Air and hotel cost containment initiatives often devour a travel purchaser's time, but some buyers and suppliers are zeroing in on an untapped source of potential savings--food and beverage. Whether it's by partnering with an outside company for discounts or integrating F&B into hotel negotiations, strategies exist to assist travel buyers in unearthing some savings.
Yes, the air and hotel categories account for more than half of a typical travel and entertainment budget. But, according to Procurement.travel's "State Of The Practice" survey ( January 2009) of 473 travel buyers, meals and entertainment averaged 14 percent of their organizations' total spend, which can equate to a significant sum of money.
"When I analyzed my spend, 50 percent goes on things apart from air and hotel--which is quite remarkable," said BT Group global category manager Jan Tucker Jones, speaking at the Business Travel Market conference in London. "Yet, 80 percent of my time is spent on airline deals and hotel; it's strange."
Finding strategies to manage F&B spend can be challenging since much of it is sporadic and scattered across innumerable restaurants worldwide. F&B is a "piece that you could touch, but absolutely the other ones are larger," said Karoline Mayr, Deltek Inc. travel manager. "Is it something that you could do, yes. I don't know that you would want to include that in your year-over-year negotiations. Just trying to get people to do the air, car and hotel is a challenge in itself. The last thing we want to do is add all this other stuff to make it more complicated. I can't say what will happen in the future, but, at this juncture, no, we are not doing that."
[PULL_1] Marrying Hotel And F&B
Integrating F&B with the hotel program--typically a much larger chunk of change--can help reduce spend. For example, BT Group has discounts in place at all the restaurants within its preferred hotel program, Jones said. BT's goal is to "put contracts in place so that we start managing F&B to get to the same level we are with our managed hotels" and to gain "control of spend compliance" to those contracts that BT hopes to implement, she noted. Also, BT aims to reach a point where employees are spending as "if it was coming out of their own pockets."
Indeed, some travel buyers for years have provided travelers with breakfast, lunch and dinner spending guidelines. Some even calculate and promote average targets for specific cities as a means to coax travelers to appropriate meal tabs.
For others, guiding small meeting planners to book events at preferred hotels close to corporate headquarters that offer restaurant discounts is another way to drive compliance and reduce F&B spend. Deltek's Mayr focused her F&B efforts on one hotel close to headquarters. "We are tying transient travel and meetings spend together because someone might say they want to go offsite to do a luncheon meeting, and we would recommend the [preferred] hotel," said Mayr. By doing this, the lodging branch of spend is connected to F&B and time typically spent negotiating with preferred hotels for rates can include conversations around F&B.
Another method of prompting travelers to use negotiated hotel F&B agreements is by using mobile SMS messaging to inform travelers that, for example, breakfast is included in the room rate.
Microsoft Corp. currently uses conTgo's Mobile Travel Assistant messaging tool, which tracks bookings and then notifies travelers of hotel and restaurant deals of which they may have been unaware. As conTgo tracks the traveler's trip, the tool sends appropriate SMS messages about restaurant agreements in place with the hotel at which the traveler is booked, according to conTgo CEO Johnny Thorsen.
"We are sending [messages] to Microsoft travelers before they arrive in a preferred hotel, [saying] what is included in a corporate rate, [such as] breakfast, wireless, late checkout or whatever the extras are," said Thorsen.
"This is a new savings: It's not from renegotiating the airline deals; you can't really squeeze much more out of the airlines. We are focusing on this 'on the road procurement' as we like to call it."
[PULL_2] Linking Up With Outside Forces
Partnering with such third parties as Rewards Network--a company that aligns with thousands of restaurants in the United States and Canada--may be an avenue to explore. Corporations register their corporate cards in Rewards Network's registered card platform and then are provided with information on participating restaurants. If an employee pays for a meal using the corporate card, the corporation typically receives a 10 percent to 15 percent rebate for the total bill, according to Ron Blake, CEO of Rewards Network.
According to its annual report, Rewards Network had signed about 100 clients for its corporate program. Customers can garner up to "hundreds of thousands of dollars" in rebates annually, said Blake. The supplier offers a choice between two models: a traditional full rebate or a split rebate whereby travelers receive reward points and the corporation receives half the rebate. According to Rewards Network, the traditional model is used more often; the "split benefit did not receive as much traction," according to a spokeswoman.
"The process is quite seamless. After we sign an agreement, [the corporation] delivers a file to us with all of their corporate cards," which is loaded into the Rewards Network database, said Blake. "This is a program especially for midmarket companies that have some geographic concentrations. This would be an excellent program for them to control and limit their T&E."
Rewards Network also can deliver content to third-party online booking tools, guiding travelers to eat at preferred restaurants so their corporations can receive rebates. In Rearden Commerce's online and mobile booking tool, travelers can search for restaurants near their location, look for preferred Rewards Network restaurants and book a reservation through OpenTable--an online reservation booking company.
Dining bookings were up 119 percent year over year in the March quarter, according to a Rearden official.
Rearden is "our only direct third-party source," said a Rewards Network spokeswoman, and is "our one exception where we have outsourced recruitment." Rearden asks corporations if they want to join Rewards Network and acts as a liaison to help set up the accounts. Once onboard, travel managers are given monthly reports on traveler spend and where they ate, followed by a monthly report on spend at each restaurant and the corporation's rebate check.
"[Corporations] get quite a bit of information in detail about those individual transactions, and that is sent over to them electronically," said a Rewards Network spokeswoman.
Other online booking tools also enable restaurant bookings. Concur's Cliqbook allows travelers to use OpenTable, while Sabre's GetThere offers users the ability to reserve tables via LiveBookings and OpenTable.
F&B "was something that we focused on awhile ago, and then it kind of died down. Of late, it is starting to come back and people are seeing it as an opportunity to drive savings," said Paul Wiley, GetThere director of product and customer experience. "Travel managers are looking for a greater overall experience for their travelers and one single solution to help travelers make the right decision, whether it is around air, hotel, rail or even where they dine."
GetThere is working to customize the dining aspect so buyers can place per diem rules that would only display restaurants that are within travelers' meal caps. Wiley said the company also is developing the capability for travelers to load reservations into their calendars and book through their mobile devices.
Size Doesn't Matter
While Blake said mostly large corporations are partnering with Rewards Network, midsize corporations are slowly coming onboard as well--especially since the economic downturn.
"The big companies figured this out a long time ago," said Blake. "To the midmarket business, this is a simple, cost-effective and elegant way to make their dollars go further. And in this environment, this is a natural fit with businesses that need to entertain their customers but want to manage their costs as effectively as they can. When you are looking for every dollar and every dime to work for you in this kind of an economic environment, most companies don't need a whole lot of encouragement to pursue this."