Room for Savings: Optimizing Hotel Spend - Carlson

Figure 69: Companies that retain at least 80% of preferred hotels from year to year tend to
be more effective at limiting rate increases
Change in average room rate (ARR) 2007-2008 according to program stability
(7 companies' room nights in Paris)
Average change: +19% Average change: +6%
100
16% 16% 25% -14% 32% -10% 15% Change (%)
Program
stability*
(%)
80
60
40
64
74
81
89 91 93
20
39
0
P AF O T B G Q
Company
* Program stability: hotels remaining in the program year over year (2006-08 average)
Source: CWT Travel Management Institute
When determining whether to retain current
suppliers or select new ones, travel buyers
should also consider the following:
Current preferred properties that are
frequently used and clearly meet travelers’
needs.
Non-preferred hotels that are frequently
used, particularly if they meet the
US$10,000 spend threshold. Some
companies design their programs around
travelers’ current choices, but most try to
strike a balance between the hotels travelers
appear to prefer and those that offer greater
savings.
New entrants on the market or existing
properties that have developed their
offering through, for example, extensions or
refurbishment.
Considering primary and secondary
preferred properties
It can be useful to identify secondary preferred
properties that will only be proposed to travelers
by TMC counselors or the online booking tool if
primary hotels are unavailable. Such a system
enables companies to maximize volumes at key
hotels while ensuring travelers obtain preferred
rates as often as possible.
Hotels suggested by travelers or local
employees, which should be recorded
throughout the year.