Room for Savings: Optimizing Hotel Spend - Carlson

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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)
Seven steps to optimize hotel spend > Negotiate effectively Figure 86: Companies pay a lower average room rate with an LRA agreement, even if the negotiated rate tends to be higher than non-LRA rates Average room rates paid by 2 companies with similar volumes at the same hotel in Paris in 2007 Company AL (non-LRA) Average room rate: US$215 (+8.3% vs. negotiated rate) Company H (LRA) Average room rate: US$200 (-2.8% vs. negotiated rate) 215 200 274 Average room rate (US$) 174 199 249 178 206 ARR < negotiated rate ARR = negotiated rate ARR > negotiated rate Source: CWT Travel Management Institute Based on 2007 transaction data for two companies with similar room night volumes 93
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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
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Hotel category: not the most import
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“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 90 and 91: Despite this reticence, 40 percent
Page 92 and 93: Figure 83: Another company’s ARR
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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Room for Savings: Optimizing Hotel Spend - Carlson

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