The number one question I'm asked by clients about travel management is "how do others do it?". It's a great question as it shows a thirst for knowledge, a strategic intent to understand life outside one's own business and the understanding that someone has (nearly) always walked the path before you.
This is particularly true of hotel sourcing strategies. Should you go to RFP? Can you reverse auction rates? Are dynamic rates beneficial or risky? The list goes on. I believe that different buying styles are emerging; you could even call them 'sourcing personalities'. Here's what we have seen through the 2014 season in preparation for 2015 hotel programmes, can you recognise yourself in here?
What's the underlying and common success factor of each of the strategies?
Three key factors: data, knowledge and control.
The clients with the most robust programmes know their hotel data inside out and back to front. They have consolidated TMC, hotelier, card and expense data in one place so they have a deep data repository but they are able to hone in on priority factors deliver an executive summary to focus on what matters most.
Knowledge is king with hotel spend. Knowing real-time rate trending, what other companies are paying and what's happening in the market are all key. But the defining difference is in understanding where the source of power sits within the hotel value chain. How does the hotel or chain make its pricing decision? It's certainly not just down to volume but a whole series of factors including historical performance, total spend including F&B/meetings, loyalty etc so the hotelier can accurately forecast the total revenue your hotel spend will bring. It is important to understand these factors in order to be able to respond to this within the negotiation strategy.
Finally, control. In a well-managed programme with high percentage visibility of spend, control can enhance a company's ability to shift hotel volume. The strongest position within any strategy is the ability to 'stop-sell' a hotel overnight and start shifting to other hotels. But like any good sales person, the 'selling buyer' can't just say "yes I can do that", they need to demonstrate how they can do it.
Summary
This is a high-level view of some very detailed strategies that in some of our larger client programmes have taken months of analysis and market understanding to build.
No one strategy will work for every company, which is what makes the procurement of travel and buying strategies so interesting.
The key is in designing sourcing approach that best fits your company strategy and the marketplace within which it is operating.
Another consideration is the operational and process impact. Some of these strategies have created downstream difficulties that are workable but need some attention.
Hopefully this column has given you some sense of 'how others do it' to answer the question my team is so often asked.
- Submitted during Caroline's tenure as VP consulting at Amercan Express Global Business Travel