“Legal departments, insurance and procurement are also candidates for involvement, as is IT, to ensure compatibility of systems and to cover data protection matters”
Ford operates, who talks to the HR person in each region to help us locally, so that we find out about properties they are using that we don’t know about,” says Swift. For a multinational company, this gives a good insider’s view and also alerts buyers to a spike in use; for Ford, that might be during a car launch. AIG receives local feedback from
country general managers and has a hotel council, comprising the company’s top 500 travellers globally, who comment on the programme and what they need in certain markets. Legal departments, insurance and procurement are also can- didates for involvement, as is IT, to ensure compatibility of systems and to cover data protection matters.
CONTRACTS Received wisdom regarding length of contract varies considerably. Two years works “really well” for Ford, though it depends on the willingness of the hotel or chain to accept a two-year rate, and the company goes out to tender annually. Ian Flint recommends a five-year con-
tract for TMCs, with a three-year break- point and an annual review, especially where companies have a number of sup- pliers worldwide, because it takes a while for them to bed in. AIG has minimum two-year contracts for hotels, three for airlines and three-to-five years for TMCs. “We have longer contracts so that sup-
pliers can penetrate the business and move travellers into a new environment,” says AIG’s Jacobsen.
INVOLVING YOUR TMC A TMC’s purchasing power is likely to be much stronger than any individual buyer’s. “We use American Express con- sulting to do our hotel programme for us,” says Swift. “Year-over-year, for four years, they have demonstrated savings and value-add in terms of increased ame- nities and LRA [last room availability]. They are a fantastic business partner and
BUYINGBUSINESSTRAVEL.COM
Key takeaways
• Prepare – work out your objectives, whether that is cost-cutting, maximising savings or giving the best service levels for travellers at a good price, and develop your RFP accordingly.
• Keep track of the programme and the sector(s) throughout the year, so that you know the market by the time the RFP comes around.
• Do not be emotional – make decisions based on fact.
• Keep an open mind about how you approach the RFP, because technology is changing the game.
• Consider running your RFP with your TMC, as their negotiating clout is likely to be greater than yours.
spend to work with. If we are negotiating on their behalf, we have their trends, their benchmark and what we have done with other companies; and our hotel sourcing team has got multiple brands, covering retail and corporate, so we can see all the parameters in the industry.” FCM saw a 25 per cent year-on-year
rise in the number of hotels it sourced for customers in 2016, and results are good: “For one client, we have just produced an 8 per cent reduction on hotels they had on contract; and a fourth year hold on rates at one of their top London hotels,” Ross says. “For another client, 52 per cent of hotels agreed to hold rates for the next year – and they have 159 hotels in the programme. People are nervous because prices are forecast to creep up in 2017, so we are looking at that to see what value-add or holding rates we can get.” Ross recommends travel managers
it’s cost neutral at the very least. And they provide really good data analytics. We can drill down to hotel level so that we can see how many times we are getting the preferred rate; how many times we are getting lower than preferred rate; and, most importantly, how many times we are paying more than what we negoti- ated. That’s very powerful data that we’ve never had before. Now we can manage our programme in real-time.” “Having everybody involved gets the
best solution,” says FCM’s head of sales, Graham Ross. “Individual buyers trying to push their spend, volume and negotiating strength to a supplier only have their
take a flexible approach because there can be unexpected options to negotiated rates. A company in the energy sector might normally take marine and offshore fares, which are higher because of the flexible conditions: bookers can hold them longer, cancel or change them, and they allow extra baggage. “But somebody going to Seoul to work on a rig can use one of our retail fares with a Saturday night stay and provided the conditions are met, that would give a significant financial saving upfront,” says Ross. “They are unlikely to have to change the ticket because workers tend to go to rigs on rota- tion, and companies that take the lowest logical fare are willing to accept that risk.” RFPs do not have to be the all-consum-
ing exercise they once were. Provided buyers know what they want and suppli- ers can be confident they will receive the promised business, the bidding process can be a natural extension of the relation- ship that has served all parties well to date. The electronic element just removes complexity and adds clarity.
BBT January/February 2017 85
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