Many travel managers regularly source hotel rates for transient travel, and although the market and the industry have evolved and matured, this particular process has hardly changed, making it a tedious and time-consuming task.
However, this doesn't mean we should trudge blindly down the same path that we trod in the past. You may well have considered, and dismissed, other options in the past, but just because something didn't work before doesn't mean you shouldn't take a few minutes to see if it might work now. The market is not stagnant and organisations are open to change.
There are several options for alternative approaches to the negotiation you may have considered and rejected before, but are worth revisiting as times and businesses change.
1. Evergreen contracts
The contracting process is incredibly time-consuming for both corporate travel managers and hotels. There are usually a number of properties that you must have in the programme; both sides know this. So, do you need to go through the RFP process every year? Evergreen contracts save both parties time and effort by focusing on the rate negotiations whilst other static information and any pre-agreed terms and conditions simply roll forward.
2. Hybrid contracts (chain deals / contracted plus Best Available Room rates)
If you have high-volume business in a low-demand market, you are in a great position to dictate the conversation. However, if the opposite is true, the suppliers are going to be in the driving seat.
When negotiating this type of contract, you need to ask yourself if you are playing to your strengths. Is it worth spending a considerable amount of time and effort negotiating from a position of weakness? Could you instead negotiate to secure a discount off the BAR (Best Available Rate) or secure a chain-wide agreement of discounts to mop up the smaller volumes which nonetheless need to be controlled and managed?
3. Alternative providers
Increasingly more business travellers have stays that are longer than three nights. In this instance, securing mid to long-term business stay contracts with alternative providers could be beneficial.
Know your business. If you have longer stay requirements, understand how you could potentially work with apartment service providers and hotels as many now offer impressive apartment services programmes for the non-conventional business stay.
4. Longer term contracts — two-year deals
So much time and resources are committed (on both sides) to the annual RFP process that there has to be a benefit in considering a longer contract period. Managed properly with openness and integrity on both sides — there can be opportunity to discuss and agree on pricing for a two-year term (maybe longer) and cement the partnership by focusing the energy and effort of the RFP process into developing and maximising the business relationship.
Mutually beneficial to both parties, longer contract terms allow corporate travel managers to save time and manage budgets and provide the property with a bedrock of 'known' business.
5. Allocation to manage Last Room Availability (LRA) / Non-Last Room Availability (NLRA)
LRA is something everyone wants to negotiate on, but it is still not well understood. In simplest terms, LRA means that if a hotel has a room for sale in the contracted room category, anyone with LRA has the right to book it at their contracted rate. An NLRA rate is available at the discretion of the hotel and this rate can increase as rooms are filled.
When it comes to negotiating this type of process, corporate travel managers need know what they are asking for versus what is being offered. Always check, for example, to see exactly what proportion of hotel inventory might be available with LRA — will this cover your needs? If you have a well-managed booking process, can you put in place an agreed regular allocation (allotment) of rooms for certain nights at your contracted rate? Once the allocation is used, additional rooms will be at the NLRA rate. The hotel is then not exposed to an unlimited volume and can be more generous with that rate. If you understand your booking patterns, you can secure allocation to cover much of what you need at a very competitive rate.
Ultimately, finding the balance between LRA and NLRA rates is worth serious consideration as this enables both you to manage budget and your hotel partners to manage yield and revenue.
6. Pre-negotiated rates for small meetings
In today's industry, there's a huge missed opportunity to contract pre-negotiated rates for small meetings. Most organisations have a sizeable chunk of small, simple meetings that can essentially be 'packaged' under a day-delegate or 24-hour delegate rate. These meetings are rarely managed under the 'Meetings & Events' policy/process but if unmanaged, they pose several risks to the organisation.
Not only could you find that multiple meetings are being held in the same venue with considerably differing prices, but each meeting will have a contract that could contain restrictions you don't want to be signing up for.
You may also be failing in your duty of care to your travellers. If you don't know where they are, how can you support them in the event of a crisis?
By pre-negotiating rates for these meetings, you can help speed up the booking process for your travellers: you'll know where they are, you can contain the costs and, ideally, by pushing out your own terms and conditions as part of the RFP process, mitigate contractual risk. In addition, this is more revenue for your preferred properties on top of the room night spend which should help strengthen your position in your rate negotiations.
Remember to challenge the process and ask viable questions
Understand your overall objectives and work back from those end goals
You can't negotiate on something that you haven't asked about in the RFP, so before submitting the request, take a step back and define your objectives. What's the end goal?
While it may be clear to you that everything should tie in to your objectives, they are not always well communicated to suppliers. Give them a clear understanding of your desired outcomes, which allows them to better align their responses to your end goals with less back and forth. In the RFP don't include questions you are not going to negotiate on or that do not inform your final decision. By asking (only) the relevant questions you will get a better, more considered response from suppliers.
Segment your programme
Understand where your biggest opportunities lie and/or where you are going to be at greatest risk/exposure and focus your efforts on these areas. Don't be afraid to flip the script. Do you have project work that would be better supported if you negotiated a separate programme with project-based rates?
If you can cut to the chase and recognise how to make it easier for hotels to respond, you will receive a more relevant offer.
Negotiate on things that matter
Be very clear on your non-negotiables and the ones that are less important. Why negotiate on the 6pm cancellation policy if you know your travellers rarely, if ever, cancel within 24 hours? As a rule of thumb if it's not business critical, "give" this to the hotels in return for a more important "get" for your organisation. While it may be understandable to keep cards close to your chest on the things that matter, transparency about negotiables fosters trust that can lead to concessions you weren't aware were even a possibility.
Focus on amenities that matter
There is no point including add-ons that are of little value to the business or your travellers. By understanding what your travellers require you can make informed decisions on the amenities that matter and leverage the negotiation.
Take complimentary Wi-Fi as an example. Does the free Wi-Fi fit the needs of your travellers? Is there a more robust level of Wi-Fi that would usually be at an additional cost that you would be well served to secure for your programme?