Room for Savings: Optimizing Hotel Spend - Carlson

5. Negotiate effectively
Negotiations may seem particularly
challenging when a preferred hotel program
can include hundreds of properties. To set the
right objectives and obtain competitive deals,
travel managers can implement a number of
best practices involving the type of deal
(property or chain-wide, flat-rate or dynamic
pricing, with or without last-room availability),
the negotiating approach and hotel selection
criteria.
Property or chain-wide deals?
Property-level negotiations generally bring
the largest savings. They should be
considered for any individual hotel (i.e., an
independent hotel or a property within a
chain) that accounts for at least US$10,000
in spend or 100 room nights, the typical
threshold hotels set for this kind of deal. A
large number of properties can fall into this
category. As an indication, a third of surveyed
companies sign preferred property deals with
more than 100 hotels, while 2 percent sign
more than 900 such deals (Figure 72). In
fact, some large CWT clients have propertylevel
deals with several thousand hotels.
Most companies combine two main types of
deals: property-level deals for hotels that account
for their largest spend and chain-wide
agreements for other properties.
Figure 72: 31% of companies have more than 100 preferred property deals
Number of preferred properties in hotel programs
100
Number of
hotels
Average hotel
spend (US$M)
7
Number of
hotels
>900
Average hotel
spend (US$M)
117
80
31
>100
28
18
601-900
43
Companies
(%)
60
40
12
25
51-100
21-50
8
7
30
201-600
26
20
32
1-20
2
45
101-200
12
0
Source: CWT Travel Management Institute
Based on a survey of travel managers (85 responses)