How Commissions and Referral Fees Impact Your Corporate Accommodation Budget

When corporations look at their accommodation options for business travel or global mobility, they typically compare hotels and serviced apartments. Each option has its merits, but one crucial factor often overlooked in the decision-making process is the role of commissions and referral fees. These hidden costs can significantly impact a company’s bottom line and should be carefully considered when consolidating corporate accommodation programmes.

Understanding Commissions & Referral Fees

Understanding both the commission structure and referral fees in corporate accommodation is crucial for companies looking to optimise their travel and relocation budgets. The traditional hotel booking model can significantly inflate costs with its layered commissions and hidden fees. Additionally, referral fees—payments made to agents or platforms for directing bookings to specific accommodations—can further increase expenses.

Platforms like AltoVita offer a more transparent and cost-effective alternative by minimising these additional fees. By reducing the layers of intermediaries and using streamlined booking processes, companies can cut down on commissions and manage referral fees more effectively. This approach allows businesses to maintain high standards of employee satisfaction and well-being while controlling costs.

The Hotel Commission Model

Hotels often work with third-party booking platforms and travel management companies (TMCs), which charge commissions on each booking. These commissions can range from 10% to 30%, depending on the arrangement. While this system is convenient for businesses, the costs increase quickly, especially for extended stays. This model often results in multiple layers of commission fees, which can inflate accommodation costs without providing additional value to the company.

Serviced Apartments: A Different Approach

In contrast, serviced apartments often involve lower or no commissions, particularly when booked through specialised platforms like AltoVita. These platforms are designed to streamline the booking process while minimising additional costs typically associated with hotel bookings. 

Unlike traditional methods that may involve multiple intermediaries, platforms like AltoVita offer a clearer pricing structure by consolidating and simplifying the booking process. This approach reduces expenses and gives companies greater control and visibility over their accommodation budgets, making it easier to manage costs effectively.

The Problem of Stacked Commissions

One key issue with the traditional hotel booking model is the stacking of commissions. When multiple intermediaries are involved—such as travel management companies, booking platforms, and even relocation agents—each one takes a cut. This practice, often referred to as “double-dipping,” can inflate costs significantly. For example, if a hotel room is initially priced at $100 per night, the final cost to the company could easily exceed $130 after all commissions are added.

Global consulting leader PwC experienced significant cost savings by switching to serviced apartments for their employees’ stays. By consolidating their corporate accommodation spend and leveraging AltoVita’s platform, PwC achieved up to 48% savings compared to traditional hotel bookings.

These cost savings were primarily due to the elimination of stacked commissions and the transparent pricing structure offered by AltoVita.

Key Takeaways:

• Cost Efficiency: Serviced apartments generally have lower or no commissions, reducing overall accommodation costs.
• Transparency: Direct booking models offer more transparent pricing structures, enabling better budget management.
• Reduced Hidden Fees: Avoiding stacked commissions leads to significant savings, especially for extended stays.
• Proven Results: PwC’s experience with AltoVita showcases how consolidating accommodation spend can lead to up to 48% cost savings.

By understanding and strategically managing commissions, businesses can make more informed decisions about their corporate accommodation, ultimately driving greater value and efficiency in their travel programmes.

Consolidating Corporate Accommodation programmes

Effectively managing corporate accommodation is crucial for companies that engage in frequent business travel and global mobility. One powerful strategy to achieve this is by consolidating corporate accommodation programmes. By combining spend across various departments, companies can leverage their buying power, negotiate better rates, and streamline the booking process. 

However, the key to successfully implementing this strategy is leveraging advanced technology platforms like AltoVita. These platforms facilitate the consolidation process and provide real-time data and analytics, enabling businesses to optimise their accommodation spend, ensure compliance with corporate policies, and align with broader sustainability goals.

Advantages of consolidating corporate accommodation programmes include:

1- Combining Spend for Greater Leverage

One strategic advantage of consolidating corporate accommodation programmes is the ability to combine spending across various departments, such as Global Mobility, Business Travel, and Admin & Finance. This consolidation allows companies to negotiate better rates and terms with accommodation providers. Businesses can drive significant savings and reduce the administrative burden by centralising the booking process.

2- Technology as a Key Enabler

AltoVita’s platform is designed to streamline the corporate accommodation process through its tech-driven approach.

With features like the AltoInsights, companies gain real-time visibility into their accommodation spend, booking trends, and potential areas for savings. This technological edge allows businesses to make data-driven decisions, ensuring their corporate travel and relocation programmes are cost-effective and compliant with company policies.

3- Cost Management

AltoVita’s platform reduces booking times and integrates sophisticated analytics tools like AltoInsights to enhance spend control.

For instance, through its EcoStats feature, companies can track and report CO2 emissions associated with their corporate accommodations, aligning with Environmental, Social, and Governance (ESG) goals. Additionally, the Escalation Dashboard provides 24/7 support and incident management, ensuring issues are resolved quickly and efficiently, reducing potential costs.

By combining spending across departments and utilising AltoVita’s advanced features, such as AltoInsights, and EcoStats, companies can make informed, data-driven decisions that align with their financial objectives and sustainability commitments. This strategic approach enhances cost management and supports the broader goals of efficiency, transparency, and employee well-being in corporate travel and relocation programmes.

Advantages of Serviced Apartments Over Hotels

When it comes to corporate accommodation, particularly for extended stays, the choice between serviced apartments and hotels is an important one that extends far beyond the commission structure.

Serviced apartments offer distinct advantages that can significantly enhance employee well-being, sustainability, and cost-effectiveness. Understanding these benefits is essential for companies aiming to optimise their corporate travel and global mobility programmes. 

By choosing serviced apartments over traditional hotels, businesses can provide their employees with a more comfortable, productive, and environmentally friendly living environment while also achieving substantial cost savings.

Space and Amenities

Serviced apartments offer several advantages over hotels, particularly for more extended stays. Employees can enjoy a more comfortable and home-like environment with features like fully equipped kitchens, laundry facilities, and larger living spaces. 

These amenities are especially important for global mobility programmes, where employees may stay in a location for several months. The additional space and amenities provided by serviced apartments contribute to better employee well-being and productivity, which can indirectly benefit the company.

Sustainability and Employee Well-being

Sustainability is increasingly becoming a priority for companies worldwide. Serviced apartments generally have a lower environmental impact than hotels, making them a greener choice.

PwC, for instance, has integrated serviced apartments into its travel programme to promote more sustainable stays. Furthermore, the home-like environment of serviced apartments is better suited to meet the diverse needs of employees, including those with neurodiversity, as highlighted by PwC’s experience.

Cost Savings

From a cost perspective, serviced apartments are often more economical than hotels, particularly for extended stays. The ability to cook meals, do laundry, and enjoy more space reduces the need for additional services that can quickly add up in a hotel setting.

When combined with the lower commission structure, serviced apartments emerge as a more cost-effective option for corporate accommodation.

Case Study: How PwC Consolidated Accommodation Spend with AltoVita

PwC’s journey with AltoVita provides a clear example of the benefits of consolidating corporate accommodation programmes.

By centralising their spending across different departments and leveraging AltoVita’s tech-driven platform, PwC eliminated unnecessary commissions and achieved significant cost savings. Using AltoInsights allowed PwC to gain a comprehensive view of their accommodation spend, CO2 emissions, and overall programme performance, enabling them to make informed decisions that align with their corporate goals.

Considering Commission Fees & Beyond

When evaluating corporate accommodation options, it’s essential to look beyond the surface and consider the hidden costs associated with commissions and referral fees.

Serviced apartments, especially when booked through a platform like AltoVita, offer significant advantages over hotels regarding cost savings, employee well-being, and sustainability. By consolidating accommodation programmes and leveraging technology, companies can achieve greater efficiency, transparency, and control over their travel and relocation budgets.

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