Room for Savings: Optimizing Hotel Spend - Carlson

2. Ask travelers to use serviced
apartments for stays exceeding five
nights
Serviced apartments can provide a cost-effective
solution for travelers staying longer than five
nights, when the cost of accommodations and
meal expenses are taken into account. These
furnished apartments tend to provide similar
amenities to hotels while providing a more
relaxed, productive working environment for
travelers.
3. Provide guidelines on what to do
when a preferred property is
unavailable
Travelers cannot always book at preferred
properties, which may be fully booked or simply
not exist at their destination. In these cases, CWT
recommends three main guidelines:
Ask travelers to use a preferred chain so
the company still benefits from preferred
rates, although chain deals tend to provide
lower savings than property deals. This is
discussed further on Pages 82-86.
Set a price limit for travelers to respect if
booking outside preferred properties or
chains. CWT research shows that city caps
can be an effective way to limit spend when
travelers have to book outside the program.
Although the average room rate paid in a city
usually exceeds the negotiated rate(s), the
difference is smaller for companies that use
city caps (16 percent for those that do
compared to 34 percent for those that do
not, as seen in Figure 40).
CWT recommends setting city caps mainly
for cities that are not covered by the hotel
program (i.e., the company has no preferred
properties there) and not cities that are
covered. This is to limit the temptation for
travelers to book non-preferred hotels when
preferred hotels are available. To set these
city caps, it is useful to analyze benchmarking
data provided by the TMC to determine the
average room rate paid by companies for
each relevant hotel category in each city
concerned. These rates can be used as city
caps.
Some companies also set caps for cities that
are covered by the program. To do so, they
identify their average, lowest and highest
negotiated rates in the cities concerned. The
rate cap they set then depends on their
strategy. Companies that wish to penalize
travelers who book too late to obtain a room
at a preferred hotel set the lowest city caps—
sometimes even 10 percent lower than their
lowest negotiated rate. At the other end of
the scale, some companies may wish to set
more generous city caps, especially in cities
where occupancy is high and travelers may
have difficulty obtaining a room at the
negotiated rate.
Although it is best to define spend limits at a
city level, it may be appropriate to use
country caps as well (i.e., city caps for key
destinations and a country cap for all
remaining locations).