Business travel is proven to be a driver of corporate growth, but can be challenging to manage because expenses pile up quickly. Undoubtedly, the C-Suite salivates at the thought of maximizing revenue gains with travel discounts – especially as airfare, hotel and car rental costs continue to rise. Savvy companies will attempt to negotiate their way to the best deals – after all, negotiated vendor discounts account for the largest percentage of business travel savings, according to the Global Business Travel Association. We’ve gathered a few tips and tricks to help you negotiate preferred rates with travel suppliers that your business uses most often.
Gather traveler data to best identify travel patterns
Negotiating a better rate requires you to do your homework. Before you contact a travel supplier, create a report based on your last year or two of travel expenses. Be prepared with data on the frequency of travel, peak seasons, how much you’ve spent on airfare, lodging and transportation and frequent destinations or routes.
Demonstrate your company’s volume of air travel. The minimum amount of annual volume needed for an airline to consider a volume discount is usually $500,000. For companies with annual volumes below $1 million, the airlines’ soft dollar programs may offer a greater opportunity for cost savings than a negotiated discount. You’ll need to evaluate with an apples to apples comparison of which programs are better. Bottom line, the airline will want to know if they give your company a discount, how much incremental business will they get, and does it justify subsidizing the business they are already getting without a discount?
Normally, a single agreement with a major vendor will bring your company big savings. If your company spends over $100,000, then you may want to secure a secondary agreement as a back-up. But don’t focus entirely on negotiating the lowest daily rate. Car rental companies are often more willing to make concessions on other costs which could be more valuable. Examples include surcharges, refueling charges, insurance, energy recovery charges, etc. These miscellaneous charges typically represent about 40% of your car rental bill.
For small to mid-sized companies without the volume to impress a major chain, you might consider being a big fish in a smaller pond and aim your negotiations at a regional chain or a boutique hotel in a frequently-visited destination. After all, as few as 50 nights a year would make an impression on a boutique or smaller independent. Just like the airlines, a hotel will want to determine if it lowers its rate for a company, how much incremental business will it get? Your company should plan to consolidate its volume with just a few properties in each destination to get the best rates. And most importantly, choose properties that will be acceptable to your employee travelers.
Establish Contact – and Make it Personal
Instead of starting with a cold call, ask colleagues in your industry for the name and number of their account representative or the head of their strategic partnerships. You might seek out potential vendors at corporate travel tradeshows. Face-to-face contact is a great way to start collaborating on cost-savings with the appropriate person. If you’re targeting a smaller hotel, make contact while you’re on-site during one of your business trips to lend credence to your commitment to staying with them. Ask for the local general manager or director of sales who’s dedicated to making that hotel your home away from home. Follow up on your meetings with an email that makes the case on your value and provide enough time to review your proposals.
Adding Value to the Supplier Can Sweeten the Pot
Consider what your company can add to throw into the negotiable mix. An option for an airline agreement would be to make their loyalty rewards card your corporate travel credit card, if you can demonstrate a significant amount of annual purchases. For a hotel, you might be able to parlay a short-term discount for an annual convention or national meeting into a year-long deal, even if the attendees are not all from your company. If you’re willing to commit to the same hotel every year for your convention – whether you’re hosting it or you’re simply in attendance of an industry event – use these numbers to bolster your yearly total. Consider barter: perhaps your business offers services that would be useful to the vendor or can help the vendor enter a new market or target a new customer segment. In the end, you could swap a discount for a discount on your services, provided your company is in a position to negotiate a deal of major significance for a travel supplier.
Consider partnering with a travel management company, which has already built the connections you’re trying to forge.
Ask For In-Kind Discounts
Think outside of the box when it comes to discounts. If you’re not reaching agreement on a dollar amount from a basic air fare or room rate, perhaps the hotel will add in free Wi-Fi with every stay or free overnight parking or breakfast. See if the airline will provide complimentary access to its airport lounge or waivers for advance purchase requirements that reduce ticket prices.
Use a Travel Management Company
Consider partnering with a travel management company, which has already built the connections you’re trying to forge. Reputable travel management companies have a long history with suppliers and they bring a lot of business to their door step. They can find and negotiate discounts for you by leveraging their buying power across a broad network of customers. Part of their job (and their goal) is to impress you so you’ll renew your annual contract. Since they have access to unpublished rates, odds are they can negotiate a better deal for you than you could on your own. A partnership with a travel management company will keep paying off. As your business partner, they get to know your spending and travel habits. Combine that understanding along with their negotiating power and you have a major advantage when it comes to minimizing travel costs.
Content provided by Travel Leaders Group.
Contact Travel Leaders / Destinations Unlimited for assistance with supplier optimization.