Room for Savings: Optimizing Hotel Spend - Carlson

Identifying properties and locations that
represent at least US$10,000 in spend
Travel managers should consider including in
their preferred hotel program any property that
represents sufficient spend to make negotiations
worthwhile for both parties. For buyers, the
benefits of negotiating a deal typically outweigh
costs when spend reaches US$10,000 (Figure
55). For hoteliers, the threshold is often 100
room nights, which may represent more than
US$10,000. These figures vary, however,
between cities and properties, and some
hoteliers will be prepared to negotiate rates for
fewer room nights.
Figure 55: It is generally worthwhile for companies to negotiate a deal at any hotel
representing at least US$10,000 in spend
5,000
US$
4,000
3,000
Savings
outweigh costs
when the
company
spends at least
US$10,000 at
the hotel
Savings
2,000
1,000
Typical costs (negotiation and program management)
0
0 10,000 20,000 30,000 40,000 50,000 60,000
Annual spend at a hotel (US$)
Actual costs vary between companies according to the number of hotels in the program, the country where costs are
incurred, etc. Negotiation costs are based on typical costs for a program of 500 hotels. Savings assume typical volume
discounts (i.e., 5%).
Sources: CWT Hotel Solutions Group, CWT Travel Management Institute