Part 2. Supplier Sourcing in an SME World

Asked about their biggest travel management challenges for 2025, travel buyers responding to BTN’s 2025 Small & Midsize Travel Program survey clearly had one thing on their minds: cost. One travel buyer speaking to BTN even said an approximate 20 percent increase in travel costs year-over-year “wouldn’t be that bad” in the current environment for SMEs who didn’t have contracted supplier deals. Granted, the buyer’s travelers frequented highly compressed business travel markets. But still…

SME travel buyers are working hard to negotiate the market, but a plurality believes that critical travel categories are harder for smaller players to hammer out deals. And if they do, the results may be less satisfactory than they hoped.

Less than half of SMEs responding to BTN’s survey even attempt to initiate a formal request-for-proposals process with airlines. A quarter of SME buyers “sometimes” will go out to RFP for an airline partner, but only 17 percent always do so.

Those numbers are only slightly better for car rental contracts, where 49 percent “always” or “sometimes” will go out for bids, but 50 percent still sit it out.

Lodging is more positive for the SME travel management segment, possibly because hotels have a more fragmented business model within which it is possible to approach a single hotel or a smaller chain and not bid out to a national or global sales operation. Some SMEs consolidate their transient and meetings travel needs into a coordinated pitch that is attractive to a larger sales organization. Others may have concentrated volume in a few cities where the business fits a supplier niche. Whatever the individual cases, BTN’s survey showed two-thirds of SME organizations either “always” or “sometimes” go out to bid for formal lodging contracts.

But the going is getting tougher in these categories for many buyers. More than 40 percent of respondents to BTN's survey said the buyers’ position had weakened toward airlines since their previous attempt to negotiate, while only 16 percent said buyers were in a stronger position now. While most buyers are still sitting down to the negotiating table for lodging, more than one-third said getting to a deal is harder than it was in their previous attempt, and not even a quarter of buyers said they were able to fare better than last time.

Power dynamics in car rental negotiations were, on balance, unchanged, with 19 percent of buyers saying it was harder to get a deal but another 19 percent saying it was easier—and 50 percent saying it was the same difficulty as always.

Non-Negotiated SME Programs

In lieu of corporate contracts, travel buyers can opt for SME-oriented supplier programs that do not require negotiations. Many such programs will offer limited discounts but are more squarely predicated on loyalty rewards and perks—and often will require travelers to book directly on the supplier’s website, but not always.

BTN data shows adoption of such programs in inverse proportion to the use of corporate contracts among SMEs. In general, the stronger SMEs are in negotiating directly with a supplier category, the less they take advantage of pre-set SME programs and vice versa.

Forty-four percent of BTN survey respondents said they use airline SME programs; 37 percent said they use car rental SME programs and 36 percent said they use such programs in the hotel category. Suppliers report the use of these programs is growing, and they continue to invest in them. (see Part 3. SME Loyalty Strategy? for more on new program developments and how SME buyers are using loyalty strategically for their programs).

SME Buyers Respond to Sourcing Challenges

“Over the course of my career with Riot Games and Snapchat, I’ve had those opportunities where I was with a small company but some of the airlines would still work with you,” said veteran travel buyer Sean Parham, who now manages travel for online community communications app Discord. “And I’ll call it out—Delta used to be really amazing about working with startups. That’s really changed a lot, I think, for all airlines. Now, I don’t really have any airline relationships other than a couple of small business programs.”

That could be a story associated with nearly half of small and midsize programs, according to BTN’s data. Partnership Travel Consulting CEO Andy Menkes would offer that for many SME buyers putting energy into an airline program wouldn’t deliver dividends, from a policy compliance standpoint or from a cost savings one. Especially if most of the travel is domestic—and coming through at an average of about $500 per ticket, as tracked by ARC so far in 2025.

“Even if you got a 5 percent discount, which would be considerable for an SME, on a $500 ticket, the difference is $25. Do you think that is going to move the needle on a traveler’s decision to take that airline or another one? I don’t think so,” he said.

If the travel manager has the right kind of business mix, however, it could be a different story. “If they can leverage international travel to get a better domestic discount, there could be an opportunity,” he said.  

For Parham’s startup companies, however, the contracts weren’t only about the discount—he’s also looking for those experience benefits that are more elusive without that corporate relationship.

“Contracts often have certain status matches or lounge access availability that are baked in. I don’t have that magic hat to reach into anymore when a traveler needs the lounge, or when an executive might be hired from a larger company and is looking for that status match,” he said. “I now have to tell them that our spend isn’t high enough to get that and it’s something we need to pay for.”  

He doesn’t fault airlines for changing their strategies. He said the strong post-pandemic recovery of leisure travel had a lot to do with the demise of airlines’ consideration for smaller companies—and possibly startups, in particular, that are more likely to fail than to succeed. “Both of my former companies grew, so that was great for us and for Delta in offering us that program… but in the airlines’ defense they’re very proud of [their leisure growth] and they should be proud of it; and a lot of startups fail, so that was a risk they were taking. They have to change their business strategies and you can’t fault them for it.”

Another midmarket travel buyer for a life sciences company was in a similar position for airline contracts, post-Covid, but looked to be on the favored side of the supplier’s strategic alignments. All airlines, she said, were much more focused on buyers proving volume and scrutinized the program’s ability to shift market share to preferred suppliers. This experienced buyer said she was able to leverage some intangibles to get a deal done.

Her target airline partners took into account the halo effect they might gain from having the up-and-coming life sciences company in their client portfolio, even though the travel volume on the table might not have garnered contract consideration for a similar sized program at a different company.

"The [company] name helped a lot because in some areas we might not have had enough spend or even the data available to us to prove… what? There was no Prism data, there was nothing. I had to leverage my contacts and my reputation, and I had to convince suppliers to come on this journey with us,” the buyer said.  

The contract has been a success. “I committed to the airline certain agreements,” the buyer disclosed; that’s a kind of commitment that larger companies might try to avoid. “We moved the market share. We’re overperforming by 35 percent on our contract. The airline could not be happier.”

Menkes says hotels, too, while they may well be a riper opportunity for SMEs compared to airlines, are getting more exacting with market share commitments and the proven ability to shift share, particularly in the SME market.

“They want to know how you are preferencing them and highlighting their brands in the online booking tool; they want to see how you’ve shifted share in the past,” he said. Additionally, they’ll want ongoing proof that the account is delivering.

“[They’ll want] you to actually provide numbers back to the hotel that show, ‘OK, in Charlotte for the 400 room nights in the first half of this year, you got 300 of them,’” Menkes said, adding that for large accounts, hotels might not be as persnickety because they can rely on loyalty to deliver the room night volume.

Parham has experienced this increased data scrutiny first-hand: “One of my best hotels was looking at our contracts and they came to me and said, ‘Look, you aren’t producing.’”

Parham, however, had different numbers, but not in the traditional transient travel cited in his original pitch to partners. His company’s remote and hybrid work structure had changed the shape of his business into room blocks due to the growing number of internal collaboration events that he has started to deliver through the Discord travel program.

“We call them ‘gatherings’ and not exactly meetings,” he said. “The number of rooms has just gotten bigger and bigger. I’ve been able to get the hotels to understand the value of the business I’m delivering, even though at first they weren’t considering these room blocks applicable to the transient contract.”

Parham has said he’s been able to get both individual hotel property teams and national sales organizations to recognize the room nights from his room block-based business and he continues to get transient rates for them. He also includes his strictly transient volume in his deals.

SMEs Seek Supplier Alignment & Flexibility

Another experienced travel buyer who has long served the midmarket and now works for an entertainment company said this is the type of flexibility SMEs need to be actively seeking in their travel partners.

“You need to be able to talk to them, and even if you have to go with a small business program for the moment—or certain terms in your contract to begin with—you should be able to go to them after six months and see if they can offer you something more customized if you’ve proven that you can deliver. If you can’t get that, maybe it’s not the right vendor for you.”

Pretium Partners global director of travel and expense Maria Chevalier said the supplier set may be painting their services and support for the SME segment with too broad a brush. 

"Suppliers have been servicing [the large market] for a long time. [They have] that depth of knowledge of over 30 years of understanding servicing that segment in the business. In the SME market, they don't have the same depth of knowledge, data and experience," said Chevalier, who advises a number of SMEs as part of a private equity company

“Right now, suppliers sort of throw SME into one bucket. I would actually categorize SME in three categories,” she proposed. “There’s the startup environment, where they are unmanaged and they travel a lot like leisure travelers with very few restrictions, policies, etc. Once you get above what I call that startup and you start growing up, you shift, into small, then midmarket. … Their travel programs are very different, and as long as the supplier community keeps lumping them in one—so-called SME—they'll never be able to accurately support them.”

The life sciences buyer agreed that suppliers could miss opportunities if they can’t get more creative with this segment and flex programs to encompass the bigger picture of what SME travel buyers may be asked to manage. 

“SMEs need to look for the innovators, people who are willing to do things and make sure you have good service as long as you are managing a quality program,” she said.

“You can’t build your program myopically as an SME, you have to look for ways to expand your program across the organization—what other departments do you touch? It’s not just travel; it’s not just meetings.”

The buyer said she is expanding her remit to participate in workplace services processes for planning onsite meetings and how to manage them better. She’s also working with the company’s clinical and medical people after she discovered their in-progress RFP for meetings services. As she pitches in her knowledge to those efforts, the shape of her spend volume and program are changing.

“Those other aspects will change your program, and good partners should go on that journey with you. I’m like, ‘Why should we not leverage this spend and reduce our costs? SMEs have to share that narrative; it’s how they grow their programs.”  

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For insights on TMC sourcing, relationship management and tech advancement, see Part 4. SMEs Rely on TMCs, but Want More