Room for Savings: Optimizing Hotel Spend - Carlson

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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.
Seven steps to optimize hotel spend > Design an effective hotel policy Figure 42: Travelers use preferred hotels more often when they book through the TMC % 100 Proportion of preferred hotels booked by booking channel 8 11 80 60 38 50 62 67 77 40 92 89 20 62 50 38 33 23 0 Corporate online booking tool TMC counselor Phone/fax/ email to hotel In person Hotel Website Other travel agent Web booking agency Preferred hotels Non-preferred hotels Source: CWT Travel Management Institute Based on a survey of travelers (1,714 responses) Travelers obtain lower rates, with greater flexibility and availability. Previous CWT research 1 shows that rates are on average 18-21 percent cheaper when booked through a TMC counselor or online booking tool, compared to hotel call centers, hotel Websites and online travel agencies (Figure 43). There are two main reasons for this. First, travelers get the correct negotiated rate at preferred hotels more often. Second, the TMC can propose the best available rates, including promotional rates and dynamic public rates that are sometimes lower than negotiated rates at the time of booking. Figure 44 shows this is the case for more than 20 percent of bookings at preferred hotels. In addition, booking through the TMC provides competitive room availability and flexibility in terms of being able to change or cancel reservations with little or no penalties (Figure 45). 1 Playing by the Rules: Optimizing Travel Policy and Compliance, CWT Travel Management Institute (2008) 51
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 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 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
Page 130 and 131:
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
Page 138:
For more information about how CWT
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Room for Savings: Optimizing Hotel Spend - Carlson

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