Applying traditional once-a-year negotiation strategies to today’s dynamically managed hotel market opens the door to risk, advised Advito expert Laura Kusto in a recent Business Travel News article.
Travel buyers may see a massive difference between projected savings based on their negotiated rates and actual spend because travelers aren’t able to book negotiated rates all the time. In the article, Kusto, global hotel practice leader for the business travel consultancy, details a four-step approach to improvement. Here’s an excerpt.
- Define the real value of your travel program. How your company quantifies the value of the savings baked into your hotel program through commission structures and negotiated add-ons (like Wi-Fi and breakfast) matters.
- Measure your negotiated rates against the market’s average booked rate. Hoteliers are taking a more dynamic approach and using real-time data to maximize revenue. It’s time for corporate travel buyers to take a dynamic approach, too—and conduct timely renegotiations with suppliers if the market’s average booked rate or the inadequate availability of negotiated rates indicate missed savings.
- Choose your battles. Negotiate static rates only in markets where you have leverage. Ensure you have enough volume to justify the number of preferred hotels. In markets with less volume, save time by negotiating multiyear dynamic rates or use current market prices. Then use market-level rate caps to manage spend. Bring this all together by using Dynamic Performance Management throughout the year.
- Get your entire company on the same page. A value-driven travel program may require unprecedented collaboration between procurement and travel managers to rethink accountability for both teams. It’s also important to engage travelers and enlist their support. Communicate program goals and benefits, educate travelers on changes and explain how their booking behavior affects savings.
Check out a case study on how a global defense and cybersecurity firm cut hotel spend 22% in one year and gained actionable insights with Dynamic Performance Management.