Strategic Solutions to Reduce Local Authority Temporary Accommodation Spend

How Local Authorities can reduce Temporary Accommodation Spend

In the face of rising homelessness, councils across the country are grappling with escalating costs for temporary accommodation. While service teams are admirably managing this crisis day-to-day, there's an urgent need to find strategic solutions that minimise this rising temporary accommodation cost. This piece explores two key drivers of excessive hotel costs and offers actionable strategies for local authority leaders to implement.

The Hidden Drivers of High Temporary Accommodation Spend

We've spoken to temporary housing teams across the UK & analyzed rates at 18,594 hotels. Our analysis reveals two primary factors contributing to inflated hotel expenses:

1. Limited Supply Pool
2. Failure to Leverage Volume

Driver 1: Limited Supply Pool

Most local authorities rely on a small number of hotels (typically 2-4) for temporary accommodation. This limited pool is often a result of resource constraints; vetting hotels, negotiating rates, and establishing booking channels require time and personnel that many councils simply don't have.

This approach creates a market dynamic of limited supply and growing demand, inevitably driving prices & spend upwards. Hotel sales managers, keenly aware of this situation, can capitalize on the council's limited options.

Driver 2: Failure to Leverage Volume

In the world of procurement, volume is king. The more you buy, the better rates you should secure. However, many local authorities are missing out on this fundamental principle of purchasing.

Private sector companies with similar spending levels routinely negotiate substantial rebates and preferential rates. Local authorities, despite their significant and consistent hotel spend, often fail to leverage their purchasing power effectively.

Strategic Recommendations

To address these issues and significantly reduce hotel spend, local authority leaders should consider the following strategies:

1. Expand the Supply Pool

• Actively recruit more hotels to your approved list
• Streamline the vetting and onboarding process for new hotels
• Review and, where possible, relax geographical or other constraints on hotel selection

2. Leverage Purchasing Power

• Negotiate volume-based rates and rebates with hotel partners
• Consider partnerships or using 3rd parties to increase bargaining power
• Implement a structured approach to regular rate reviews and negotiations

By addressing these two key drivers, local authorities can expect between a 10 and 20% nightly rate saving on hotels. This not only represents significant savings for taxpayers but also frees up resources that can be redirected to more sustainable, long-term solutions to homelessness.

We at Staze specialise in helping local authorities reduce temporary accommodation spend by addressing these two key drivers. Send an email to info@staze.com and we’ll assess the savings possible in your hotel spend.