Room for Savings: Optimizing Hotel Spend - Carlson

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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
Seven steps to optimize hotel spend > Optimize the preferred hotel program Companies therefore need to identify properties that already represent the relevant spend volume. They should also analyze total spend at locations to see if the threshold may be reached by steering travelers toward fewer properties (Figure 56). Furthermore, companies may wish to designate preferred hotels in markets accounting for less spend, particularly at high-risk destinations, to guarantee travelers have the right level of security and comfort. Figure 56: Companies may be able to concentrate spend on fewer hotels within a city to reach the US$10,000 threshold Example: a company in Paris Before spend concentration at destination (10 hotels, including 4 above US$10,000 spend threshold) After spend concentration at destination (4 hotels above spend threshold) Hotel * Company’s office Client/supplier’s office *Spend is proportional to bubble size Source: CWT Travel Management Institute 65
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Room for Savings: Optimizing Hotel
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Contents Introduction Overview ....
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Research objectives This CWT resear
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Figure 1: Breakdown of surveyed com
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Key findings in brief The research
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changes. In addition to providing t
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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 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 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
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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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