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Business Travel Travel Management

Business Travel Cost Savings: Part 2 – Vendor Negotiations

To review Part 1 where we discuss the value of having a business travel account management team and the potential savings that come as a result, click here.

Part two of my series on business travel cost savings touches on vendor negotiations.

There are several options when negotiating for your hotel, car, and air contracts. Depending on the depth of the negotiation, one or more of the following processes may be employed: RFP (Request for Proposal), RFQ (Request for Quotation), RFI (Request for Information), ITB (Invitation to Bid), and/or ITN (Invitation to Negotiate). For example, if you are simply seeking information, then use the RFI process. If you are wanting pricing only, then an RFQ would be appropriate, and so on.

Clients who partner with Christopherson Business Travel enjoy the benefit of having an account management team who will consult with their travel managers to determine the best avenues when negotiating on their behalf. During our consultation we use the following formula for negotiation success:

  1. Visualize
  2. Prepare
  3. Strategize
  4. Empathize
  5. Commit
  6. Follow-Up

Have you ever wondered how hotels look at the negotiating process? Here is a little insight.

Hotels are ultimately judged by shareholders on their return on capital, which translates into targets for Revenue per Available Room (RevPAR), the overall revenue divided by the total potential number of room-nights over the financial year. Hotels use a range of techniques and technologies to assist them in “yield management,” the process by which they try to optimize revenue and occupancy over different market segments, through seasonal fluctuations, while taking into account national, regional and local economic circumstances. Some hotels have very sophisticated systems and experience analysts; others do not. Some hotels always follow the advice of the yield managers; others have more discretion.
Christopherson Business Travel knows that travel vendor negotiations can, and should, differ considerably company to company depending on the type of organization, size, geographic scope, and the degree of influence on the vendor. Christopherson’s account managers consult with industry experts and employ sourcing methods to help our clients create and manage their entire travel supplier network. In addition to the traditional vendor categories like airlines, hotels and ground transportation, we also support sourcing efforts related to meeting services, online booking tools, and credit card programs.

To produce cost-consistency and reductions, Christopherson Business Travel consults with you and creates strategies to:

  • Achieve optimal savings, coverage, and service goals
  • Align supplier programs with overall organizational goals
  • Track economic and industry trends to help identify opportunities for improvement
  • Take advantage of best-practice tools and benchmark information

Typical components of a sourcing management engagement include:

  • Vendor Program Assessment & Savings Opportunity Analysis
  • RFP Process Management
  • Negotiation Support
  • Vendor Program Implementation

President John F. Kennedy said, in his 1961 inaugural address, “Let us never negotiate out of fear, but let us never fear to negotiate.”

Because of increasing costs and greater demands, Christopherson Business Travel’s Account Managers will meet with you to create the ultimate scenario to ensure that your company gains a profitable return on investment with regards to your travel program. For facts on actual ROI savings and additional information, contact us.

Categories
Business Travel

Business Travel Cost Savings: Part 1

The account management program is a valuable part of Christopherson Business Travel’s unique value proposition.

When Christopherson’s business development team is awarded a new account, they include the account management team to assist in consulting each new customer on the importance of a managed travel program.

The account managers, also known as the client consultative services team, have developed a program that will not only help companies better understand the value of managed travel, but also provide programs to show cost savings, cost avoidance, and return on investment. I will be emphasizing these particular points in this post. In parts 2 and 3 I will touch on other cost saving measures such as vendor negotiations, creating an effective travel policy, and compliance with that policy.

Business Travel Cost Savings, Cost Avoidance, & ROI

Travel spend is often listed as one of the highest costs of a corporation’s expense portfolio. It is our job to help those companies manage a travel program that provides savings to counter the costs of maintaining such a program. Here is an example of how we, together with our partner Travel GPA, can do that for you:

  • We find specific travel savings opportunities for your company by selecting Key Performance Indicators (KPIs) to measure your corporate travel program.
  • We run “what-if” scenarios to analyze the impact of behavioral changes.
  • We explore the impact of shifting full-size and higher rental car reservations to intermediate-size vehicles.
  • We analyze the impact of shifting more expensive hotel nights to alternative, less expensive properties.
  • We determine whether online booking options will create the savings you require.

Upon working through this analysis process, we then provide a summary recommendation to your company. Here is a sample summary recommendation provided to one company which resulted in potential savings of more than $94,000:

  1. Shift 113 airline ticket purchases to 7 days or more in advance of travel – Savings $14,873
  2. Accept lowest offered fare on 245 transactions – Savings $30,221
  3. Shift 614 agent-assisted transactions to online transactions – Savings $11,665
  4. Shift 59 hotel bookings to the Upscale tier – Savings $7,100
  5. Shift 101 car rental bookings to Intermediate-size – Savings $3,716
  6. Cut airline ticket exchanges by 108 transactions – Savings $26,829

Total potential savings – $94,404

Savings recommendations are based on shifting 50% of current booking practices to better performace areas of that particular program. Percentages can be modfied based on the goals set by the company.

 

For a full business travel program analysis please contact our client consulting services team. And if you have any questions or points you’d like me to address in future posts regarding corporate travel managed programs, please respond in the comments section below.