Improve air, hotel, and car rental negotiations with several key actions to start now to assure your company accomplishes its 2017 program goals. The first essential step before starting the negotiation process is to outline your strategy, which should include developing a plan that requires effective and aggressive negotiations. In addition, we recommend establishing clear objectives for program achievements when negotiations are finished. The final phase of the pre-negotiation process, involves obtaining data and a complete familiarity with your existing spend, current fares/rates, and traveler trends.
These important steps will strengthen your company’s negotiating leverage. Think your program is too small for negotiating with suppliers? Small and midsize enterprises (SMEs) have intensified their negotiating rank through the majority of supplier groups over this past year.
There are numerous methods to choosing a supplier, as well as tactics for creating the essential elements of a managed travel program. It is recommended to attempt to negotiate with a single supplier for several locations. Leverage volume for contracts at hotel chains and multiple city car rentals. Contemplate regional or global air alliance agreements and smaller, local contracts to guarantee wide-ranging coverage. Request that contracts contain distinct service level agreements to ease performance measurement, which should be at consistent intervals and quarterly is best.
Acendas has the following best practices for successful airline, car, and hotel negotiations in 2017:
- Airline consolidation and strategies for smaller programs. Due to last year’s completion of the final key phase in the American Airlines-US Airways consolidation, U.S. travel buyers are left with only three legacy airlines. Additionally, Alaskan Airlines agreed to acquire Virgin American. Regardless, there are numerous air negotiation options for corporate programs that typically signify the largest segment of overall travel spending. Carriers still need high-yielding corporate volume and in attempts to succeed, are continuing to fight to enhance dependability and inflight experience. Volume continues to rule in carrier negotiations. However a lesser program that shows compliance and travel on important schedules will be ahead of bigger companies with less understanding of data and traveler performance. During the initial phases of managing negotiations, there are crucial factors and Acendas developed guidelines for companies that are preparing to negotiate with airlines for the first time.
- Car rental rates should include ancillary services. Recently, car rental suppliers have grappled with increasing rates. However, there are still advantages to a well-managed corporate car program. While car rental typically signifies a lesser part of total travel spending, slight savings per rental obtained by comprehensive management, can grow into considerable advantages through thousands of transactions. Additionally, car suppliers are understanding that income increases can occur more from supplementary services rather than rates, consequently corporations that do not negotiate or create policy based on these amenities will see a substantial impact on their program. Acendas has best practices to achieving savings on car rental negotiations.
- Hotel market and benefiting from changing control. While hotel occupancy in the U.S. is still high, growth in 2016 has slowed down. While not fully a buyers’ market, 2017 looks to be better than in past years for hotel RFP negotiations. Corporate travel growth appears to be recovering in the later part of this year. Hotel occupancy is projected to level out in 2017, which allows buyers to alter segments to hotels that can benefit. Group travel will do even better in 2017, due to rates being negotiated so far in advance. Special reduced rates accessible via hotel loyalty programs should be considered, if these rates are lower than negotiated. Acendas has more recommendations for successful hotel negotiations.
Once agreements are in place, the Travel Manager or buyer should review current contracts before the negotiating process starts over. This process can expose possibilities such as further advantageous contracts with preferred suppliers. As part of managing the travel program, traveler communication is crucial regarding preferred partners and policy requirements.
Acendas created three white papers to assist with the negotiations process for airlines, car rental and hotel. Click the link below to read our Best Practices in Corporate Airline Negotiations.Click the link below for our white paper on the Crucial Steps to Success After Hotel Negotiations. Click the link below to read our Effective Strategies for Corporate Car Rental Negotiations.