cheap dr martens Negotiated Rates Often Better Hotel Value Than Dynamic Pricing
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.
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.
In terms of volume, the average negotiated discount unsurprisingly was higher for companies offering more room nights. The average discount off BAR for companies offering more than 500 room nights was 29.5 percent; for companies offering 100 nights or fewer, the average discount was 21.3 percent, according to the report.
The report said other considerations are required when evaluating dynamic pricing agreements. Such amenities as breakfast and Internet access typically are not included in dynamic pricing or chainwide agreements, which could further lower the savings threshold. Programs with many travelers who book at the last minute also are vulnerable to “yield management tactics” that could hinder dynamic pricing savings, according to the report. Dynamic pricing agreements can offer long term savings in terms of time, however, since hotels often are willing to offer them on a multiyear basis.
“Travel buyers should continue to place most focus on corporate negotiated rates, as the greatest benefit is currently still here,” the report concluded. “However, consider dynamic agreements as a beneficial program supplement in low volume markets or at hotels with few room nights,
particularly in the [economy] category and in seller’s markets with low volume.”