In February, a handful of DHL board members traveled to Miami, some from out of the country. Weeks in advance of the meeting, the CEO’s executive
assistant had reserved rooms at the Hilton Garden Inn Miami Airport West,
a preferred property in DHL’s travel
program, and used the CEO’s corporate
card to guarantee the booking.
With the travelers set to arrive on a
Friday, the shipping and logistics company’s travel management company
called the hotel on Thursday to confirm
the reservations and to notify the hotel
staff that the travelers were VIPs.
Everything appeared set.
Until the board members arrived
to discover some of their reservations
had been canceled earlier that day. No
more rooms were available, and the
hotel offered little help finding alternative accommodations.
The DHL travel program members
learned firsthand what happens when
record-high hotel occupancy meets
increasingly aggressive revenue management techniques, and they’re not
alone. Buyers and revenue management experts said last-minute cancellations by hotels, while not widespread, have become more common as
spare rooms have become scarce and
no-shows threaten hotel revenue.
“We had one incident [in May]
in D.C. where our traveler’s reserva-
tion was canceled by the hotel the day
before arrival,” said Financial Industry
Regulatory Authority corporate travel
services manager Carol McDowell.
“The traveler never received notice, but
fortunately he checked their website
beforehand and found it canceled.”
McDowell said the reservation was
made at a longtime preferred property
months in advance. The hotel offered no
reason for the cancellation, but FINRA’s
TMC was able to get the room, which
had more than doubled in rate, reinstat-
ed for the traveler at the original price.
In DHL’s case, it turned out the
CEO’s card used to guarantee the
booking had been replaced. The hotel
canceled the reservations after a test
charge on the old card was declined.
“He updated his travel profile [with
the TMC], but it didn’t occur to him
that he needed to redo all the hotel reservations he’d already made, too,” said
DHL regional category manager of
travel services Michelle Hunt. “It didn’t
occur to anybody because we’ve never
come across this before.”
The property made no attempt to
reach out to DHL or its TMC before
it canceled the reservations. The board
members sought alternative accommodations, but the Miami occupancy rate
that month was 87.6 percent, according to STR, and one traveler had to
drive more than 50 miles for a vacancy.
“It blew my mind that they were VIPs,
that we called and spoke to the front
desk the day before and told them, ‘VIP.
Do not walk. Do not displace,’” Hunt
said. “The hotel acknowledges that they
were all marked VIP, but when they go
to run the credit card, they don’t look at
those notations. They just ran the credit
card, found out it was declined and then
canceled the reservation.”
Though hotels have long reserved the
right to validate cards that are holding
reservations, multiple travel managers
told BTN they recently have noticed an
increase in the number of hotels clear-
ing cards before arrival.
“It does not surprise me at all that
hotels are taking this stand,” said The
Linde Group corporate travel man-
ager PJ Scala. “Let’s face it: They are
holding a lot of cards right now. …
They want to cancel at the last minute
when there is a problem, but [they]
charge a penalty when a traveler can-
cels at the last minute. While capacity
is on the supply side, we are all going
to be dealing with new sets of rules.”
Applied Systems Inc. senior travel
coordinator Rachel Sylvester said
reservation and cancellation policies
have gotten so strict that hotels are
charging cards at least one or two
days before arrival.
Erik Browning, vice president of
business consulting for hospitality/
gaming at The Rainmaker Group, a
revenue management solutions compa-
ny, also has heard hotels are validating
cards more frequently. Hoteliers also
have told him that as occupancy has
increased, no-show rates have grown.
“As hotels are getting busier, there
are more and more sold-out days,”
Browning said. “People are likely
is a record-setting year.
The current annualized occupancy
is 65%, besting the previous
record of 64.9%, set in 1995.
Occupancy hit 67.5%, while
average occupancy across the top
25 U.S. markets climbed above
76%. Demand reached
104 million room nights.
… while supply
Annualized supply growth as of
May was 1%, which is below the
20-year compound annual growth
rate of 1.7%.