Room for Savings: Optimizing Hotel Spend - Carlson

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Contents Introduction Overview ...................................................................................................................................................3 Research objectives...............................................................................................................................4 About this research................................................................................................................................5 Key findings in brief...............................................................................................................................8 A complex market...............................................................................................................................................12 Key findings explained 1. Hotel spend is often underestimated although it represents nearly 40 percent of the total travel budget .......................................................................................................................21 2. Companies can save 21 percent of hotel spend by adopting best practices...........26 3. Seven steps enable companies to optimize hotel spend ..................................................31 Consolidate data..................................................................................................................................32 Understand traveler needs and behavior ...................................................................................37 Design an effective hotel policy .....................................................................................................47 Optimize the preferred hotel program ........................................................................................62 Negotiate effectively ...........................................................................................................................80 Improve traveler compliance........................................................................................................110 Track performance............................................................................................................................123 Conclusion ...........................................................................................................................................................133 Appendices Glossary ..............................................................................................................................................134 List of companies researched in case studies......................................................................135
Overview Hotel spend has been left unmanaged in many companies, due to the complex nature of the hotel market and the difficulty of gathering data to accurately evaluate spend. This situation is changing as travel managers experience greater pressure to reduce costs and look for new ways to achieve savings. As this research indicates, hotels represent nearly 40 percent of the travel budget on average. The stakes are therefore high. CWT research shows companies can save 21 percent of their hotel spend by adopting best practices. Room for Savings: Optimizing Hotel Spend explains recommended measures and their impact, along with step-by-step advice on how to improve performance in this area of the travel program. This study also debunks several myths. It explains, for example, which hotel and booking features travelers value most, why it is important to favor preferred hotels unless alternatives offer significantly lower room rates, how dynamic pricing can out-perform flat-rate deals in certain conditions, and the value of city caps. Optimizing hotel spend can pay, bringing savings and sustainability to the travel program while enhancing service and security for travelers. 3
Page 1: Room for Savings: Optimizing Hotel
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 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
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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
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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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