Room for Savings: Optimizing Hotel Spend - Carlson

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Ensure your travel management team has the right resources. Most companies find it useful to involve local teams at different stages of the hotel program such as identifying candidate hotels for the RFP, setting rate objectives and negotiating directly with properties if required (Figure 101). Travel managers who handle global programs generally call on one or two fulltime equivalents (FTEs) centrally and 0.5-2.5 FTEs at a local level. Figure 101: Most companies involve local staff at different stages of the hotel program Source: CWT Travel Management Institute Based on a survey of travel managers (52 responses) Work closely with a travel management company. TMCs can make the RFP process more efficient, notably by automating hoteliers’ responses (e.g., via Web-based tools) and processing the information centrally. Moreover, the TMC can provide support at every stage of the negotiation process, from contributing expertise on local markets and setting objectives to discussing terms with hoteliers and evaluating different proposals.
Seven steps to optimize hotel spend > Negotiate effectively SUMMARY Key points for effective negotiations: Property-level negotiations are generally worthwhile for any hotel representing at least US$10,000 in spend. Under this threshold, companies can consider chain-wide deals. Although companies tend to prefer flat-rate deals with preferred properties, dynamic pricing agreements can bring savings if they are well monitored, especially in an economic downturn. On the whole, however, companies tend to prefer the predictability of flat-rate deals. Companies that negotiate last-room availability tend to pay lower average room rates over the year, even if the negotiated rate tends to be slightly higher. To negotiate most effectively, buyers should know the local market, consolidate room night volumes, benchmark rates, include amenities in negotiations, leverage city caps and attractive stay patterns, and conduct several rounds of negotiations as needed. Companies can also renegotiate during the year if internal or market conditions change to the extent that better rates are likely. For best results, companies should plan sufficiently in advance, ensure they have the right resources, and work closely with their travel management company. 109
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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
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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 108 and 109: Hoteliers’ performance. A hotelie
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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