It’s that time of year when American Express Global Business Travel’s (GBT) crack team of hotel consultants releases its city-by-city hotel pricing forecast ahead of the 2019 request for proposal (RFP) season.
This year, to help travel and procurement managers gearing up for negotiations with hotel suppliers, American Express GBT has created a special report called “Smarter Buying: How to Build a Better Hotel Programme” that provides proven strategies to optimize your accommodation spend.
Because you cannot rely on a one-size-fits-all approach — after all, the same techniques for a company with a spend of $100K will not necessarily work for a multinational with a $100 million budget — we have grouped our tips into three categories. There’s ‘fundamental’ for those with a relatively new managed travel programme, ‘intermediate’ for those who have mastered the basics and are ready to take the programme to the next level, and ‘advanced’ for seasoned travel buyers with mature programmes.
Here’s a sneak peek at some of tips you’ll find in our report, which you can access down below.
Knowledge is power. To capture the best hotel rate, you must review your numbers to identify the destinations your travelers are heading to most frequently and where you have the most leverage. If you clearly can demonstrate to a supplier that you book 1,000 rooms a year in a specific city and that your travelers only use three hotels there, sell that in the RFP!
For the long-term. If you have travelers visiting a city for a stretch of time, serviced apartments may be a more cost-effective solution over a hotel. Not only can you save on meal and laundry costs when using a serviced apartment, but there also may be some tax benefits (which you can read more about in the report).
Curb the blackouts. During the RFP, the hotel may push to include blackout dates when your negotiated rates will not apply. To control costs, limit these to no more than four blackout periods in a calendar year.
Do your homework on the hotel. Understanding your supplier’s business objectives for the upcoming year can be employed as a bargaining tool. For example, if you learn that the hotel wishes to improve its food and beverage revenue, perhaps you can negotiate some kind of meal deal if you are able to get more of your travelers dining in at the property.
Benchmark your policy. We recommend regularly evaluating your policy and allowance amounts against peers and other industry sectors to ensure your program is up-to-date and that you’re following best practices whenever possible. (By the way, contact us if you need help!)
Fixed, dynamic or a mix? Take a close look at your data to determine what kind of pricing structure will work best for your organization — a fixed rate where there’s usually a minimum volume requirement, dynamic in which a client receives an agreed percentage off the hotel’s best available rate, or a blend of the two. (For the pros and cons on each, see the white paper.)
Manage your ‘hot spots’. Analyse your data to identify which locations your travelers are visiting where the supply is higher than demand and, thus, where hoteliers will be hungry for your business. Then use the analytics to negotiate lower rates in the cities your travelers regularly visit where prices are going up.
Stall with the RFP. Instead of sending out your RFP during the peak season of September to December, you just might get a better rate if you wait until January when hotels have a clearer picture on their revenue forecasts — and which accounts they’ve lost.
Size doesn’t always matter. Even if your hotel spend is on the smaller side yet your hotel needs are consistent season to season, you have negotiating power with hotels seeking base accounts with clients who can fill their rooms regularly throughout the year.
When does this strategy work best? To find out the answer and the many more cost-saving tactics we recommend, you’ll just have to download our ‘Smarter Buying’ guide. And to do that, fill out the form below and then click on ‘Submit’. You will be redirected to a new screen, where you can download the report.
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