New procurement strategies, services improving business travel experience

Business travel managers need to consider a shift in their hotel sourcing process, as fiscal performance and traveler satisfaction have become increasingly important, according to a recent survey.

The ACTE Corporate Travel Study was released by the Association of Corporate Travel Executives and HRS at the Corporate Lodging Forum in Shanghai last week to “take the pulse of the industry”.

A total of 226 corporate travel executives around the globe responded to the survey. They are from companies with diverse business travel programs, ranging from a small size with less than $5 million in annual expenditures, to medium ($5 million to $10 million) and large scale (more than $10 million).

The report found that more than half of travel executives have changed their negotiation process of hotel sourcing over the past three years, with most reporting cost reduction and other benefits.

Greeley Koch, executive director of ACTE, said that for the past four decades, travel managers have “spent their third quarters buried in hotel sourcing reviews”.

“The once-a-year negotiation strategy worked for a long time, but that was back when the industry was relatively quiet, and it took months or years for change to kick in,” Koch said.

“Today, changes in pricing, content availability and your company’s needs can hit within a matter of hours,” he said.

About one-third of the respondents said that they were highly satisfied with their current negotiation approach, while the majority reported only moderate satisfaction, facing frustration with market fragmentation, rising prices, lack of data transparency and the amount of time and labor involved in the sourcing process, according to the survey.

Marco D’Ilario, vice-president of sourcing solutions at HRS, said: “In a global arena with thousands of hotel management groups vying for business travelers, a growing number of perceptive travel managers and procurement executives recognize the benefits of evolving with new automation tools and best practices to drive financial savings while improving traveler satisfaction.”

The most common change was to begin working with a thirdparty hotel-focused specialist or consultancy service — a preferred option to companies with large hotel spends — or with a travel management company, a practice often used by those with small hotel programs.

Travel executives looking to reduce hotel costs, improve traveler satisfaction and increase program flexibility should consider the continuous sourcing model, a relatively new concept in hotel procurement, the report said.

Continuous sourcing is a yearround service that allows corporate hotel program managers to stay on top of hotel rate fluctuations in cities most relevant to their business.

The new approach introduces real-time awareness about rate trends in a company’s key destinations, D’Ilario said.

“This dynamic method, increasingly used in multiple countries by multinational programs, gives hotel programs irrefutable data necessary to engage with their preferred hotel suppliers throughout the year,” he said.

The report showed that expected cost reductions, improving traveler satisfaction and increasing program flexibility are cited as travel executives’ primary motivators for considering the approach of continuous sourcing.