Room for Savings: Optimizing Hotel Spend - Carlson

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LRA is common in corporate contracts, although more difficult to obtain in recent years (Figure 87). This trend may be reversed as hotels negotiate harder to maintain corporate business during the economic downturn. Figure 87: LRA has become more difficult to obtain in recent years % 100 Proportion of preferred hotel agreements offering LRA for 3 companies 2006 vs. 2008 6 8 9 18 13 28 80 60 Non-LRA LRA 40 94 92 91 82 87 72 20 0 2006 2008 2006 2008 2006 2008 Company B Company AJ Company H Source: CWT Travel Management Institute Based on case studies of 3 companies
Seven steps to optimize hotel spend > Negotiate effectively How best to negotiate? The rates companies obtain are strongly linked to the room night volumes they present to hoteliers, but other factors, ranging from spend on amenities to stay patterns, can be leveraged in negotiations. CWT recommends the following best practices: Know the local market. Buyers get the best deals when they have a keen knowledge of the hotel market in a particular city, including general price trends, the negotiating approach used by key hotels, and the evolving offering. For example, the buyer should know whether hotel rooms are in short supply, which suitable hotels are on offer, and how rates are evolving. This kind of knowledge is essential for selecting the right properties, setting the right negotiation targets, and knowing when to accept or reject a proposal. For example, in a buyers’ market, it may be possible to obtain not only substantial rate decreases but complementary amenities. Typical ways in which local market dynamics can impact rates and negotiating targets are shown in Figure 88. Figure 88: Local market knowledge helps buyers set the right negotiating targets Evolution of negotiated rates/occupancy in key gateway cities December 2008 vs. December 2007 Moderate rate increases are likely - Refuse significant rate increases - A held rate is a good result New York Hong Kong London Dubai Sydney 85% 80% Paris Major rate increases are likely - A limited rate increase is a good result Cairo 75% Los Angeles Berlin 70% Buenos Aires Cape Town Change in occupancy Dec. 08 vs. Dec. 07 (%) Rome Toronto 65% -15 -10 -5 0 5 10 15 Madrid Rio de Janeiro Mexico 60% Rate decreases are likely Beijing - Refuse rate increases - A held or decreased rate is a good result 55% 50% Occupancy (December 2008) Moderate rate increases are expected - A held rate is a good result Sources: Smith Travel Research & The Bench, CWT Hotel Solutions Group, CWT Travel Management Institute 95
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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
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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 94 and 95: Last-room availability A last-room
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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