INSIGHT
What to know before you negotiate
To achieve significant savings in your travel program, negotiating competitive airline and hotel accommodation contracts with suppliers is key. It’s important to approach these strategic negotiations armed with all the information you need to achieve a tactical outcome.
Know your organization’s travel behaviors
Before you contact hotel and airline suppliers, it’s essential that you have:
- accurate and current information on your organization’s travel patterns, to help you assess the best suppliers
- rich reporting and data indicating your travel volumes and travel spend
- a thorough understanding of your travelers, their preferences and what is important to them
- consider consolidating your travel with a smaller number of preferred suppliers in return for loyalty bonuses
- knowledge of whether your company travel is consistent and predictable or ad hoc
- an accurate picture of your company culture - when the culture is strong employees relate to the company’s values and tend to book within your supplier policies
- an understanding of how well you can control your travelers to book according to your supplier strategy. Even the best supplier strategy won’t work it your travelers don’t make in policy bookings
How can your travel management company help?
Your travel management company can offer a big picture overview of your travel program, while also providing meaningful reporting to help identify your organization’s travel volumes and patterns. Also having an up-to-date future travel forecast, for the coming contract period, will give your organization’s negotiations added leverage.
For example, reporting may reveal that your annual travel patterns are generally consistent from one year to the next so you can then target specific suppliers which meet those needs. However, some industries naturally have more ad hoc travel behavior.
A professional account manager will also have their ear to the ground so they can also provide expert insights into the latest travel industry trends, expected future price rises and supplier market intelligence. Starting your negotiations with this knowledge will help you gain the upper hand. Ultimately, the best outcome is to build a solid strategic partnership with your suppliers, built on mutual respect and trust.
When to negotiate?
While there used to be a preferred time of year to embark on hotel contract negotiations, that’s no longer the case. With innovations, digital disruptors and the more fluid nature of travel, negotiations can take place at any time of the year.
With so many new accommodation suppliers emerging and seasonal market changes, hotel contracts tend to be 12-month terms to take advantage of constant market changes. In contrast, airline contracts are generally contracted for a longer term of two to three years.
Need Help With Your Contract Negotiation?
4th Dimension Business Travel Consulting Can Help
FCM’s business travel consulting division, 4th Dimension (4D), provides procurement solutions and business advisory services to help companies generate more value from their corporate travel spend. Working collaboratively with clients they also assist with developing tailored sourcing strategies to reduce costs, improve supplier value, effectively benchmark, forecast and analyze hotel, airline and car hire services.