Room for Savings: Optimizing Hotel Spend - Carlson

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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
Seven steps to optimize hotel spend > Negotiate effectively Figure 90: Volume-based discounts are impacted by market conditions Volume discount by room yield growth category 10 Decrease in RevPAR* Moderate increase in RevPAR High increase in RevPAR 8 Average: 7.6% Discount for doubled volumes (%) 6 4 2 Average: 3.1% Average: 2.6% 0 Berlin Tokyo Madrid Chicago Paris Sydney New York London Shanghai *RevPAR: Revenue per available room Source: CWT Travel Management Institute Based on negotiated rates for 2007 97
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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
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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 96 and 97: LRA is common in corporate contract
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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