Former National Business Travel Association president Kevin Maguirehas long fancied collective buying, and as travel manager for intercollegiate athletics at the University of Texas in Austin, he and colleagues at an undisclosed set of other schools have struck more than ten joint contracts with hotels and other suppliers.
"We're generating a 20 percent to 30 percent reduction in pricing because of our collective approach," said Maguire, who has been working on the initiative for about a year. "That's a minor reduction to me because we will bring on more components. You're not going to see a 60 percent discount, but you will see more."
The agreements are not designed to offer one rate to all of the consortia's members.
"Take the Big 12 for example," said Maguire, referring to a major collegiate athletic conference. "The schools in the Big 12 all go to the same cities--or the same 11 cities plus the one that they live in. So we know that each year the baseball, football or basketball teams involved will go to those cities and the question came up, 'Why don't we sit down collectively, whether it is the Big 12 or the Big Ten or the NCAA as a whole, and talk about collective buying because we have all these room nights?' Everyone would have a different contractual agreement, because from a legality standpoint you run into issues when you have an umbrella type situation and the rates might not be the same for everyone depending on the number of rooms that you have. Hypothetically, right now if your room rate is $100 per night, collectively if you go in and you can reduce that to $95 a night. Maybe you have a huge university like the University of Texas and a very small university that is in the same conference. Our rate might be $95 but their rate might be $98. We are both getting a better rate, but it might not be the same rate."
When suppliers shy away from consortia, it's often because they assume the members are looking for one big contract handled by a single point of contact, said Maguire. But "we are not coming in as a group to beat you down so you don't make a profit. All we are asking is, if we promise room nights, or bodies on buses or bodies on airplanes, can we get a better deal," he said. "Of course there may be requirements that one university may have over another, whether it is meeting rooms or food or do you comp them phones in the rooms at night or do you charge for that. There are specifics to each team, but the overall room night rate is negotiated because it is a volume issue now not just a singular visit situation."
Maguire, who last decade helped a similarly constructed consortia of midmarket companies obtain discounted hotel rates, declined to identify members of his buying group. However, he did talk about the work of the National Business Travel Association's sports travel management task force, launched a year ago.
"The task force is addressing things like how airlines check in teams," said Maguire. "How do they deal with bags? Continental Airlines is going over the way they do this from a procedure standpoint. We're not asking them to drop the baggage fees, but we're asking for new ways to facilitate the way these teams are handled from a check-in standpoint and movement standpoint."
Maguire sees a lot of potential in pooling travel management resources among college athletic programs, even mentioning the nearly 1,300 schools within the National Collegiate Athletic Association.
He also suggested that in the corporate world, consortia buying is more prevalent than is generally known. "Nobody wants to talk about it when it is successful because they dont want to have to end up doing it for everybody," Maguire said, referring to suppliers. "We were always told airlines will never negotiate and what we found with all the suppliers is that they didn't want to talk about it publicly. If you went to them they were more than happy to do that but they didn't want it public. I know there are several consortia out there now that are doing it. It's probably not as large a scale as we would like, but it's not true that it doesn't work."
~ with reporting by Lauren Darson