Room for Savings: Optimizing Hotel Spend - Carlson

Twenty-one percent savings through best practices
Figure 19: Calculations used to evaluate the savings impact of implementing best practices
Improvement action
Resulting
savings on
total hotel
spend
Sources
Hotel
category
Replacing 20% of preferred hotels
with preferred hotels in a lower
category leads18% more travelers to
use a lower-category hotel.
3%
Refer to CWT study Playing by the
Rules: Optimizing Travel Policy and
Compliance (2008).
City caps
Introducing moderate city caps for
destinations covering 50% of hotel
spend lowers the average room rate
paid by travelers by 4.4%.
4%
Average room rates paid relative to
rates negotiated by 5 companies,
some with city caps and some without.
Based on transactions totaling US$3.4
million.
Advance
booking
Implementing policy and compliance
measures leads travelers to book on
average 4 days earlier.
1%
Based on a 4-day difference between
median and best performance. Each
further day booked in advance leads to
a 0.2% price reduction. Based on an
analysis of rates paid and reservation
dates for US$260 million in
transactions across 11 cities.
Consolidation
Advance & booking
negotiations
Consolidating local to regional or
regional to global hotel programs and
using best practices in negotiations
leads to savings of 6.5%.
6%
Refer to CWT study Global Horizons:
Consolidating a Travel Program
(2007): based on a survey of 50 travel
managers and case studies.
Preferred
hotels
Moving from average to best-in-class
performance on preferred hotels
increases the use of preferred hotels
by 20 points (from 40% to 60%).
4%
Based on an industry benchmark of
spend at preferred and non-preferred
hotels for 7 companies. Rates are 10%
lower at preferred hotels compared to
other properties, based on a 5%
further volume discount for each
doubling of room nights.
Preferred
booking
channels
Moving from average to best-in-class
performance on preferred booking
channels increases TMC bookings by
25 points (from 50% to 75%).
5%
Refer to CWT study Playing by the
Rules: Optimizing Travel Policy and
Compliance (2008): bookings through
preferred channels are on average
18% cheaper than others, based on
262 hotel price samples for 79 hotels
in 26 cities.
GDS
rate loading
Introducing a series of 3 GDS audits
(including auditing for rate squatting)
and corrective actions reduces the
proportion of unloaded rates to 17%
(down from 40%) and incorrectly
loaded rates to 6% (from 10%).
1%
Based on a GDS rate audit for 5
companies and a rate squatting audit
for 2 companies in 2008. Companies
pay a 14% higher average rate when
rates are not loaded and 15.5% more
when loaded incorrectly. On average,
5% of transactions involve squatted
rates.
Source: CWT Travel Management Institute
24%
3%
Total savings:
-
=
Overlap
Net savings 21%
27