially from one hotel program to the next.

PricewaterhouseCoopers has forecast a trend of rising hotel room rates into 2007 and beyond, saying that occupancy rates this year alone will be the highest since 1997. Serious scrutiny of hotel usage patterns now can help control expenses as the trend continues.