Room for Savings: Optimizing Hotel Spend - Carlson

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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.
Seven steps to optimize hotel spend > Optimize the preferred hotel program Ensuring properties meet security standards Ensuring travelers’ safety and security has become a top priority for travel managers, who are increasingly aware of the need to mitigate the risks associated with business travel. One key component of any risk management program is checking that preferred suppliers meet the requisite security standards. To this end, travel managers should ideally work with security specialists when designing their hotel program, particularly for high-risk destinations. Ongoing review A preferred hotel program needs to be reviewed regularly to ensure it continues to meet needs. Once a year is a basic minimum, but some companies review their programs more often. Extending coverage to meet demand and concentrating spend on fewer properties to maximize volume discounts, are the main trends in terms of program evolution, as shown in Figure 70. Figure 70: Many companies plan to increase program coverage and/or concentrate spend on fewer properties Increase Decrease Source: CWT Travel Management Institute Based on a survey of travel managers (87 responses) 77
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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
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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 76 and 77: Deciding between existing preferred
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
Page 126 and 127: 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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Room for Savings: Optimizing Hotel Spend - Carlson

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