CWT says many companies overspend by up to 5% of their hotel cost on Last Room Availability rates
5 July, 2017
CWT Solutions Group, the consulting division of Carlson Wagonlit Travel, today published research that shows a 5% gap between the perceived and actual value of Last Room Availability rates. For a company that spends US$ 20 million with their preferred hotels, that could amount to US $1 million.
“Last Room Availability rates have been the gold standard for hotel agreements since the 1980s, and no one has ever really questioned that. But we have now looked into this in great detail and it seems like the gold has lost some of its shine.” says Eric Jongeling, Director, Hotel Solutions. “Our research shows between 5% and 11% differences in some markets so travel managers should bear this in mind when negotiating global rates.”
The key findings of the research, which analyzed 7,300 2016 hotel bookings across 97 countries, revealed that:
There is a 5% gap between perceived and actual value of LRAs. This can translate into millions lost each year for corporations on misperception of the value of LRAs.
44% of hotels charge a premium for including an LRA clause.
12% chance that the traveler will not be able to stay at their contracted rate - even with an LRA rate.
Multiple hotels in a target market negates the need for an LRA clause.
The perceived value differs considerably between premium and economy hotels and between cities.
Companies and governments rely on us to keep their people connected. We provide their travelers with a consumer-grade travel experience, combining innovative technology with our vast experience. Every day we look after enough travelers to fill almost 200 Boeing 747s and around 100,000 hotel rooms, and handle 95 corporate events. We have more than 18,000 people in nearly 150 countries, and in 2016 posted a total transaction volume of US$ 23 billion.
When companies have negotiated Last Room Availability (LRA) rates, which are often higher than Non Last Room Availability (NLRA) rates, they have the right to buy a room at their contracted terms and prices even if the hotel only has one room left in that category.
For companies without a negotiated LRA clause, and only Non Last Room Available rates, it’s at the discretion of the hotel as to what price they sell the last rooms.