Should you pay now, or is it better to pay later at the hotel? This is a very interesting question with a number of nuances that are often overlooked. The obvious answer is to always choose the cheapest rates, right? Not always. Let me explain…
Companies often prepay because the price is slightly cheaper, and they prefer to lock the currency at today’s rate rather than dealing with the currency conversion at the time of checkout. But, let’s be honest, the price is more often than not the overriding factor in these decisions.
Let me illustrate with an example of why the cheapest rate is not necessarily the cheapest option for your company. Consider this scenario: Mary logs into the dashboard of her favourite Online Travel Agent (OTA), searches for hotels in London, selects a 4-star hotel near her conference venue, and is presented with 2 prices for exactly the same room:
Pay now = $100
Pay later = $110
On first glance, this is a no-brainer, but what if Mary knew that her company could claim back 20% VAT on business travel to London? That is a $22 dollar saving equating to an effective price of $88, way cheaper than the prepaid option. Read my blog post on reclaiming VAT for a better idea of how this works.
Why can’t companies claim back VAT on “pay now” invoices? The reason is that VAT invoices are only valid for reclaim when the invoice includes VAT. When companies prepay, the invoice is created by the OTA with zero VAT, and when companies pay later, the invoice is from the hotel, which includes the VAT amount. Although there are certain instances where companies can prepay and still get an invoice from the hotel, this is the exception rather than the industry norm.
The toughest part of reclaiming VAT is ensuring that the invoices are perfectly compliant. This can be a real headache – especially when Mary is focusing on delivering a killer presentation at the conference.
Voyya is the only corporate travel platform in the world that ensures clients get a perfectly VAT reclaimable invoice which is automatically uploaded to your portal. Better still, we can link you up with one of our preferred VAT partners to get your 20% back when you pay later at the hotel. It’s savings and convenience all round. Sign up with Voyya today to experience the world of business travel savings from your desktop.