Have Companies Been Overspending on Last Room Availability Rates?

Carlson Wagonlit Travel’s CWT Solutions Group has published research that shows a five percent gap between the perceived and actual value of last room availability rates, which means companies overspend by up to five percent of their hotel cost on last room availability rates. For a company that spends US$20 million with their preferred hotels, that could amount to US$1 million.

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 NLRA rates, it’s at the discretion of the hotel as to what price they sell the last rooms.

The key findings of the research, which analysed 7,300 hotel bookings in 2016 across 97 countries, revealed that the five percent gap between the perceived and actual value of LRAs can translate into millions lost each year for corporations on misperception of the value of LRAs. In addition, 44 percent of hotels charge a premium for including an LRA clause; 12 percent chance that the traveller will not be able to stay at their contracted rate, even with an LRA rate; while multiple hotels in a target market negate the need for an LRA clause.

“Last Room Availability rates have been the gold standard for hotel agreements since the 1980s, and no one has ever really questioned that,” says Eric Jongeling, director, Hotel Solutions. “But we have now looked into this in great detail and it seems like the gold has lost some of its shine. Our research shows between 5 % and 11 percent differences in some markets so travel managers should bear this in mind when negotiating global rates.”

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The Art of Business Travel is Asia-Pacific's leading portal for corporate travel news and views. We cover everything from airline routes and airport developments, to new hotels, meeting venues, loyalty schemes, and entertaining.