The 2009 hotel request for proposal season for individual business travel is one that will go down in history. Under normal circumstances, the process is long, arduous and expensive for both buyers and suppliers. But this season amid the uncertain economic environment was unlike any other, with a record-breaking number of solicitations, an unprecedented amount of rebids and an extraordinary delay in receiving customer decisions. It will indeed be long remembered.
Of course, it's not surprising. All corporations are focused on the same business objective: to reduce travel costs. Certainly, taking advantage of today's market conditions is one way, and it is understandable that buyers invested the extra time and money to ensure they were receiving the greatest value for the lowest cost.
So we've just spent seven to eight months negotiating the best price that reflects an annualized period. But the buzz in the industry seems to be the encouragement of rebids during the year. Sure, there are questions as to what the market might look like six months from now. Even after completing the process, buyers will continue to wonder if they received the lowest rate possible. And, yes, travelers can, at times, find--and should book--lower consumer rates available in a month like January than the annualized corporate negotiated rate that reflects market conditions throughout the year. But do we really want to conduct rebids midyear and continue down that tactical, costly and process-heavy path? Do both sides even have the resources to accomplish such complex, unanticipated tasks? Is this really the best use of everyone's time, or are there better ways to generate additional cost savings?
[PULL_1]Studies have shown that corporations can save an average of 20 percent to 30 percent with strong compliance to travel management programs. In reviewing travel trends for 250-plus corporations during the past six years--whether in a buyer or supplier market--evidence shows that there is room for compliance improvement, leading to greater cost savings return. For example, compliance to preferred distribution channels has remained stagnant at an average 42 percent to 43 percent during this six-year timeframe. This means travelers are buying through numerous channels, some of which can be challenging when trying to access corporate negotiated rates without the right information. Reviewing trends of what rates travelers are buying can uncover opportunities for cost savings.
How much more savings could be achieved if compliance to policy, preferred vendors and preferred distribution channels is ratcheted up 20 points or more?
Simply put, adherence to the already negotiated travel management program typically can generate greater cost savings than re-investing time and money into midyear rebids. Where is time best spent for the remainder of the year? Work collaboratively and strategically with your travel supplier to help drive compliance to achieve your objectives of cost savings, traveler safety and guest satisfaction.
To be selected as a preferred supplier, one must set pricing that is competitive, sellable and fair to current market conditions. Economic times dictate these conditions, and this year it already is generating cost savings for most corporations. Other travel industry initiatives being implemented by companies are creating further reductions. Thus, the focus--to capture more--for the remainder of the year should be the enforcement of the strong travel program we just worked so hard to negotiate. But don't feel you have to do it alone.
Leading providers are happy to help by offering recommendations and solutions to improve traveler compliance. Engaging together, developing a collaborative plan and taking a strategic approach will generate greater returns, meet mutual business objectives and beat another costly rebid cycle.
Focusing on the larger issue of compliance saves on resources and prevents bogging down in process reliance.
Denise Lodrige-Kover is Hilton Hotels Corp. vice president of business travel sales and strategic partnership accounts.