Business Travel Executive, February 2019

PHAT DATA Supplier Side Economics 30Business Travel Executive FEBRUARY 2019 suppliers for their programs and their business objectives Then they negotiate the heck out of those discounts Pearls Beyond Price Now this certainly doesnt mean that you dont drive competition in the marketplace All other things being equal schedules times property type and the like a good travel buyer will leverage that to obtain the best discounts But buyers must consider other things besides price alone How is their working relationship with that supplier Even though were in the business travel industry these relationships are working in the hospitality industry There will be times when a buyer may need waivers and favors from a supplier How will that work if you just forget about the relationship piece of the business and only focus on the numbers It is less likely that account managers and others in similar positions will want to really step up and help when those favors are needed Why would they If theyve just been nickeled and dimed to death they may feel that the buyer only values numbers So when theyre asked to choose to do a favor for one program over another they may be less inclined to help out the numbers only travel buyer When you are working with procurement these are the types of things that you need to explain to them There are many soft benefits that the managed travel program can bring to the company when there is a good blend between discounts and relationships Traveler compliance is also critical to the success of the buyer supplier relationship When buyers take into consideration the long term partnerships that many travel programs have had with suppliers over the years they often find that their travelers have adapted to those suppliers and probably prefer the stability of that familiar experience versus an every changing kaleidoscope of suppliers Travelers become known regulars at hotels and with air carriers They are comfortable with their travels because they know what to expect If buyers use only numbers to determine their supplier base they could be creating more compliance challenges because travelers are often resistant to change Remember even the best discount when not used is no discount at all There must be a balance Buyers often find that good strong partnerships with their suppliers can often overcome pricing related issues Case in point A solid airport hotel in a major market which is attached to headquarters building of an organization had been getting 279 per night When the recession hit in 2009 the hotel was forced to drop their rates to 109 per night just to be competitive and keep the business they had Over time as the economy rebounded hotel management found itself in a predicament they could get back to The buyer supplier relationship cant be all about the numbers Travel is too personal that 279 rate as market conditions improved but the travel buyer for the organization could in no way take a sudden 170 rate increase back to 279 The buyer and the hotelier partnered and over a three year period did two things First they had slight year over year rate increases over a few years and second they looked at their traveler portfolio and provided all travelers coming to that property with at least Gold status and not just for their property but for all of the chains properties This step alone mitigated thousands of dollars in spend in the organizations overall hotel program because now on that brand Internet and breakfast was included for all those travelers Over time they were able to create a balance between the needs of the hotel and its stakeholders with a solution that worked for the managed travel program honoring the long term relationship This is a perfect example of how a true partnership works It is give and take on both parts And that is Phat Its Complicated So back to that most interesting conversation between travel and procurement the one where procurement folks often raise the question How can it be that the rate we negotiated wasnt applied Which is often followed up with How come we cant track 100 percent of our spend Well the answer is its complicated especially from a procurement perspective In many past Phat Data stories weve highlighted the industrys ongoing challenge with the differences in spend data between the buyer and the supplier But when buyers share their Phat Data strategy with their suppliers as well as their internal stakeholders they create a safe place to reveal challenges and opportunities that yield a better more effective data set actionable data that serves multiple purposes for multiple stakeholders Buyers and suppliers yearn to have more accurate spend data so they both can negotiate better A supplier doesnt want a buyer to say we have X amount more spend so I need a better deal likewise the buyer doesnt want to be undercut because the supplier sees a less productive relationship Working together they can to find ways to obtain better data so they can get closer to the truth and while theyre at it they can identify ways to creatively enhance the managed travel program There is one other area buyers should consider that may be the elephant in the room What happens to the buyer supplier relationship when the travel management companys supplier relationships are counter to the buyers travel program Being aware of how back end incentives TMC preferred relationships and the rest could impact your program is critical Buyers need to track supplier compliance and identify potential areas of concern with their TMC so they can work together to strengthen their preferred partnerships While it is most important for buyers to be focused on their individual supplier relationships they should understand the overall potential impact of the TMCs preferred relationships too The buyer supplier relationship cant be all about the numbers Travel is too personal and a successful program focuses on a balance between the numbers and the experience If done correctly that balance will enable preferred partnerships to grow and mature over time This how to build those symbiotic relationships within the managed travel space Conquering this is Phat and Phat Data continues to tell the story BTE Jennifer Steinke is vice president Global Travel Experience at WHoldings and an industry thought leader with over 30 years experience managing corporate travel She holds an MBA plus Certified Corporate Travel Executive CCTE and Global Travel Professional GTP certifications from GBTA Jennifer strives to deliver innovative and thought provoking ideas to the corporate travel industry