Room for Savings: Optimizing Hotel Spend - Carlson

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
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