HOTELS TAKING YOU FOR A RIDE?
THE TRUTH ABOUT GROUP DISCOUNTS
...and a little bit about the travel industry....

So this is how the story goes: Wedding couple decides to elope in Hawaii, calls, and books with me. They tell their parents, and now... the couple has company, because their parents wanna join in. The couples parents tell their family, and now...their coming. Somehow the couple's friends find out, and now..their coming too. And now...that couple has twenty plus people watching them elope. Wait a minute, I thought eloping literally meant "running away to get married?" Well, not anymore! Does this sound familiar...or similar?

And now... the couple faces the grand dilemma of figuring out where their entourage is gonna stay. They call me, and ask, "Hey Steve, what about group discounts for hotels?" And here is what I say... GROUP DISCOUNTS ARE NOT ALL WHAT THEY ARE CRACKED UP TO BE.

When dealing with hotels, there are actually two main rates that you will encounter: the rack rate, and the bulk rate.

RACK RATE: The term rack is just another fancy way of saying retail. This is the rate that you will receive directly from the hotel if you try booking directly with their front office. The rack rate is sometimes twice as much of what you would pay from a travel agency. Why do they keep rates high like this? Mostly so they can charge walk-in customers more... or charge guest who wish to extend their stay...more. It's purely capitalism.

BULK RATE: The term bulk is just another fancy way of saying really big group rate. This is the wholesale price that travel agencies get rooms, airline seats, and car rentals for. The rate is sometimes up to half of price of the rack rate, sometimes less. Why? I'll get to that.

There are two types of travel agencies in this world. Retail and Wholesale.

WHOLESALE TRAVEL AGENCIES: These are large companies who spend millions of dollars buying up blocks of airlines seats, blocks of hotel rooms, to get a gigantic group rate. These wholesale agencies will then sell their inventory to the public that is cheaper than the rack rate. But because they bought so many rooms and seats, they know, they cannot do it alone...enter the retail travel agency.

RETAIL TRAVEL AGENCIES: These are small travel agencies which specialize in certain market places within the travel industry; such as me, I focus on the wedding industry. These agencies don't have the purchasing power of the wholesale travel agency, but don't mind selling the discounted inventory because they did not have to take the risk of buying blocks of inventory. Most agencies out there are retail travel agencies.

So, back to the thesis. Why are group hotel discounts not all what it's cracked up to be? Well, it's because unless you buy your travel package directly from the airline or hotel, you will be buying a rate based upon a bulk purchase....no matter what..because remember, retail travel agencies packages are all bulk inventory. To put it simply, if you approach a hotel with 30 guest, they will give you a bulk rate based upon 30 guest. Versus, a wholesale travel agency who will get a bulk rate based upon 1000's of guest. Guess who gets the better discount? You or the wholesale travel agency?

And even after that wholesale inventory is retailed to the public, it is still cheaper than your group rate you received from the hotel.

What does this mean to you? And why should you just pass on the group hotel rates?

1) Do not book group rates from hotels because you will most likely not receive a better price than just booking simple air/hotel/car packages.

2) Even if you do manage to get a great bulk rate, your guest will all have exactly the same check-in and check-out times, meaning exact travel dates. This will not jive for most of your guest because they will probably not be able to obtain the same days off of work, or can stay the same amount of days, or they may just want to stay longer.

3) Even if you do manage to get a great bulk rate, you will have to front 100% of the money for your trip, consequently draining your checking account. Then, you will have to chase after your guest for the money....and that can be stressful.

The answer. Just let your guest book their own travel....or even better, have them contact me, so I can create a great travel package that will fit their ambitions.