Room for Savings: Optimizing Hotel Spend - Carlson

Figure 41: Recommended rules for booking
a hotel when preferred properties are
unavailable are each included in fewer than
40 percent of policies
Source: CWT Travel Management Institute
Based on a survey of travelers (103 responses)
3. Authorize booking at non-preferred
hotels only if the rate is at least 20
percent cheaper
The policy also needs to spell out whether or not
travelers should book outside the program if a
cheaper rate is available. According to the
research, 88 percent of companies allow their
travelers to book a lower rate outside the
program even if a preferred hotel is available.
Among those, however, only 14 percent specify
that the rate must be cheaper by a certain
amount. CWT recommends allowing travelers to
choose a hotel outside the program only when
the price difference is at least 20 percent lower
for two main reasons:
The use of non-preferred hotels
negatively impacts negotiations with
preferred hotels the following year as
volumes are diluted. Even slight “leakage”
from the program can have a surprising
impact on the discount obtained. Based on
different scenarios, CWT estimates that when
room nights are lost to competitor hotels, the
resulting increase in the negotiated rate
requires non-preferred hotels to be 10-15
percent cheaper to compensate.
A cheaper rate at a non-preferred hotel
can translate into a higher total cost of
stay when amenities are taken into account.
As seen on Page 98, extra charges can
increase hotel spend by up to a third if they
are not included in the negotiated rate.
Furthermore, depending on where the hotel
is located, transport costs such as taxis may
be higher. Travelers often do not factor in
these costs when comparing rates and may
choose a non-preferred hotel erroneously
believing it will be cheaper.
4. Mandate booking through the travel
management company
There are several compelling reasons for
mandating booking through the TMC (i.e., using
a corporate online booking tool and/or going
through a travel counselor).
Travelers book preferred hotels more
often. According to the CWT survey, travelers
selected a preferred hotel in 92 percent of
cases when using their corporate online
booking tool and in 89 percent of cases
when booking through a travel counselor
(Figure 42). This compares to an average of
23-62 percent compliant bookings made
through other channels.