Case Study: Saving $1m on corporate hotel spend
Saving $1m on corporate hotel spend
What was achieved:
Our client is an Infrastructure Services Business who in 2017 booked 68,500 room nights worth $11.1m in 110 hotels across two countries, with compliance at 70%. A year later this increased to 80% with significant total savings across in 2018 of $912k.
What we recommended:
Working with 4th Dimension, FCM’s business travel consulting specialists, three specific proposals for change were suggested based on the client’s objectives of reducing hotel expenditure by a minimum $250k, expanding chain agreements to maximise coverage, appointing new project locations into suburban and remote regional locations, securing additional ancillary inclusions and discounts without increasing accommodation rates and improving program compliance and traveller satisfaction through a choice of different hotels for a diverse blue and white collar employee base.
A realigned hotel program to develop a new strategy that met the changing needs of project locations, diverse traveller requirements, improved duty of care, compliance and rate reductions.
Outsourcing hotel RFP and program management to take in resource time savings, expert industry knowledge, an efficient e-sourcing platform and global benchmarking.
An audit of global rates to ensure all negotiated rooms were loaded correctly with inclusions and their conditions audited so no money was left on the table.
How the results were delivered:
The tactics included negotiating rates lower than ARR industry forecasts for 2018 across major locations. This resulted in +11% cost avoidance savings annually.
Contracted hotels to cater for a broad range of travellers were also introduced meeting the client’s aim of increasing traveller satisfaction through a choice of different hotels for a diverse employee base of blue and white collar teams.
Negotiating complimentary and discounted ancillary services found savings of $130k while six chain agreements were introduced too with savings of 10-15% off BAR with anticipated savings of $275k to the business.
By outsourcing to 4D its hotel RFP and category management plan, there was a direct saving of $48K to the procurement team via resource, technology and benchmarking. 4D also forecasted increased program compliance of +10% and an increase of +20% in bookings consolidation through the TMC.