Room for Savings: Optimizing Hotel Spend - Carlson

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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.
Seven steps to optimize hotel spend > Design an effective hotel policy Figure 49: Advance booking enables companies to limit the impact of last-minute price hikes Impact of advance booking on the average room rate Average rate is higher at 6 out of 17 hotels Indexed rate (15+ days = 100) Average rate is stable at 9 out of 17 hotels Indexed rate Average rate is cheaper at 2 out of 17 hotels Indexed rate 250 -120 pts 250 -9 pts +274 250 pts 200 200 200 150 150 150 100 100 100 237 50 100 87 80 80 50 100 100 98 99 50 100 126 133 0 15+ 14-8 7-3 2-0 0 15+ 14-8 7-3 2-0 0 15+ 14-8 7-3 2-0 Days in advance of stay *Includes one hotel in Moscow where the last minute price was 3.4 times more expensive than the 15+ day advance booking rate Source: CWT Travel Management institute Based on 196 GDS rates for 17 hotels for a reservation on October 8, 2008 57
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Room for Savings: Optimizing Hotel
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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 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
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
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Hoteliers’ performance. A hotelie
Page 110 and 111:
Ensure your travel management team
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6. Improve traveler compliance The
Page 114 and 115:
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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