Room for Savings: Optimizing Hotel Spend - Carlson

Benchmark rates. Companies commonly
make year-over-year rate comparisons to
evaluate deals offered by existing preferred
hotels. In addition, travel management
companies can provide information on
average rates negotiated and paid by clients
with similar volumes at different properties
in the relevant markets.
Consolidate room night volumes.
Companies with larger volumes of room
nights can expect to receive better discounts.
This is illustrated in Figure 89, where a
company with twice the room nights of
another receives an additional 6 percent
discount at a hotel in Madrid and an
additional 3 percent at another property in
New York. In cities where occupancy is falling,
discounts can rise to almost 10 percent
whenever volumes are doubled. In markets
where demand remains high, the same
increase in volume may produce additional
discounts of only 2-3 percent. (Figure 90).
Figure 89: Companies obtain better discounts when they have larger room night volumes
at a property
Negotiated room rate by volume
300
A hotel in Madrid
400
-3%
A hotel in New York
Negotiated
room rate (US$)
200
-6%
300
200
100
Doubling volume leads to
a further discount of 6%
100
Doubling volume leads to
a further discount of 3%
0
0
0 1,000 2,000 3,000 0 1,000 2,000 3,000
Annual room nights
Annual room nights
Source: CWT Travel Management Institute
Based on negotiated rates for 2007