Room for Savings: Optimizing Hotel Spend - Carlson

Last-room availability
A last-room availability (LRA) clause stipulates
that the hotel must offer the negotiated rate to
travelers even when only one room of the
negotiated type is available at the property. This
type of agreement is intended to protect
companies from paying increased rates during
periods of high demand, although hoteliers may
specify “black-out” dates when the negotiated
rate is unavailable. Approximately half of all
hotels offering LRA impose black-outs, which
involve 30-40 nights on average.
Rates negotiated with LRA are slightly higher than
non-LRA rates—typically by about 5-10 percent—
but they tend to lower the average rate paid over
the year because they enable companies to
obtain the negotiated rate more often, as shown
in Figures 85-86.
Figure 85: An LRA clause enables companies to receive the negotiated rate more often
Percentage of 7 companies’ room nights billed at the correct negotiated rate
at a preferred property in London in 2007
%
100
Without LRA
8 11
With LRA
5 2
80
50
60
78
40
92 89
95 98 100
20
50
22
0
AL AP E AB AQ AF H
Company
Room rate below or equal to negotiated rate
Room rate above negotiated rate
Source: CWT Travel Management Institute
Based on transaction data for 7 companies at one hotel in London in 2007 (2,211 room nights)