Room for Savings: Optimizing Hotel Spend - Carlson

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Hoteliers’ performance. A hotelier’s track record is important, as performance varies widely in terms of correct rate loading into global distribution systems (GDSs) and the application of LRA. When a new preferred hotel is under consideration, the buyer’s travel management company can share the experience of other clients of the hotel. Traveler behavior. The benefits of making changes to the program should always be considered in light of traveler behavior and the ability to steer travelers toward other hotels. Some “new” properties might already be popular with travelers and represent a low risk in terms of compliance, whereas others might be a less certain choice. For changes to bring the expected benefits, companies should be prepared to implement measures to improve compliance. discussions during the first few months of program implementation. The time taken varies, but a general idea is shown in Figure 100. The most important point to note is that requests for proposals must go out sufficiently early for hoteliers and buyers to evaluate proposals and carry out several rounds of negotiations if necessary. At the same time, negotiating too early can deprive companies of valuable benchmark information. This timeline is typical of companies that are updating existing hotel programs. When a program has to be designed from scratch or completely overhauled, at least two years are required to achieve average performance. For best-in-class performance, a further two years should be allowed with the support of hotel sourcing and program optimization specialists. Green criteria. Although hoteliers’ green credentials can be hard to evaluate objectively, companies are increasingly interested in working with environmentally friendly properties. When two properties propose very similar conditions, green benefits can make a difference, particularly since travelers say environmental friendliness is an important consideration. Which timeframe and organization? Effective negotiations require careful planning and support from the right teams. The following points are worth considering: Plan in advance. Hotel contracts generally run for a calendar year. Negotiations therefore take place mainly toward the end of each year, with an intense period of auditing and
Seven steps to optimize hotel spend > Negotiate effectively Figure 100: A typical timeline for designing and managing a hotel program Tasks April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March Preliminary planning Data consolidation and analysis First semester reporting dashboard Initial selection of hotels for RFP RFP release Negotiations Final selection of hotels & fine-tuning of program locally Publication of preferred hotel directory Program implementation and auditing Team activity Input from the company's local staff Source: CWT Travel Management Institute 107
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Room for Savings: Optimizing Hotel
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Contents Introduction Overview ....
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Research objectives This CWT resear
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Figure 1: Breakdown of surveyed com
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Key findings in brief The research
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changes. In addition to providing t
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A complex market The complexity of
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A lack of global standards to defin
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Complex pricing Hoteliers use diffe
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Figure 10: Rates remain fairly cons
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Figure 12: Most corporate hotel boo
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Data on hotel spend is however, not
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How to calculate your company’s t
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2. Twenty-one percent savings throu
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Many organizations have yet to opti
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GDS auditing It is important to ens
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1. Consolidate data Travel managers
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Figure 27: Combined TMC and credit
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Figure 28: Recommended data fields
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Hotel category: not the most import
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“No-frills” booking When it com
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In fact, travelers often draw on th
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A number of differences between the
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SUMMARY Understanding traveler need
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2. Ask travelers to use serviced ap
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Figure 41: Recommended rules for bo
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Figure 43: Rates are on average 18-
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Figure 46: In a rate benchmarking e
Page 58 and 59: 5. Mandate booking at least two wee
Page 60 and 61: 6. Address extra charges Travelers
Page 62 and 63: SUMMARY An optimal hotel policy cov
Page 64 and 65: 4. Optimize the preferred hotel pro
Page 66 and 67: Identifying properties and location
Page 68 and 69: Considering local market conditions
Page 70 and 71: Figure 59: One company could save 6
Page 72 and 73: Figure 61(continued): The share of
Page 74 and 75: Figure 63: Hotel stays of at least
Page 76 and 77: Deciding between existing preferred
Page 78 and 79: Figure 69: Companies that retain at
Page 80 and 81: SUMMARY Key points for optimizing a
Page 82 and 83: 5. Negotiate effectively Negotiatio
Page 84 and 85: Chain-wide agreements, as the name
Page 86 and 87: Chain-wide deals tend to offer smal
Page 88 and 89: There is, however, a risk associate
Page 90 and 91: Despite this reticence, 40 percent
Page 92 and 93: Figure 83: Another company’s ARR
Page 94 and 95: Last-room availability A last-room
Page 96 and 97: LRA is common in corporate contract
Page 98 and 99: Benchmark rates. Companies commonly
Page 100 and 101: Companies can consolidate volumes i
Page 102 and 103: Leverage city caps. Experience sugg
Page 104 and 105: Consider renegotiating flat rates d
Page 106 and 107: Buyers should use the full range of
Page 110 and 111: Ensure your travel management team
Page 112 and 113: 6. Improve traveler compliance The
Page 114 and 115: Understanding why travelers book ou
Page 116 and 117: The survey also indicates that trav
Page 118 and 119: Explain the stakes. Price-conscious
Page 120 and 121: Figure 112 shows how an OBT can be
Page 122 and 123: Require travelers to book their hot
Page 124 and 125: Investigate the reasons for noncomp
Page 126 and 127: To ensure that the agreed condition
Page 128 and 129: GDS rate squatting. Regular GDS aud
Page 130 and 131: Rate audits pay A rate audit conduc
Page 132 and 133: Tracking traveler compliance Compan
Page 134 and 135: SUMMARY Tracking performance: Compa
Page 136 and 137: Appendices Glossary The following i
Page 138: For more information about how CWT
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Room for Savings: Optimizing Hotel Spend - Carlson

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