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Audit of Hotel Invoices Turns up Overcharges that
 May Add up to Millions for Business Travelers

By Kyle Stock, The Post and Courier, Charleston, S.C.
Knight Ridder/Tribune Business News

Aug. 13, 2005 - Business travelers, the bread and butter of the hospitality industry, are often overcharged without their knowledge by hotels, a pattern that adds up to significant extra costs nationally, according to a recent survey by an agency that books rooms for some of the country's biggest corporations.

The average American road warrior is overcharged $1.31 per night, according to a recent survey by Corporate Lodging Consultants, a Kansas-based agency.

Corporate Lodging audited a year's worth of receipts from one of its biggest clients, 624,606 room nights in all. The company found that its client was mischarged -- both higher and lower than the negotiated rate -- 11.6 percent of the time. The average error was in the hotel's favor by $11.35, tallying almost $820,000 a year in excess travel costs.

If the rest of Corporate America is seeing the same amount of glitches, U.S. companies are giving hotels an extra $500 million a year, the study said.

The big glitches aren't the problem: Those get noticed. It's the small ones, multiplied thousands of times, that eat into a corporation's bottom line.

Travelers rarely question whether a bill is correct. Many don't know what rate their company negotiated, and others are too busy or simply don't care.

They are, after all, on expense accounts.

Most agencies and hotels say the mistakes are unintentional, the result of the increasingly complex process of negotiating rates and recording those prices in a number of databases.

About 7.5 percent of negotiated rates are entered incorrectly in hotel books and databases, according to the National Travel Business Association, which represents both hotels and corporate travel buyers.

Caleb Tiller, an NTBA spokesman, said a rash of new computer systems in the hotel industry have probably exacerbated mistakes. But he noted that technological advances have also made errors easier to catch. In April, the association sent its members a 16-page set of guidelines on how to police hotels loading negotiated rates into databases. "This has kind of been an ongoing challenge," Tiller said.

Travel agencies are rolling out expensive computer services to audit reservations before and after the hotel stay. Corporate Lodging Consultants heralds a service that checks each booking 52 times. About a year ago, American Express Business Travel, one of the world's largest corporate agencies, started offering a similar service dubbed Rate TRAX.

"With the sheer number of rates being loaded into a system, errors are bound to occur," said American Express spokesman Tom Wilson.

Joanie Cole, director of sales at the Embassy Suites near the convention center in North Charleston, said she doubted that any hotels would nickel-and-dime their big corporate guests. "They'd be shooting themselves in the foot if they did," Cole said.

But hotels have tinkered with rates more in recent years. Many have set up what they call "dynamic corporate rates," prices that fluctuate based on how full the lodging is. Hoteliers have also tacked on additional fees for cancellations, early check-in, room service and room changes, things that used to be free. Accounting firm PricewaterhouseCoopers said 2005 will be a record year for surcharges and fees levied on group and business travelers.

Since 2001, Florida's attorney general's office has investigated four large hotel chains that tacked small "energy surcharges" onto bills without notice. In May, Starwood Hotels & Resorts, which runs a Sheraton in North Charleston, settled with the state, agreeing to stop the practice, pay a $175,000 fine and cover litigation costs. Wyndham Hotels & Resorts, Marriott and Hilton also are being investigated.

Charleston-based Travel Management Inc. has not noticed discrepancies between the rates it negotiates and the billed prices, although it has wrestled with fast-fluctuating rates. The company reserves about 1,000 room-nights a month, mostly for corporate clients, according to owner John Powers.

"Frankly, I would chalk them off to honest mistakes," Powers said. "I can't remember the last time we had an issue with people thinking they were overcharged."


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