Room for Savings: Optimizing Hotel Spend - Carlson

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1. Consolidate data Travel managers need accurate, comprehensive data to successfully manage hotel spend. This is particularly important for more effective sourcing and a better understanding of traveler behavior. Gathering and analyzing the right information is often a complex process, but best practices can help. Key challenges for consolidating data For a complete picture, travel managers require information on the total amount spent at hotels, distinguishing between meetings and events (M&E) spend and transient travel spend. This separation is necessary as a large part of M&E spend is non-recurrent (e.g., for major annual events) and negotiated separately, usually resulting in higher room rates. Recurring M&E spend (e.g., for regular team meetings) can be concentrated on preferred properties to obtain the negotiated transient room rates. Hoteliers, however, do not tend to consider M&E volumes when proposing transient rates (i.e., M&E room nights are not leveraged when negotiating transient rates). A breakdown of room rates and additional expenses per transaction is also necessary. This information enables buyers to leverage maximum spend volumes during negotiations, check that travelers are being charged the correct negotiated rate, and monitor their compliance with the company’s hotel policy. Many companies, however, do not have all the necessary data. In fact, 39 percent of surveyed travel managers believe they capture at most 75 percent of their total hotel spend, as shown in Figure 25. Figure 25: 39% of travel managers believe they track less than 75% of their total hotel spend Source: CWT Travel Management Institute Based on a survey of travel managers (98 responses)
Seven steps to optimize hotel spend > Consolidate data Getting comprehensive data is no easy task. Buyers’ preferred source of information, booking data from the TMC, does not cover transactions made through other booking channels or ancillary expenses paid when a traveler is checking out of a hotel. Companies must therefore use several sources (e.g., the travel management company, corporate credit card issuer and hoteliers), which can make the consolidation process complex. Much of the challenge lies in the fact that each data source can use different codes for the same information (e.g., some credit card reports use the merchant code of the hotel while others simply use the hotel name). In addition, the data provided by different sources can overlap (e.g., when room night spend is captured by both TMC booking reports and credit card statements). This means that before the data can be aggregated, it needs to be “cleansed” to harmonize the codes and remove duplicate entries. Best practices To manage this complexity, several practices are recommended: Focus on two main sources of data: TMC transactions and corporate credit card spend. CWT analyzed 10 companies’ spend and found that when combined, these two sources can cover up to 100 percent of total hotel spend (Figures 26-27). For best results, companies should mandate booking through the TMC and payment with a corporate card while implementing measures to increase compliance (described on Pages 110-122). The data consolidation process can also be facilitated by working with a single TMC and credit card provider worldwide (or regionally as a first step). Consolidated data is provided by services such as CWT Agency+Card Reporting. Figure 26: Companies that combine data from TMC and corporate credit card transactions can track up to 100% of hotel spend Breakdown of expenses by ease of tracking Hotel spend (%) 3 2 1 100 15 15 14 11 Hard 13 12 15 19 27 to track 33 3 80 15 1 23 20 58 28 1 60 36 23 15 21 17 50 14 81 86 40 79 72 23 20 51 50 41 41 35 17 17 Easy 0 2 to track D E F G H I J B L K Average Company Not booked through TMC nor paid by corporate credit card Payment by corporate credit card (but booking outside TMC) TMC booking (but not paid by corporate credit card) TMC booking + payment by corporate credit card Source: CWT Travel Management Institute Based on a survey of travelers (2,175 responses) 33
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 16 and 17: A lack of global standards to defin
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 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
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 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
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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
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For more information about how CWT
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