Research from CWT Solutions Group, the consulting division of
Carlson Wagonlit Travel, shows a 5%
gap between the perceived and actual value of Last Room
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.
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.
“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,”
said 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
The key findings of the research, which analyzed
7,300 hotel bookings in 2016 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.
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