Op-Ed: Consortium Buying Can Benefit Both Sides

The concept of consortia or collective buying surfaces in travel industry discussions every three or four years. Travel buyers and suppliers passionately debate the theory's pros and cons, analyzing why the practice has never gained widespread acceptance in the industry. The problem appears to be twofold: a common, but no longer practical, resistance to something that would change the norm, and a lack of understanding on the part of the buyers concerning proper ways to present the concept and negotiate with suppliers. If neither side can foresee a tangible win from utilizing collective buying, then any benefits are eliminated before the program ever gets off the ground.

Change is often difficult. Change for the sole purpose of doing something differently, yet achieving the same end result, is nothing more than a method of building a foundation for participant frustration and dissatisfaction. However, when a process can be improved, costs may be reduced or some actual significant, positive gain could be achieved, change can be justified. Some decision makers often spend too much time and unproductive energy searching to find reasons change will not work, instead of focusing on the possible success of implementing something new and different. As it relates to collective buying, it is past time for the travel industry to try a new approach.

Developing a successful strategy must begin with the premises that collective buying is not applicable in all situations and that some seemingly potential partners may not be the best fit for such a program. Members of the collective buying group also must understand that information on the group as a whole and each participant's travel patterns, volume and spend in specific areas will be freely shared among the group members. Member companies should have enforced travel and expense policies or guidelines in place, as well as the buy-in and support from upper management to proceed with a collective buying effort.

Comprehensive preparation is a key component of fair and productive negotiations and essential to ensure the ultimate success of a collective buying arrangement. Before any serious consideration can be given to moving forward with a program, potential group members must take the time to carefully analyze how their programs might work together, i.e., similarities in destinations, common suppliers, how each company's policy addresses current or potential traveler issues, etc.

Another important aspect, in initially considering the possibility of a workable program, is reviewing why similar attempts to create collective buying arrangements either failed or succeeded in the past, drawing on the strengths of the winners and avoiding the pitfalls of those who fell short of achieving the objectives.

Buyers must know the specifics of their own programs because savvy suppliers easily can gain the upper hand in negotiations if a buyer stumbles when describing a travel program. This sounds too much like simple common sense, but it is a major stumbling block when parties sit down for serious negotiation discussions. Plus, buyers and sellers must understand that collective buying does not translate into one rate, one service level. The realistic goal is a better, but not necessarily the same, rate for each group member and improved service levels for each buyer. From a legal standpoint, companies should have separate contractual agreements with each supplier, not an umbrella one that covers all group members. Each company may have special requirements, service-level definitions and required legal wording.

If an individual or a company, whether representing buyers or suppliers, is unwilling to or is restricted by policy or culture from being able to step out of the proverbial box and explore fresh, new creative possibilities for resolving travel-related concerns, collective bargaining will never succeed, negotiations will never achieve truly positive results and the opportunity to make a significant difference in a travel program and any partnership or relationship with suppliers will be lost. The purpose of collective buying is for each participant, including the seller, to have a winning arrangement. Both sides need to be open-minded, creative and communicate honestly and directly.

Collective buying isn't a bad concept if handled correctly. Change can be positive. Both sides can realize benefits, including the re-establishment of possible long-term relationships between buyer and seller. The travel industry can continue to tread water by maintaining business plans that are ineffective and outdated and continue to watch critically important partnerships deteriorate.

I prefer to work to find better answers, instead of sitting back and thinking, "what if?"