Case Study: Negotiating Rate Agreements

At this property, we used Spider’s Rate Plan and Company Analysis module to renegotiate 3 different accounts. By utilizing the “% of Room Nights on >= 95% occ” column, we identified that company A, company b, and company c contributed more than 50% of their room nights on nights when the hotel was already at or above 95% occupancy. This means that these accounts, while big producers, were also big displacers. Armed with a wish rate from the “wish rate” column, we were able to present the client with our findings, explain why we needed the higher rate, and were ultimately able to renegotiate at a higher rate for each account.

After renegotiating, room night production increased a combined 1512 room nights, which translated into a revenue increase of $191,332 dollars from their previous year’s performance! Without analytics from Spider, it is likely that the hotel would’ve simply kept their rates the same for fear of losing a high-volume account, or worse, lowered rates in an attempt to keep room night production high, not knowing that it was that very high volume on peak nights that was hurting them in the first place. When sales teams are armed with the right kind of analytics, it gives them the confidence to ‘stick to their guns’ and know what rate they really need, and at what point it’s ok to walk away from an agreement that no longer makes sense for the hotel.

Next time RFP season rolls around and it’s time to have the tough conversations with your LNR’s, would you rather have a sales team that says:

“Hello, Company A – While we are pleased with your room night production this year, we have discovered that 55% of your room nights are staying on nights where our hotel is already very busy and this is causing displacement of our other highly-valued accounts. In order to better accommodate both of our needs and to ensure that you continue receiving the same high quality of service you are used to, and that you maintain the Last Room Available status, we request that for the coming year our negotiated rate fall as near $125 as possible”

Or

 

“Hello, Company A – We are pleased with your room night production, is there anything we can do to ensure that your room night production remains strong?”

One of these e-mails will lead to a frank conversation about each sides’ needs, but the other opens the door to more displacement, and possibly a lower negotiated rate for the coming year.

Be sure that your team is ready to send the first e-mail by clicking here to request a demo and get ready for RFP season!

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