When times are tight you may not be able to get travel suppliers to budge on price, but they may throw in extras if you put business their way, says Catherine Chetwynd
As the recession recedes, are travel buyers fighting to keep prices down?
They’re not all trying to get rates slashed, many are aiming for added value, giving suppliers the opportunity to stand out from their peers in both creativity and willingness to negotiate.
Surely suppliers want to be seen to be competitive?
Yes, but clever suppliers want to demonstrate that if buyers keep forcing prices down, there comes a point where this will end up being counter-productive.
Does this apply to all travel providers?
Yes. Travel agencies are a good example. If you pare away the transaction fee – the cost of making a booking – the agent is not going to have the right resources in the quality of people, technology or time, to work at reducing the product cost.
Have natural disasters, terrorist threats and health scares influenced negotiations?
The ash crisis of 2012 in particular highlighted a need for risk management. As a result, some corporates are renegotiating contracts with TMCs to build in emergency contingencies.
What is necessary for risk management?
Information is key. A good system for controlling travel, knowing where everyone is and keeping information in one place are vital starting points, so pre-trip approval is becoming more important in companies.
Can this information be used strategically?
Yes. When you can see that a supplier has fulfilled all the agreements in a contract you can give them more business, which can present opportunities for further rate negotiation. Mutual loyalty also goes a long way.
Can yearly reviewing of contracts add value?
Traditionally, contracts have been reviewed annually, but now reviews are taking place after three or four months and terms and conditions are being scrutinised more closely.
Should travellers play a part in looking for value?
Definitely. Ask them to be more aware of the value in what they buy, so that they don’t pay for speedy boarding and don’t order services such as wireless internet access if they’re not going to use them.
Are all-inclusive deals a good idea?
They’re only good value if what is included is used. This particularly applies to hotels: if your travellers tend to leave on a 6.30am flight, they’re not going to have time for breakfast before they go to the airport. Or if they are engineers or mechanics, for example, they’re unlikely to need wifi.
What about airlines, which are increasingly charging for extras?
Unbundling can work in buyers’ favour. If your company makes a lot of short-haul trips with little or no baggage and not much demand for meals on board, there’s no need to pay for them. Conversely, where carriers are offering limousine transfer or lounge access, that can be built into negotiations. However, this doesn’t apply to upgrades, because two people travelling together might not both get one.
Where do joint ventures and alliances fit in, especially with the latest BA/American/Iberia relationship?
This primarily applies to the North Atlantic. It provides an opportunity for companies to have one deal across the joint venture, rather than negotiating with all three, reducing duplication, complexity and potentially cost.
Can you negotiate car hire deals?
As ever more vehicles arrive with sat nav, drivers can be discouraged from ordering it when they book, while negotiating for an automatic upgrade is a visible benefit.
Hoteliers are also trying to add charges. How can I prevent this?
Cancellation, early check-out fees (a charge for staying a shorter time than booked) and minimum-stay restrictions are increasingly the norm and can all be negotiated away.
How can I check that I’m getting what I was promised from a supplier?
Listen to travellers. If they’re not happy, they will tell you, and you can then apply pressure to the supplier, or even drop them from your programme. If it’s a hotel, that may mean your people have to travel further to get to their client’s offices. Unfortunately, quality and price don’t always go hand in hand.
Will meeting venues give added value?
Yes. The meeting industry has had a particularly hard time and this has made suppliers creative. If you have enough meeting business, you could negotiate a good rate for exclusive use of a venue, and if you only use it from Sunday to Friday, the operator will sell the remaining space. Even with smaller volumes of business, providers may be happy to offer a deal.
What’s the bottom line?
Define your requirements and those of your travellers. Decide which extras are worth paying for and which ones are dispensable – these may differ according to the profile of the travellers. Then enter the fray bearing in mind that if you beat down suppliers to the final penny, they won’t be able to offer you anything other than a basic service. Negotiate on a give-and-take basis.
