Buying strategies
they can
purchase best fare of the day on any
airline on any route.” But it is not simply that those with
large budgets spot-buy on short-haul and use negotiated fares on long-haul while smaller companies use TMC fares. Peters shared the distribution of Capgemini’s fares to illustrate the point (see pie chart, right). As discounts can often be applied only
on the more expensive booking classes and as companies increasingly expect their travellers to use lower classes of travel, the discount becomes less applicable and spot buying the lowest logical fare available on the day has become more popular. Simone Buckley, chief executive of the
Institute of Travel and Meetings (ITM), says, “People are using their negotiated rate as the worst case scenario. They will look for something cheaper via spot buying, but have this as their default fare.” HRG’s Pancaldi says, “The general rule
is that on domestic and European flights you do best with lowest fare in the market rather than relying on the pre-negotiated discount deals. “The areas where it is important to have negotiated agreements are the longer distance regional or intercontinental routes. The traveller has less flexibility the further afield they travel,” adds Pancaldi. “It will all come down to the company
and the nature of the policy and the business requirement,” says Roger Peters. “The benefit of the route deal is that if I
know on Friday that I have to fly [short- haul] on Monday, I can use the route deal. If I didn’t have the route deal in place I’d have to pay the full published fare.” Pancaldi advises buyers to “regularly
review your policy to ensure it matches the needs of your business. Don’t treat the whole business with one-approach-fits-all because different departments and different cost sectors need different things.
Some can be flexible, others can’t. “Work out what’s happening not just in
the market but what’s happening in your business. Are you going to be expanding?” Pancaldi continues, “The marketplace is getting more leisure-like. People are putting up with the inconvenience of not being able to change, booking way in advance. It’s not just about corporate
55% c“ People are using their negotiated
orporate rate as the worst case scenario. They will look for something cheaper via spot buying, but have this as their default fare
”
policy but about getting people to behave differently, more like a consumer.” Simone Buckley believes that the changing expectations of business travellers is why spot buying is looking cheaper. If buyers are looking for fares in booking classes they might not previously used and on which an airline doesn’t offer a corporate discount, it is going to be cheaper, she explains. “Always spot check web fares,” she advises. “If you do a formal audit, the TMC will know it’s being audited. But bookers should just pick a day and compare what’s being booked with the travel management company with what’s on
ba.com. “There are sometimes simple explanations
for discrepancies such as the TMC having been instructed always to book the corporate rate but sometimes the TMC could be passing on extra fees that a buyer is not aware of.” That’s not dissimilar to Alex Salmond’s suspicions about Westminster.
How a company may spread its fares The distribution of Capgemini’s air spend: TMC fare Negotiated fares Lowest logical/published fares Other
Source: Capgemini HOTEL DEALS
According to a buyer from a large financial organisation, the corporate rate is alive and well in hotel purchasing. He says, “Corporate rates are a ceiling rate. You can sometimes buy at a cheaper rate but it requires paying immediately. Corporate rates are flexible, you can change up 'til 4 on day of release and negotiate extras such as breakfast.” Jon West, UK managing director of HRS, says, “A hotel will always want to maximise revenue just like any other business and a partnership between a corporate and a hotel should end up with a fair rate the corporate is happy to pay. A yield manager will be determining right price on right day and what their occupancy rate will be. A BAR for a hotel can change every hour. “On a given day BAR might be higher, lower or the same
as your negotiated rate. It’s worth negotiating a rate when your volume enables you to get a better rate than you would get in the spot market.”
7% 15% 23%
THE BUSINESS TRAVEL MAGAZINE 17
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