Anticipating that hotel rates this year will jump 8 percent to 18 percent worldwide even as travel budgets remain pressured, BT Group global category manager Jan Tucker Jones focused on streamlining the 2010 negotiating process. One simple solution was to consolidate meetings with as many as 30 chains to one event where BT delivers company specifics and then met privately with suppliers on privileged matters.
"Rather than having individual meetings with suppliers, we actually got all of our hotel suppliers in one room because we give the same message [to each one], so why not give it all at the same time? " Jones said. "That worked extremely well and the feedback from that was very positive. We obviously spent 10 minutes [privately] going through individual hotel chains with their data, but the one-day event proved very worthwhile."
She said the change helped produce better hotel picks for 2010, with more value-added items to help cushion financial tension.
Before inviting chains to participate, Jones and her team established specific goals to achieve by the end of their hotel negotiations: garner better deals with properties closest to where travelers need to go, consolidate the program by 500 properties, and add more "soft benefits" to contracts.
After giving all bidders, at the same time, generic information about those objectives as well as notes on the general goings-on at BT and the performance of its hotel program, Jones said, "We had really good feedback from all the hotel chains that attended, and from my point of view, it's instead of my staff spending three or four days on that process and getting quite robotic in the presentation."
BT won't ever go so far as to institute an auction, but the new process saves hassle and reduces miscommunication, Jones told The Transnationalfollowing her presentation here last month at the Business Travel & Meetings Show.
After hotel suppliers do all of the detailed work of filling out the request for proposals, BT narrows the field to suppliers that best answer questions which most impact travelers, she said. Then the travel procurement department contacts the suppliers to talk price.
"We analyze by location; that's very important to us," said Jones. "It is no good having the right hotel at the right price if it’s in the wrong location. Sometimes we get the feedback that the traveler can stay in a hotel that is even cheaper, but then they spend £20 (US$30) on a taxi, then what is the savings?"
Asked why BT wouldn’t try to save even more time by completely outsourcing the RFP process, Jones said, "We are not happy to outsource completely. This is not because we don't have confidence in our suppliers, but I think it is very important for the corporation to keep our own ship. The supplier does all the work at the first level of negotiations and then we analyze that and go through it with the supplier."
Although price is a "top priority," Jones said that for 2010, rates did increase. But the focus shouldn’t "always be about price; it’s about what extra can you actually get in the contracts," she noted.
As of February, the telecom giant's travel was operating under a non-essential travel ban implemented in September 2008, which makes it difficult to promise market share to more than a few select chains, Jones said. Additionally, BT also cut travel spend by 40 percent, and the number of rooms booked fell 35 percent during the fist six months of 2009 compared with the same time period in 2008. BT's annualized travel spend is now about £80 million (US$120 million), whereas two years ago that figure was an excess of £130 million (US$194 million).
However, BT still has over 150,000 traveling employees in more than 55 countries, according to Jones. And BT has managed to achieve hotel program compliance of more than 90 percent without mandates, creating confidence in the company's ability to steer business to preferred hotels, Jones said. BT emphasizes large chains with worldwide presence and brands that travelers prefer.
"Good communication" with partners on contractual performance, where market rates sit relative to negotiated programs and service quality continues throughout the year, Jones said. "I can’t stress that enough. We organized some videoconferencing calls. We like to do face-to-face, but we don't travel for the sake of traveling. As you can imagine, those days are long gone. But we made a very conscious effort to have these calls with the suppliers on a regular basis; that actually worked out well."