Room for Savings: Optimizing Hotel Spend - Carlson

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Tracking traveler compliance Companies need to track compliance to ensure the program and preferred booking channels meet travelers’ requirements, as low compliance may indicate a problem. They should also identify cases of non-compliance that could be avoided and, where necessary, implement measures to change behavior within the organization. Ensuring travelers respect the travel policy is essential for reaping maximum benefits from the hotel program. This said, only 47 percent of surveyed travel managers say they measure travelers’ use of preferred hotels. Even fewer (32 percent) measure the use of preferred booking channels, as shown in Figure 123. Figure 123: Only 47% of surveyed travel managers measure compliance with preferred hotels and 32% with preferred booking channels Source: CWT Travel Management Institute Based on a survey of travel managers (86 and 97 resopnses) No Yes Moreover, companies that track compliance with the preferred hotel program tend to measure simply the percentage of hotel bookings involving a preferred property or chain. This information provides a useful indication of traveler compliance. It does not indicate, however, whether travelers have booked the authorized room type. Similarly, this data fails to account for situations in which travelers booked at non-preferred hotels while following the rules laid out in the travel policy (e.g., respecting a city cap). To measure compliance effectively, companies should track the following performance indicators: Room nights booked at preferred properties and chains. Use of appropriate room types. This can be difficult to determine from the room rate, as hoteliers do not always apply the negotiated rate. In other words, a more expensive rate does not necessarily imply that the traveler has booked an upgraded room. Compliance with city caps when nonpreferred hotels are used (i.e., room rates respecting a specific price limit). Other rules such as not booking deluxe hotels. As discussed on Pages 32-36, it is challenging to obtain comprehensive data. Nevertheless, travel managers can work with hotel sourcing and program optimization specialists to produce reporting dashboards that serve as an essential indication of how well the travel policy is respected and which areas need to be improved.
Seven steps to optimize hotel spend > Track performance Key performance indicators and reporting dashboards One of the challenges of data management is making sense of the mass of figures companies can receive from their different suppliers in a timely manner. Travel managers need to identify key performance indicators (KPIs) and ensure they are tracked regularly. To this end, a KPI dashboard can provide a user-friendly overview and highlight areas that require attention. Figure 124 shows a list of indicators companies find useful for tracking overall performance, hotel program design and sourcing, traveler compliance and hotelier performance. Many companies ask their travel management company to produce reporting dashboards on these key indicators on a quarterly basis. Some items, such as GDS rate loading, may require a different schedule. Figure 124: Sample reporting dashboard for hotel spend Overall Key performance indicator Scope Destination Freqency during the year Evolution of company’s ARR compared to market average Program coverage (% spend covered by preferred hotels) Company Company Top All Once Once Program design and sourcing Evolution of average negotiated rate compared to market average) Hotels offering LRA (%) Company Company Top All Once Once Rates correctly loaded into the GDS (%) Company All Four times Use of preferred properties (% room nights) Business unit All Twice Use of preferred chains (% of total room nights) Business unit All Twice Traveler compliance Use of city caps (% room nights at or below cap) Use of preferred booking channels (% room nights) Business unit Business unit Top All Twice Twice Advance booking (average number of days booked in advance of stay) Business unit All Twice Hotel category (% room nights booked in authorized categories) Business unit All Once Hotelier performance Application of correct negotiated rate (% room nights at or below rate) for LRA and non-LRA hotels Company Top Once Source: CWT Travel Management Institute 131
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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
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6. Address extra charges Travelers
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SUMMARY An optimal hotel policy cov
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4. Optimize the preferred hotel pro
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Identifying properties and location
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Considering local market conditions
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Figure 59: One company could save 6
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Figure 61(continued): The share of
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Figure 63: Hotel stays of at least
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Deciding between existing preferred
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Figure 69: Companies that retain at
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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 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 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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