Deloitte Uses Globalization To Curtail Hotel Rate Increases - Business Travel News

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Deloitte Uses Globalization To Curtail Hotel Rate Increases

February 13, 2012 - 03:15 PM ET

By Michael B. Baker

Among the benefits of globalizing his firm's travel program, Deloitte senior manager of travel procurement and operations Brian Nichols found a perk: added negotiating leverage in an increasingly challenging hotel market.

Increased demand and limited supply growth will cause hotels to whittle their roster of accounts, Nichols in December told attendees at The BTN Group's Travel Management 2012 conference, and buyers must make hoteliers aware of what separates their company from others competing for a hotel's best rates.

"Some will get the best deals, and others will get the next-best deals," Nichols said. "We have to show what makes Deloitte's travel demand different from other corporations looking for a volume discount."

Much of Deloitte's leverage in negotiating hotel rates came from globalization. Until recently, Nichols' scope was mostly U.S.-centric, and Deloitte's member firms around the world had their own sourcing processes. Now, the company has established a common sourcing process for 20 member firms across 20 countries, Nichols said.

Travel technology firm TRX assisted Deloitte in the development of that process, TRX executive vice president Kevin Austin said. Deloitte was the first client to use TRX's automation of the Travel Analytics consulting service by combining hotel, agency and card data with information about its hierarchy onto TRX's TravelTrax platform.

TravelTrax generated maps that clustered together Deloitte properties, enabling automated bid lists from which it could submit RFPs through Uversa and Lanyon, Austin said.

Communicating the value that had to hoteliers was key in negotiating this year's rates, Nichols said, with 20 new points of sale available for each participating hotel.

"I'm not saying it's revolutionary, because we're probably behind the curve in multicountry efforts," he said, "but it's worked well for us and our member firms around the world. It's enabled us to manage through an up cycle."

Globalization was not Deloitte's only selling point, Nichols said. He also emphasized that the firm's typical length of stay is longer than those of other companies, because Deloitte has a concentration of long-term project business and a pattern of consistent growth during the past decade.

Additionally, data is a critical foundation, Nichols said. Deloitte uses GDS and card data, cleaned up by a third party, to demonstrate detailed volume information for hotel companies, broken down by cities or ZIP codes.

The firm also has benefitted by maintaining solid relationships with hotels over the years regardless of who had more power in negotiations, he said.

"These cycles are fairly predictable once they start happening," Nichols said. "The knee-jerk response is to get upset when they raise rates, but you can be detached emotionally from it and keep a good business relationship through it."

— With reporting by Jay Campbell 

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