Supplier-buyer relationships have been fickle. Long-standing members of the business travel community need only cast their minds back to the hotel request-for-proposal (RFP) season in the fourth quarter of 2007. The economy was booming, and demand was outstripping supply. The hoteliers held all the chips, and made the corporates work extremely hard for their preferred rates.
But only two years later, with the economy in tatters, the same hoteliers were cap in hand at the corporate door begging for any spare scraps of business. What both sides learned from the economic collapse in 2007 was the importance of long-term, sustainable relationships. There is no value to being a fair-weather friend.
With the economy in the UK, the US and in some parts of Europe showing signs of modest recovery, buyers and sellers are, for the most part, forging the future together in partnership.
We asked industry experts how to make the most of the supplier relationships.
Will Hasler, business travel manager for Pricewaterhouse Coopers (PWC)
You must cultivate a relationship. It’s not just about the annual rate negotiation. The buyer can provide feedback on products and routes. Suppliers can help when things go wrong for our travellers. You don’t need to be in each other’s pockets, but be clear about how the relationship will work.
If you’re working towards an overall target on the airline side, don’t worry about the small declines in volume in a given month. If certain routes do drop off over a sustained period of time, or if there is a sudden increase, be prepared to be flexible.
Give the supplier as much trend data as you can. Everyone wants market share data, which you can provide – as long as they don’t ask for your average fares and volumes with their competitors. In an unmandated environment, travellers demand a certain standard on long-haul flights – for example, non-stop is a must, if available.
We have no preferred carriers for flights less than three hours and all our partners have to acknowledge this fact. Negotiations work if there is a win-win-win [supplier-corporate-traveller] outcome. For the last to happen, you can only add suppliers that have equivalent or better products and service than your incumbents to the programme.
Catherine McGavock, regional director EMEA for the Global Business Travel Association (GBTA)
Understand your requirements by analysing historical data and consulting with the business to identify future needs. Understand the market, the changes occurring and what the competition is doing. Don’t over-egg the likely size of the contract. Be explicit about the level and type of support and reporting you require. Don’t just focus on price – consider ways your supplier can tailor their offer to deliver value that will enhance your travellers’ experience or save you cost.
Stay focused on what represents value to your organisation and travellers. Agree a pricing strategy that is appropriate for your business’s needs and that drives the right behaviour on both sides. Ensure you are not exposed to unexpected costs or paying for things you don’t need or want.
Manage your supplier – make sure you get the service and reporting that has been agreed. If there’s a problem, let them know as soon as possible to give them the chance to rectify the issues.
Simone Buckley, chief executive of the Institute of Travel and Meetings (ITM)
Forming a strong supplier partnership depends a lot on identifying mutual benefits and objectives at the start of your relationship. Select partners on their overall ability to meet your company’s multi-faceted needs – if you pick a supplier because they meet the pricing requirements but not the service requirements, you’re set to fail.
Understand the business travel needs and expectations of all stakeholders. Be clear: needs differ from expectations. If your travellers expect more than the company thinks they need, be aware of this and make sure your supplier partner is aware of this. Together you will need to tackle the gap through education and communication.
Jo Greenfield, UK general manager, FCM Travel Solutions
It's important to work in partnership and understand each other’s objectives. However, suppliers can’t do much without data. Even if a client has just started a new travel programme, it’s important to monitor flight frequencies, rates and routes from day one to create spend visibility. Suppliers look at a client’s profile and data in order to value what a corporate’s business is worth to them, before they come up with a proposition.
Many people are talking about big data at the moment, and everyone is focused on data strategy. But the secret is what to do with that data. You must extract the right data to back up supplier negotiations. How many sectors did the client book with an airline on a particular route last year? What was the average fare paid? How many sectors were booked on other airlines on the same route?
Work out the locations where you need hotels, and calculate the volume of room nights you book at each hotel in each location. Once we are armed with the right data, we will be able to determine whether a client has sufficient volume to negotiate a worthwhile deal.