August 27, 2014

Negotiated rates often offer better hotel value than dynamic pricing, says CWT


Negotiated flat rates still provide better value than dynamic pricing agreements at high-volume hotels, though dynamic pricing does offer savings when properly applied, according to research by CWT Solutions Group. On average, the negotiated rates provided 22.7 percent savings off BAR, though that figure varied widely by market, hotel type and program volume.

The group, Carlson Wagonlit Travel's consulting division, tracked best available rates at about 6,400 hotels from January to April and compared them with 134 clients' negotiated rates. On average, the negotiated rates provided 22.7 percent savings off BAR, though that figure varied widely by market, hotel type and program volume. Negotiated rates in such markets as Houston, Atlanta and Toronto on average saved more than 30 percent off BAR, while the average negotiated rate in New York was actually higher than BAR, for example.

"In high-occupancy markets, we begin to see how a dynamic agreement could be more beneficial to a corporate customer," according to the report. "In these markets where hotels don't need to offer significant discounts to attract business, a 10-percent-to-15-percent dynamic pricing agreement may very well be more beneficial than flat corporate negotiated rates."

At the same time, hotels that do not discount heavily on corporate negotiated rates are not likely to offer large dynamic discounts, either, the report continued.

The group's research also determined negotiated rates tended to offer more savings in higher-tier properties. The average negotiated rate at deluxe hotels was 39 percent below BAR, while at economy hotels it was 17 percent below BAR.

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