Room for Savings: Optimizing Hotel Spend - Carlson

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Considering local market conditions Market conditions can directly impact program design. In particular, if occupancy levels are high, more preferred properties may be required to cover room night needs than in lower-occupancy markets. The average size of hotels at a destination also comes into play as more properties may be needed if their average size is smaller. For example, one property may be enough to cover 500 room nights in Tokyo every year, but four or five may be required in Paris, as shown in Figure 57. Figure 57: More preferred hotels may be required in cities with high occupancy rates and smaller properties 800 Recommended number of hotels per destination Tokyo 600 Los Angeles Hong Kong New York Number of hotels required for 500 room nights annually 1 Average size of hotels (rooms) 400 Bangkok 2 3 200 Madrid Brussels Amsterdam Copenhagen London Paris 4-5 0 65 70 75 80 85 90 City occupancy rate (%) Note: More hotels may be needed for various reasons (e.g., for proximity to different business locations) Sources: CWT Travel Management Institute, Smith Travel Research, June 2008
Seven steps to optimize hotel spend > Optimize the preferred hotel program Selecting appropriate hotel categories The average price difference between hotel categories can be significant, reaching 21-25 percent, as shown in Figure 58. Although travelers say that the hotel category is important, lower categories do not necessarily mean less satisfaction, as seen earlier (Page 38). Given that high levels of traveler satisfaction can be achieved with more modest hotels, some companies may be able to switch to lower categories and achieve savings without negatively impacting their travelers’ experience. For example, CWT calculated that one company could realistically save 6 percent of total hotel spend by switching room nights to lower-price properties in the same category or one category below, without moving to less convenient locations (Figure 59). Many organizations have cut back on their use of deluxe and first-class hotels since the beginning of the global economic downturn, as shown in Figure 60, which compares the share of categories used by seven companies during the first and fourth quarters of 2008. Figure 58: The average price difference between hotel categories reaches 21-25% Source: CWT Travel Management Institute Based on 1,694,563 room nights for one global company 67
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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
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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 66 and 67: Identifying properties and location
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
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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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