Last Room Availability

Dynamic pricing is a common strategy in the hospitality world. It’s a sure way to get more revenue for your rooms, adjusting prices in real time based on supply, demand and any relevant external factors (like seasonality or special events).

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While it’s a savvy way to generate more profitable bookings, there are situations where it may not be the best strategy. As a hotelier, you may want to enter into a rate agreement with certain groups or travel agencies to guarantee they’re able to book even during the busiest of times. In hospitality, that’s called last room availability.

What Does Last Room Availability Mean?

Last room availability (also known as LRA) refers to the contract that guarantees a pre-negotiated rate is available to specific guests, even if there is only one room available to book. This ensures that a hotel honors the agreed-upon rate regardless of occupancy levels or advanced notice.

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Not only does this guarantee that a property can’t raise rates as inventory becomes more scarce, but it also ensures that there will always be a room available for a specific party when they’d like to book.

Why Do Hotels Use LRA Agreements?

As you may have gathered, last room availability is extremely beneficial to the party entering into the agreement with the hotel. The guarantee of availability and set pricing makes booking for preferred guests a breeze, while hoteliers may feel constrained when they can’t raise prices.

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However, hotels also benefit from LRA contracts. The parties who agree to them pay a premium for the privilege: 44% of hotels charge for the perk. So while the room itself may be able to fetch a higher reservation price on the open market, an LRA hotel gets guaranteed revenue whether the party in question books or not.

Pros and Cons of Last Room Availability

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Pros of Last Room Availability:

 
•    Guaranteed availability: Travelers booking under LRA agreements can reserve rooms at the negotiated rate as long as it’s available, even during high-demand periods.  
 
•    Consistent pricing: Travel companies benefit from predictable rates, helping with their budgeting and cost control.  
 
•    Stronger relationships: An LRA builds a closer relationship between hotels and industry clients.  
 
•    Repeat business: Hotels that offer LRA contracts attract reliable corporate clients who book rooms regularly.  
 
•    Competitive advantage: Offering LRA options can make a hotel more attractive to corporate travelers compared to competitors that don’t offer it.  

Cons of Last Room Availability

 
•    Limited revenue potential: Hotels aren’t able to increase prices when inventory is low, even during peak demand periods.  
 
•    Restricted yield management: LRA agreements prevent hotels from maximizing revenue through dynamic pricing strategies.  
 
•    Challenged inventory allocation: When hotels are obligated to honor LRA rates, they may not be able to allocate rooms to higher-paying guests.  
 
•    Varied pricing options: While LRA ensures availability, the negotiated rate might not always be the lowest available, especially during off-peak seasons when hotels offer discounts.  
 
•    Limited property options: Not all hotels offer LRA, meaning corporate travelers may not always find participating properties in their preferred locations.  

What About Non-LRA Contracts?

A non-LRA contract (NLRA) serves as a happy medium between having no agreement in place and the restrictions of a full LRA. These agreements are more flexible—they still provide preferential rates to the participating parties but also allow the hotel to raise prices based on inventory or peak booking. It’s generally cheaper for the company entering into the agreement, but offers fewer perks as a result.

LRA Contracts and the Guest Experience

For hotels considering an LRA policy, there are careful considerations to make regarding the guest experience. Given the preferred rate, it provides a better experience for the specific pool of guests but may result in the hotel turning away potential business due to the agreement.

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If the guest experience is on your mind, we can help you elevate it! Book a demo with us today to learn more about our Guest Journey Platform.