NBTA Offers Industry Standard Definition Of LRA
<B>NBTA Offers Industry Standard Definition Of LRA</B>
By Bruce Serlen
Trying to clarify one of the most controversial aspects of hotel rate negotiations today, the National Business Travel Association has proposed a standard definition of last room availability.
"We have produced a definition that we hope fully encompasses the problem of LRA," said Wendy Nathan, a long-time member of NBTA's hotel committee, who last month was named its chairwoman. "This is a stepping stone created to enhance the communication and understanding between travel managers and hotel suppliers."
LRA has become an especially contentious issue in gateway cities, where hotels are enjoying very high occupancies midweek (BTN, Oct. 2). A standard definition of LRA would put both travel managers and hotel suppliers on the same page.
The proposed definition states: "LRA is an agreement between the company and hotel(s), whereby all company negotiated rates associated with a room category are available at the negotiated rate up to and including the last room to be sold in that room category. This inventory must be available through all distribution channels used by the hotel(s) to sell their corporate and rack rates. This definition does not address block space agreements or minimum stay restrictions."
The NBTA hotel committee's next challenge is to develop a plan to ensure that the definition is adopted as an industry standard, according to Nathan, who also is travel services manager for Johnson & Johnson. NBTA president Cyndi Perper is confident that a common definition can be adopted. "Following the committee's success with building industry support for an electronic version of a standard RFP form, we know the definition will soon be accepted industrywide," she said.
Underlying the LRA issue is a struggle between travel managers and the hotels over the limited availability in such key cities as New York, San Francisco, Chicago and Los Angeles, where demand and occupancy are at historic highs. LRA has become a flash point with buyers eager to have it, often at a premium in rates, because they want assurances they'll have the coverage they need in those cities. On the other hand, suppliers are hesitant to provide LRA because they believe they'll be successful in getting higher rates for the rooms if they keep the inventory open.
On an individual property level, LRA is seen as part of the hotel's partnership with the account. "Before we negotiate LRA, we work closely with customers to help determine when they'll be coming, when they'll actually want those room nights," said Kip Horton, area director of sales and marketing for Westin Hotels & Resorts in Atlanta. "The last thing we want, after all, is to turn guests away. The downside of doing this repeatedly, of course, is that they'll find another place to stay."
Not addressed by the proposed NBTA definition are minimum length of stay requirements. Many buyers argued that the hotels build these restrictions into the GDS without their knowledge. This then makes it more difficult for their travelers to book rooms, even when the buyer has negotiated LRA. Hotels counter that their yield management practices always have required them to build minimum length of stay provisions into the system, regardless of LRA.