Room for Savings: Optimizing Hotel Spend - Carlson

Seven steps to optimize hotel spend > Track performance
Last-room availability (LRA). To obtain an
LRA clause in their rate agreements,
companies generally pay a premium of 5-10
percent compared to non-LRA rates. This
premium pays off, as companies obtain
rooms at their negotiated rate more often
and subsequently pay a lower average room
rate over the year, as explained on Pages 92-
94. Nevertheless, some hoteliers perform
better than others on their LRA
commitments. A CWT analysis of one
company’s rates at seven preferred hotels in
the same city (1,605 transactions) showed
that one hotelier offered travelers the
negotiated rate (or less) for as many as 96
percent of room nights, while another did so
for only 53 percent (Figure 121). Regular
auditing can help companies ensure
hoteliers respect their LRA commitments, as
well as identify problems such as low
compliance (i.e., the traveler asks for a more
upscale room type than authorized in the
policy). An example of LRA audit results is
described on pages 128-129.
Figure 121: An LRA audit reveals that a company received its negotiated rate or lower for
53-96% of room nights at a selection of 7 hotels
100
%
Percentage of room nights billed at correct negotiated rate for 7
hotels in Paris with which a company has an LRA agreement
(Company H)
20
16
10
8
8
4
80
47
24
41
60
40
11
55
84
62
80
96%
20
0
53% 56
42
51
29
30
16
6
A B C D E F G
Hotel
Room rate < negotiated rate Room rate = negotiated rate Room rate > negotiated rate
Source: CWT Travel Management Institute
Based on transaction data (1,605 nights at 7 hotels)
127