A housing provider must have a seamless process, one where a housing coordinator answers the phone even at 3 a.m. on Saturday and then places your policyholder in a cost-effective hotel near their home all in a matter of hours. One call to your ALE housing provider should mean you can go back to sleep or get on with your job and not have to think about it again. Next time you have an after-hours call and need an emergency hotel, try your favorite ALE housing vendor and see how they do.

Additionally, a growing issue in this economy is how to pay for the hotel. Many policyholders have maxed out their credit cards or have no credit ability at all. Therefore, your ALE vendor needs to be able to make the reservation, and put it on the company card and bill the carrier later.

Hotels or Furnished Housing?

Every adjuster knows that a stay of 30 days or longer in a furnished unit will typically be the most cost-effective solution for the carrier. Also, a housing provider should start searching for the right unit as soon as a time frame is known, as this is essential in controlling costs and servicing the policyholder. For losses requiring less than 30 days, on the other hand, a housing provider should be able to counsel you to help you decide what is best for that policyholder from both a cost and a service perspective.

A housing provider should be able to supply an adjuster with quotes for both a 14-day hotel stay and a 30-day furnished unit where the unit is less expensive than the hotel. The adjuster will then have a cushion of 16 additional days if the repairs are not completed on time. If the claim extends beyond the date, then the adjuster would not incur additional charges until the 31st day, unlike the hotel.

Room Service

So when is a hotel the correct move in terms of customer service? Sometimes, as an adjuster, you need to listen to the individual's specific situation and then make the best decision for their sake. Every policyholder suffers from traumatic stress after an event or a loss. One of the ways to help policyholders through a difficult situation is to give them some control and listen to their story and needs.

A case in point: A housing coordinator spent 45 minutes listening to a policyholder tell her story about how vandals had spent hours tearing her home apart, force feeding and beating her dog, and pulling the feathers out of her bird.

The family dog was so traumatized that the owner couldn't go near it, and the canine wouldn't leave the house. What was she going to tell the children? Would the dog have to be put down? The adjuster estimated a 30-day stay. After the conversation with the policyholder, our housing coordinator determined that the best choice was to give some control back to the policyholder and reduce her stress. The best way to do that was to leave her in the hotel. The adjuster agreed, and the customer satisfaction score for the claim registered 10 out of 10.

Minimizing Hotel Costs

The key to a successful hotel program is not only knowing when to use hotels but also getting the best rate for them. With Internet pricing and travel sites rampant with last-minute deals, who knows for how much you can get that hotel room! There are many types of rates among them:

• The rack rate is the published rate on the back of the room's door. You should never pay this rate.
• Most corporate rates, AAA, and AARP are all commissionable rates. This means the hotel will pay a travel agent 10 percent of that rate, which is lower than the rack rate.
• The “best available” rate is the lowest published rate on the day of the stay. In most cases, this is the hotel Internet site's best rate. It does not change with the length of stay.

So how do you determine if you are paying too much for that room? Frankly, anyone who fails to negotiate with the actual hotel property is leaving money on the table. The hotel industry is currently in the worst position it has been in years. According to analysts Smith Travel Research (STC), the hotel industry had grown every year from 2003 to 2008. In 2009, however, the indicators were all showing negative trends. In fact, STC does not expect them to recover anytime soon. (More information about STC's estimates year-to-date through August 2009 can be found in the sidebar to the right, “Beyond Lip Service.”)

Housing providers use several models to fund the expense of their hotel programs. If an organization tells you there is “no fee” associated with its rates, then the company is most likely a travel agent or is using a travel agent. That means the company is booking commissionable rates and receiving 10 percent from the hotel.

Other housing providers negotiate with the individual properties for the “best” rate. Many hotels are franchisees and make pricing decisions based on the occupancy at that particular property. They have empty rooms to fill and are willing to deal—even company properties do the same. Informing them that an insurance company is paying the bill and that it could be a lengthy stay, you can negotiate great rates if you try.

The key to cost-effective use of hotels for short- or long-term ALE needs is in the individual hotel negotiation. Is your housing vendor using commissionable rates, or is it negotiating? When a hotel stay drags on, is the company negotiating at each extension? What kind of hotel volume does your vendor handle? Does it have leverage with the hotel in question? The more room nights and hotel relationships the vendor has, the better the attainable rate will be.

Assistance to the Adjuster

As you can see, your housing provider can be a great partner in keeping your hotel costs down. The provider should also be able to help you limit stays prior to long-term placement. In addition, it should be able to offer other services to the adjuster. There is a lot of work attached to hotel stays beyond simply booking the hotel. The housing providers you deal with should be able to negotiate the rate; ensure incidentals are the responsibility of the policyholder; handle all extensions; follow up to get a clean folio; check that the charges match the folio; at 30 days, get the taxes paid returned; and provide you with a clean invoice for the stay.

Engaging a vendor who understands the insurance industry from the carrier and adjuster standpoints—and has the policyholder's interests at the forefront of customer service—can be invaluable. The vendor's understanding of how and when to use hotels is key to the most advantageous and cost-effective housing solutions.