Room for Savings: Optimizing Hotel Spend - Carlson

5. Mandate booking at least two weeks
in advance whenever possible
Companies may wish to mandate booking two
weeks in advance whenever possible to drive
savings. Figure 48 shows the difference in
average room rates paid in 11 cities (US$266
million worth of transactions) less than three
days in advance all the way up to more than two
weeks in advance of the stay. Moreover, twoweek
advance bookings bring savings for all hotel
categories.
Figure 48: Booking in advance brings savings
110
Impact of advance booking on average room rate,
by hotel category
Indexed rate
(15+ days = 100)
105
100
Standard
Deluxe
First
95
0
15+ 14-8 7-3 2-0
Number of days booked in advance
Source: CWT Travel Management Institute
Based on transaction data from 11 cities
There are two key explanations. First, travelers are
more likely to obtain the negotiated room type
and negotiated rate at a preferred hotel the
further in advance they book. Second, if travelers
pay the public best available rate, they are likely
to pay less if they book earlier. This conclusion is
based on an analysis of prices at 17 hotels, as
shown in Figure 49. Interestingly, advance
booking did not significantly lower the average
room rate paid in most cases and sometimes
even raised the rate slightly. However, in the few
cases where room rates rose at the last minute
(up to two days before check-in), the difference
was more than double. In other words, early
booking enables companies to limit the risk of
last-minute price hikes, and ensure availability.
On average, companies pay less when they book
in advance.