Room for Savings: Optimizing Hotel Spend - Carlson

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Deciding between existing preferred hotels and competitors It is often worth considering competitor properties as they may suit travelers better and/or offer more savings. Indeed, 40 percent of companies change at least 25 percent of their preferred hotels from one year to the next (Figure 66). Case studies of two companies showed they maintained on average 58-77% of their preferred hotels year over year (Figure 67). Figure 66: 40% of companies change at least 25% of their preferred hotels every year Source: CWT Travel Management Institute Based on a survey of travel managers (97 responses)
Seven steps to optimize hotel spend > Optimize the preferred hotel program Figure 67: Two companies maintained on average 58-77% of their preferred hotels year over year Company H Average program stability (preferred hotels retained year over year): 58% Company B Average program stability: 77% 525 525 620 (+18%) 311 309 700 (+13%) 299 49 144 208 359 359 390 (+9%) 96 294 360 (-8%) 70 6 67 217 2006 2007 2008 2006 2007 2008 Preferred hotels 2006 Source: CWT Travel Management Institute New hotels 2007 <strong>Hotel</strong>s added to or removed from the program in 2006 New hotels 2008 Be<strong>for</strong>e switching preferred hotels, travel managers should consider their ability to steer travelers toward new properties. Fifty-two percent of travel managers say travelers need at least three months to adjust to changes, and one case study shows that travelers continued to book a particular hotel one year after it had been removed from the program (Figure 68). Companies should implement measures to improve compliance if necessary. More importantly, companies should consider the long-term impact of any changes, as strong relationships with hoteliers can help them negotiate better rates. Figure 68: Travelers at one company continued to book a significant number of rooms at a hotel one year after it was removed from the program and compromised savings Figure 69 suggests companies that retain a large proportion of preferred hotels from year to year (at least 80 percent) tend to be more effective at limiting rate increases. Source: CWT Travel Management Institute 75
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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
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Complex pricing Hoteliers use diffe
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Figure 10: Rates remain fairly cons
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Figure 12: Most corporate hotel boo
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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 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 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
Page 118 and 119: Explain the stakes. Price-conscious
Page 120 and 121: Figure 112 shows how an OBT can be
Page 122 and 123: Require travelers to book their hot
Page 124 and 125: 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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