Room for Savings: Optimizing Hotel Spend - Carlson

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Despite this reticence, 40 percent of companies expect to increase the number of dynamic pricing deals in their portfolio, compared with 56 percent who say it should remain roughly the same, and only 4 percent who expect a reduction. According to CWT analyses, dynamic pricing agreements can perform well under the right conditions. Notably, one company that had a dynamic pricing deal with 12 properties in a chain had, in the third year, an annual increase in the average rate paid that was 8 points lower than the corporate market average. In previous years, the company’s ARR had increased at the same rate as the market or one point less (Figure 81). Moreover, an analysis of rates paid at one hotel in New York shows that the company outperformed other corporations that had flatrate agreements (Figure 82). Working closely with hoteliers to monitor rates helped the company achieve these results. In contrast, another company using dynamic pricing saw its average rate rise higher than the market, mainly due to losses at three properties that cancelled out savings achieved at six other hotels. Performance at two of those three hotels was particularly weak compared to previously excellent negotiated flat rates (Figures 83-84). Figure 81: One company’s ARR evolved favorably compared to the market average thanks to a dynamic pricing deal Evolution of average room rate indexed to 2005 rate at 12 U.S. hotels within a chain Company AF switched to a dynamic pricing agreement 100 100 111 111 117 116 121 113 Indexed rate increase between 2005 and 2008: - Company AF: +13% - All clients: +21% 2005 2006 2007 2008 (Jan.-Aug.) All CWT clients including those with flat-rate deals Company AF Source: CWT Travel Management Institute Based on transaction data (66,540 room nights for company AF and 268,258 room nights for all CWT clients)
Seven steps to optimize hotel spend > Negotiate effectively Figure 82: An analysis of rates paid at one hotel in New York shows the company outperformed other corporations that had flat-rate agreements Evolution of average room rate indexed to 2005 rate at a hotel in New York 150 Company AF switched to a dynamic pricing agreement 122 126 120 125 130 121 100 100 100 100 109 107 106 Indexed rate (2005 rate = 100) 50 0 2005 2006 2007 2008 All clients 5 clients with flat rate deals Company AF Source: CWT Travel Management Institute Based on transaction data (121,000 room nights) 89
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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
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2. Twenty-one percent savings throu
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Many organizations have yet to opti
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GDS auditing It is important to ens
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1. Consolidate data Travel managers
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Figure 27: Combined TMC and credit
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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 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 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
Page 128 and 129: GDS rate squatting. Regular GDS aud
Page 130 and 131: Rate audits pay A rate audit conduc
Page 132 and 133: Tracking traveler compliance Compan
Page 134 and 135: SUMMARY Tracking performance: Compa
Page 136 and 137: Appendices Glossary The following i
Page 138: For more information about how CWT
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