Executive Travel : MasterCard to Itemize Hotel Charges for Firms

When MasterCard Business Card begins asking hotels to break out room charges on credit card receipts for travel managers later this month, it could signal the end of an era.

It may be the end of fuzzy expense report statements that don’t reveal exactly how much was spent at the minibar, the hotel restaurant or phone calls home. And in theory at least, it will simplify the travel manager’s job of making sure employees are complying with corporate travel policies and that hotels are sticking to negotiated rates.

MasterCard’s Business Card unit is asking hotels to itemize expenses on credit card bills so it can then itemize corporate statements. Previously, the only way a corporate travel manager could figure out what was spent where was to look at the room folio given to the employee. Not only is that a labor-intensive way to analyze information, but sometimes the information is undecipherable.

“We’re saying to the merchants that corporate users really want this information,” said Michael O’Brien, spokesman for MasterCard in New York. Hotel accounting systems have gotten much more sophisticated and compatible with one another, so the potential exists to compile the information and break it out on the statements, he said.

“It’s just that no one has taken the bull by the horns and actually done it,” he said.

MasterCard has also asked airlines for more detailed information, and has had a compliance rate of about 95%, O’Brien said. Airlines now break out class of service and route information on the credit card bill in addition to the ticket.

Corporate travel departments have been leaning on card companies to get the information for years, but hotels have resisted, said Walter Sanders, a spokesman for Citicorp Diners Club.

“Corporate travel managers do want the kind of information contained in the regular room portfolio,” he said. “The problem is capturing that information and interfacing with a card company and doing it in a cost-effective, economic way.”

Sanders said a few hotels, including one Hyatt property, are working with card companies, including Diners Club, to develop software to accomplish that goal.

“We’ve been pushing for it for a long time,” he said. “Realistically, a lot more work has to be done.”

Until the capacity is widely available, and until such systems can aggregate the information on a chain-wide basis, it won’t be of much more value than sorting through individual expense reports, he said.

“The corporate travel manager needs a chain-wide dump of this kind of information,” he said. By being able to trace the travel transactions of all employees of the company, the travel manager is better able to negotiate room rates with hotels and figure out where the corporate travel policy is breaking down.

“These days, the smart corporate travel manager is trying to create processes and procedures to eliminate the need to play cop,” he said. “They don’t want to be cops, they want to automate as much as possible.”

Being able to break out charges directly from the credit card bill would be useful, said Joan Hoberman, corporate travel manager for Walt Disney Co. But she added, “I don’t think the technology has been there.”

Travel managers want to know such fine details as whether hotels are sticking to negotiated rates. Hotels sometimes “upsell” the tired corporate traveler on a better room for a modest increment in price, Sanders said. The employee feels entitled to the better room and takes it. If it happens on a regular basis, however, it can throw off the corporate travel budget.

*

Corporate travel managers want to know what a hotel charge of $350 really means, said Melissa Abernathy, a spokeswoman for American Express. When the corporation negotiates with the hotel, it needs to know the exact room rate it’s been paying.

As part of its negotiating tactics, it also wants to be able to tell the hotel how much “extra” money the travelers are spending in restaurant, business center or fitness room charges.

For the last nine years, American Express has been asking hotels to break out room rate, length of stay and dates of service on credit card bills, with limited luck.

“The compliance rate is just too low to provide any kind of accurate sense,” Abernathy said.

Most hotels aren’t set up to deliver the data, she said. Every property is a little different, and there is no general settlement accounting system, such as the one used by airlines, to standardize the billing information.

It’s much simpler for airlines to produce that level of detail because the Airline Reporting Corp. settles the accounts for airlines and enforces standards throughout the industry.

But Sanders expects the hotel billing systems to change as more corporate clients pressure hotels to comply. And the industry itself appears poised to move in that direction.

Many hotels now offer travelers an itemized statement in lieu of a charge card receipt, said Ken Hine, president and CEO of the American Hotel & Motel Assn. in Washington. “It’s just a matter of time.”

“When this gets rolling, corporate travel people will have more information rather than less,” said MasterCard’s O’Brien. “It will help with enforcement.”