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Capped hotel rates pay off for buyer.

Publication: Business Travel News
Publication Date: 10-FEB-03 		Format: Online
Delivery: Immediate Online Access

Article Excerpt
A uniquely flexible program that Johnson & Johnson implemented to stabilize hotel rates a year ago is paying unexpected dividends this year.

After completing rate negotiations for its 2002 hotel program, Johnson & Johnson's travel department approached its hundreds of preferred hotels in dozens of cities in the United States and Canada with a compelling offer: The company would keep them in the hotel program through 2004 if they agreed to rate increases of no more than a combined 5 percent in the second and third years.

Much to J&J's surprise, a majority of the hotels last month did not take the increases they were entitled to for 2003. Instead, they actually decreased the company's negotiated rates out of concern they might outprice themselves in the marketplace.

The Johnson & Johnson initiative is an example of the creativity travel buyers are employing to get a handle on their hotel expenditures. Most efforts in traditional multiyear agreements in recent years have failed, primarily because of...

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