Artificial intelligence (AI) is already being used to automatically generates price-per-night limits and offering time saving over manual research.
Now business travel management company Egencia®, part of Expedia Group™, has launched a new hotel policy configuration feature that uses an AI-powered algorithm to automatically and dynamically adjust hotel price caps according to the local market median. Egencia claims it is also the first feature of its kind that is personalised to a company’s travel policy groups and its corporate booking behaviour.
Egencia explains most companies set hotel rate caps (or ‘per diems’) manually by city or destination, a time-consuming process that involves analysing previous booking behaviour and investigating local market rates. As a result, corporates typically prioritise setting price caps for the biggest or most frequently visited destinations but potentially lose out on savings in smaller towns or cities.
Egencia says its new dynamic hotel rate cap feature uses machine learning to automate this process by aggregating real-time hotel prices in a specific location to identify a market median and using it to configure the appropriate price-per-night cap for any traveller booking a room in that town or city. It constantly adjusts for market fluctuations while driving down spend.
John Sturino, vice-president of product, Egencia comments: “We are passionate about how artificial intelligence and machine learning can transform business travel and are making significant investments in this area. The dynamic hotel rate cap feature leverages these technologies to help companies and travellers manage uncertainty and respond to fluctuations in a volatile market.”
An example would be, if the algorithm recommends a price per night of $150 in a specific town, this can be automatically increased for specific employee types such as frequent travellers (‘road warriors’) or senior executives. Travel managers can customise the strictness of rate caps by specifying that only hotels with a minimum star rating are used in the median calculation, as well as mix and match between dynamic and static hotel rate caps for specific travel groups, cities, or countries.
The dynamic rate cap feature also integrates with Egencia Analytics Studio allowing travel managers to benefit from detailed reporting and visual dashboards that clearly demonstrate the median rate, booked rate and the savings realised.
Based on the first pilot Egencia has conducted, the agency claims its new feature can deliver average savings of $20 per hotel booking. The new data fields in Analytics Studio will give travel managers insight going back to January 2021 on how their travellers are booking relative to the median market rates regardless of whether they activate Dynamic Rate Caps.
Click here for more information on Egencia’s dynamic rate cap tool.