Biggest gains form traveller compliance
Corporates can save up to 21% on their hotel spend according to new research by the CWT Travel Management Institute.
In a new paper Room for Savings: Optimizing Hotel Spend, the Institute said the main savings were through compliance with travellers using preferred hotels and bookings channels.
But there were also savings to be made through consolidating data, an effective hotel programme and performance tracking.
Optimising hotel spend ranked second in priority after improving compliance according to 59% of the 178 travel managers polled worldwide by CWT.
But Christophe Renard, vp of CWT Business Intelligence, warned that the complexity of the hotel market made makings savings "particularly difficult" without an organised approach.
He said that research by CWT found that hotel spend was about 40% of total travel budget but that many traveller managers both underestimated and undermanaged it.
While worldwide, hotel spend was 39% of the budget, in both North America and EMEA it was 40%.
Mr Renard said the seven key areas where savings could be made were:
- consolidating of data: comprehensive data that provides a breakdown of room rates as well as additional expenses is needed
- understanding traveller needs and behaviour: travellers rate a hotel's proximity to their place of business higher than its star rating
- Designing an effective policy: a clear, comprehensive policy will drive compliance
- Optimising the preferred hotel programme: companies need a preferred hotel agreement when spend is $10,000 at a particular property
- Negotiating effectively: Individual, property-level agreements tend to generate greater savings than chain-wide deals
- Improving compliance: policy mandates must be communicated, travellers and travel arrangers must have access to the list of preferred hotels and to user-friendly booking tools.
- Tracking performance: several performance indicators must be tracked in terms of programme design, sourcing, traveller compliance, and hotelier performance.
Savings of 9% could be made through compliance, of 8% through the policy and programme, 6% through negotiations and1% through tracking.
Mr Renard said that taking out 3% for overlap, this amounted to 21%.
He said companies which combined data from their TMC and credit card companies were likely to get 100% information on their hotel spend.
Mandating policy also led to a higher level of compliance. Some mandating companies achieved 77% compliance on their hotel policy while for those which did, the level dropped to 47%.
But CWT also found that 88% of companies were ready to let travellers book outside policy if the rate was cheaper.
Loyalty to a hotel chain also brought a lower rate. Companies which stayed with 80% of their preferred hotels could more easily "contain" rate rises.
One company which retained 93% of its hotel suppliers saw rates go up by 15% while one that stayed with 74% saw its rates rise by 25%.
Mr Renard said there are more than 250,000 chain hotels and independent properties used by corporate travellers worldwide where pricing was complex and rates could change daily.
There were also different bookings tools and varying standard t fro rating hotels.
But he added: "Nonetheless, companies can work around this complexity and effectively manage their hotel spend by designing and enforcing a programme that responds to travellers' needs, negotiating skilfully with preferred hotels, and continuously tracking performance."