for securing airfares and hotel rates that are lower than their negotiated prices, particu- larly if a significant amount of travel takes place during “shoulder” seasons when there is reduced demand for flights and rooms. “Most corporates are setting policies based
both on preferred supplier rates and the best buy of the day, so that their own negotiated rates are the highest they are going to pay on those routes and destinations,” says Nigel Turner at Carlson Wagonlit Travel. In theory, negotiated rates can effectively
create a ceiling on costs with dynamic prices helping to drive further savings when they are lower than the contracted rates. But all this still adds complexity to the process for buyers and their companies. “The budgeting aspect gets challenging as
it is difficult to understand the full financial impact of dynamic pricing – the actual spend with a supplier may vary considerably,” says Asif Bashir, director of consultancy Axcent Travel Solutions. “There’s also less control of the entire process by the travel buyer as it is much more dependent on market forces, which brings uncertainty and risk.”
Tripbam, Yapta and Fairfly, that can dy- namically track airfares and room rates in the last edition of BBT (Tech Talk, Issue 85). But what impact are these new platforms
having so far? Some buyers have yet to engage with them but others can already see the advantages. “The tools are working alongside tra- ditional TMCs by helping drive further savings from travel programmes,” says one ITM buyer member. “It helps travellers feel they are bringing additional savings yet staying or flying as they want rather than as the company wants. “For a procurement team with savings
targets these add additional, unexpected savings. As the tools develop and become more prevalent, procurement will negoti- ate a ceiling rate and then the tools will find the lower rates – empowering employees to make the right decision.” Adrian Williams, marketing and part-
nership director at Business Travel Direct, believes these corporate price-tracking platforms can help crack down on the ‘maverick’ traveller.
“A challenge for buyers with dynamic pricing is the ability to forecast… a fixed rate can provide buyers more visibility”
Peter Snowdon, multinational account
manager at FCM Travel Solutions, agrees: “A challenge for buyers with dynamic pricing is the ability to forecast. It gives suppliers the opportunity to gradually increase their rates year-on-year, whereas a fixed rate can provide buyers with more visibility and the ability to benchmark.” On a positive note, Sean de Lacey, head
of sales at Diversity Travel, says dynamic pricing can help organisations that do not have “sufficient volume to negotiate a set rate” to secure discounts. “While there is currently uncertainty
around the impact of dynamic pricing, making use of the data available helps you paint a full picture of how much dynamic pricing will cost the company and the client,” he adds.
NEW TOOLS Technology is already helping buyers to navigate this new landscape of travel procurement – we looked at the growth of corporate-focused online tools, such as
66 BBT May/June 2017 “With such tools at our disposal we
are able to give our clients 20:20 insight into supplier pricing strategy,” he says. “It’s naive of a supplier to launch a yield- trashing special offer, claim it was aimed at the leisure market and then expect corporates to stay away.” But the likes of Tripbam and Yapta are
already facing some pushback from sup- pliers who have adjusted their cancellation policies and fees to reduce the potential savings of rebooking rooms and flights. “These changes will make it tougher for corporate buyers to make frequent changes after a booking is made,” says Advito’s Marwan Batrouni. “We are seeing airlines increasing their change fees. This makes it tougher to justify rebooking a ticket if the change fee offsets the new ticket price.” This particular battle has only just
started and travel procurement is likely to become more complex and yes, dynamic – maybe the old-fashioned RFP process isn’t so bad after all.
BUYINGBUSINESSTRAVEL.COM
Key
takeaways • Dynamic pricing from suppliers is here to stay with hotels increasingly joining airlines in adopting this revenue strategy.
• UK-based buyers still prefer to use the traditional RFP process to negotiate deals with hotels, although ‘targeted renegotiations’ are more common with airlines.
• Price-tracking tools are opening up new ways for companies to save more money on air fares and hotel rates. But suppliers are fighting back against some of these platforms through changes to cancellation fees and policies.
• Technology is set to make the relationship between buyers and suppliers more complex – especially as travel companies seek to target travellers individually.
• Online tools New corporate price-tracking platforms are helping to drive savings. As they develop, these tools will find lower rates thus empowering employees, plus they will help crack down on ‘maverick’ travellers.
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