Companies overspend on last room availability rates: CWT Solution

There’s an approximate five per cent gap between perceived and actual value of last room availability (LRA) rates, according to an analysis of over 7.3 million bookings across 97 countries by CWT Solutions Group, the consulting division of Carlson Wagonlit Travel.

When companies have negotiated LRA 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, it’s at the discretion of the hotel as to what price they sell the last rooms.

“LRA 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 five and 11 per cent differences in some markets so travel managers should bear this in mind when negotiating global rates.”

Some 44 per cent of hotels charge a premium for including an LRA clause, although there’s a 12 per cent chance the traveller will not be able to stay at the contracted rate even with an LRA agreement in place, the study further revealed.

CWT Solutions Group opined that the availability of multiple hotels in a target market negates the need for an LRA clause. Furthermore, the perceived value differs considerably between premium and economy hotels and between cities.

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