All that glitters in last available room rates is not gold

Although negotiated last available room (LRA) rates are a common practice in corporate-hotel agreements, a recent study by CWT Consultions Group reveals that there is a difference between perceived and actual value, so it is advisable to study each destination and each hotel category.

When companies have last available room rates (LRA), which are usually more expensive than non-last available room rates (NLRA), they have the right to purchase a room at the contracted price and term;The NLRA rates, are entitled to purchase a room at the contracted price and term, even if the property has only one room left in that category. For companies that do not have this clause, the price at which the last rooms are sold is at the hotel's discretion.

After analyzing 7.300 hotel bookings

- There is a5% jump between the perceived value of LRA rates and actual. This can translate into annual losses in the millions of dollars for companies due to a misperception of the value of LRA rates.

- 44% of hotels analyzed charge extra for including an LRA clause.

- There is a 12% chance that a traveler cannot benefit from the negotiated rate, even if it is LRA. In the case of NLRAs, this probability rises to 26%. 

- If a company has a choice of hotels in a given market, it may be more beneficial to negotiate a mix of LRA and NLRA rates. 

- Perceived value differs considerably between premium and economical hotels, as well as between cities.

As Eric Jongeling, director of Hotel Solutions at CWT Consultions Group, emphasizes, "Last available room rates have been the gold standard for hotel deals since the 1980s, and no one has ever really questioned that fact. However, we have now analyzed them in detail and it seems that the gold has lost some of its luster”.

 

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