In the news: SMEs improve air, hotel and payments deals

Advito, BCD Travel experts explain small and midsize enterprises’ newfound strength with suppliers.

Small and midsize enterprises (SMEs) have strengthened their negotiating position across most supplier categories over the past year, reports Business Travel News. The industry news site turned to Advito and BCD Travel experts for insights into what’s happening in the SME market—and why:

Air

Advito air industry expert Olivier Benoit told BTN: “The SME segment has shown a double-digit growth rate [in carriers’ revenue] for the past 10 years,” noting that growth has ranged from 10% to more than 30% annually over that period, while revenue growth across the broader business travel industry has trended between -5% and 5%.

“It is less volatile than a key account or a global account,” said Benoit, senior director and air practice area leader the consultancy, which is a unit of BCD Travel. “[The SME segment] is also more resilient in case of a global crisis because it’s less exposed and [less] concentrated on the global economy.”

Hotels

Advito Principal and Vice President Bob Brindley told BTN that SMEs should negotiate fixed rates at individual hotels where they have at least 100 room nights per year. Chainwide discounts can help SME buyers fill in elsewhere. However, major global chains typically require $500,000 to more than $1.5 million in annual spend for chainwide-deals, putting them out of reach for many SME buyers.

“In these cases, booking best-available rates through the preferred travel management company is the best bet to obtain the best pricing and receive a rebate of commissions that will partially offset the TMC expense,” Brindley advised.

Payments

Mario Kriebel, BCD’s vice president of commercial payment solutions, said setting up a corporate card program can make sense even for companies with as little as $25,000 in spending per year or as few as five travelers. But he warned that SMEs should make sure corporate card benefits outweigh potential challenges with implementation, employee credit checks and more.

Kriebel noted that many SMEs still allow employees to use personal cards, which creates other challenges. “Travelers generally like that setup because they earn a lot of miles or points using their private credit cards,” he told BTN. “One drawback is that it provides the company no management information system data to control expenses. Another is that the reimbursement process can be heavy, especially if a company has international travelers.”

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