Room for Savings: Optimizing Hotel Spend - Carlson

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A lack of global standards to define hotel quality The potentially confusing choice of hotels is exacerbated by the fact that each hotel is unique in terms of pricing, amenities and quality of service, and yet there is no single standard to accurately assess properties. Numerous classification systems are in use by national governments and industry associations, and even those that look the same (e.g., star ratings) can have different definitions. Corporate hotel experts therefore use their own criteria to help clients classify hotels. For example, CWT Solutions Group, the consulting arm of CWT, uses four categories that align with those used by other lodging industry consultants (Figure 6). Figure 6: Examples of hotel classification systems used by global industry consultants CWT global classification Smith Travel Research (STR) classification Hotel and Travel Index (HTI) classification Deluxe First Luxury property providing personalized amenities and services Full-service hotel with comfortable accommodations and public areas Luxury Upscale Superior Deluxe Deluxe Moderate Deluxe Superior First Class First Class Standard Full-service hotel with comfortable but sometimes simple accommodations Moderate Limited Service First Class Superior Tourist Class Tourist Class Moderate Tourist Class Economy Property providing basic amenities Economy Budget Unclassified Source: CWT Travel Management Institute
A complex market Diverse markets Each city is unique in terms of economic conditions, the average size of hotels and negotiation styles, all of which impact hotel selection and corporate agreements. Figure 7 illustrates the changes in average room rate observed across different markets between January 2008 and January 2009, highlighting dramatic decreases in cities like London, Sydney and Paris, compared with continued strong increases in Tokyo. Figure 7: Average room rates (ARR) have dropped dramatically in some cities in response to the economic downturn ARR January 2009 (US$) 250 Tokyo Paris New York 200 London Sydney Rome Hong Kong 150 Madrid Los Angeles Toronto Berlin 100 Beijing Cairo Buenos Aires 50 -40 -20 0 20 40 Source: CWT Travel Management Institute Based on data provided by Smith Travel Research ARR change January 2009 vs. January 2008 (%) 15
Page 1: Room for Savings: Optimizing Hotel
Page 4 and 5: Contents Introduction Overview ....
Page 6 and 7: Research objectives This CWT resear
Page 8 and 9: Figure 1: Breakdown of surveyed com
Page 10 and 11: Key findings in brief The research
Page 12 and 13: changes. In addition to providing t
Page 14 and 15: A complex market The complexity of
Page 18 and 19: Complex pricing Hoteliers use diffe
Page 20 and 21: Figure 10: Rates remain fairly cons
Page 22 and 23: Figure 12: Most corporate hotel boo
Page 24 and 25: Data on hotel spend is however, not
Page 26 and 27: How to calculate your company’s t
Page 28 and 29: 2. Twenty-one percent savings throu
Page 30 and 31: Many organizations have yet to opti
Page 32 and 33: GDS auditing It is important to ens
Page 34 and 35: 1. Consolidate data Travel managers
Page 36 and 37: Figure 27: Combined TMC and credit
Page 38 and 39: Figure 28: Recommended data fields
Page 40 and 41: Hotel category: not the most import
Page 42 and 43: “No-frills” booking When it com
Page 44 and 45: In fact, travelers often draw on th
Page 46 and 47: A number of differences between the
Page 48 and 49: SUMMARY Understanding traveler need
Page 50 and 51: 2. Ask travelers to use serviced ap
Page 52 and 53: Figure 41: Recommended rules for bo
Page 54 and 55: Figure 43: Rates are on average 18-
Page 56 and 57: 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
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Figure 59: One company could save 6
Page 72 and 73:
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
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5. Negotiate effectively Negotiatio
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Chain-wide agreements, as the name
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Chain-wide deals tend to offer smal
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There is, however, a risk associate
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Despite this reticence, 40 percent
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Figure 83: Another company’s ARR
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Last-room availability A last-room
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LRA is common in corporate contract
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Benchmark rates. Companies commonly
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Companies can consolidate volumes i
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Leverage city caps. Experience sugg
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Consider renegotiating flat rates d
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Buyers should use the full range of
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Hoteliers’ performance. A hotelie
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Ensure your travel management team
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6. Improve traveler compliance The
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Understanding why travelers book ou
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The survey also indicates that trav
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Explain the stakes. Price-conscious
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Figure 112 shows how an OBT can be
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Require travelers to book their hot
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Investigate the reasons for noncomp
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To ensure that the agreed condition
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GDS rate squatting. Regular GDS aud
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Rate audits pay A rate audit conduc
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Tracking traveler compliance Compan
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SUMMARY Tracking performance: Compa
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Appendices Glossary The following i
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For more information about how CWT
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Room for Savings: Optimizing Hotel Spend - Carlson

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