September 10, 2009 • San Diego - With the 2010 hotel rate negotiation season underway, travel managers here at the National Business Travel Association convention last month admitted they are still struggling to find the true value of their 2009 hotel programs. As publicly available rates continue to tumble below corporate negotiated rates, travel managers are hoping to achieve steeper discounts for 2010, according to some speakers on a panel discussion. Meanwhile, travel managers emphasized benchmarking and communications to both senior managers and travelers as keys to success.
"Our program really doesn't have value right now," said Pearson manager of travel services Justin Zucker. "[A traveler] who is just going to whatever city on vacation is getting the same rates that our travelers can. That is a real red flag and we are having a discussion [with hoteliers] about it.
"Every buyer is looking for reduced rates [in 2010], but in order to get them, the travel managers have to be supportive of the supplier as well," Zucker added.
Bank of America corporate travel services sourcing lead Alisabeth Fox agreed, but said she is planning for an aggressive bid season as she looks to lower 2010 properties by 25 percent to 35 percent.
Working Through M&A Challenges
Bank of America faced many travel program hiccups this year related to mergers and acquisitions. As Merrill Lynch folded into Bank of America, Fox said hotel compliance fell almost 10 percent as the two corporate cultures meshed. Fox also said the combined company now has too many preferred properties in some cities. For 2010, Fox plans to "re-optimize" the mix of properties in the hotel program based on current volume. "We also ask [travelers] for the top 25 preferred properties and we look at the negotiated rate in the market, and we also look at the top 25 non-preferred properties to see if there is some opportunity that we are not aware of to add a property or solicit it next year," said Fox.
"We have noticed that there are different cultures that we need to account for and we are challenged with combining them into one complete program," Fox said.
Fox found she had to rigorously communicate the travel policy to travelers. Once the program is complete, she said, the travel department will list all of the preferred properties in a hotel directory available to travelers, load the regulations into the online booking tool and send emails to travelers and travel arrangers about program changes. Fox added that the company programmed dynamic messaging within the booking tool to display the travel policy when travelers book in certain markets.
Importance Of Communication
Other panelists also said they implemented or plan to implement diverse forms of communication to improve compliance and ultimately reduce costs.
Pearson's Zucker said finding effective ways to communicate to travelers--and senior executives--has proven to be challenging. "I would by lying to myself and everyone here if I said that our executives care about compliance," he said. "What they care about is the budget and traveler safety. It's my job to communicate to them how the program will them achieve these goals."
PricewaterhouseCoopers U.S. travel director of operations Kim McGlinn said her company's travelers are more than 90 percent compliant to the hotel policies because the booking process is "really easy." PwC conducts focus groups to understand travelers' booking patterns, posts instructional videos, emails newsletters to travelers and arrangers, and, like Bank of America, uses dynamic messaging in the online booking tool.
"We have had a huge amount of success with this and it has resulted in tremendous cost savings," said McGlinn, citing senior management support and corporate travel policy.
Uncovering More Savings Opportunities
Despite indicators pointing to a gradual economic recovery, travel mangers said their corporate finance teams still demand budget cuts.
"If you can benchmark within your organization, that is probably one of the most important opportunities," said Zucker, who discussed cost containment comparisons between departments.
Instead of comparing internal budgets, Fox said she compares Bank of America's travel program to other programs using data from her travel management company. "We feel that we do a great job [with our hotel program], but we were not able to show a hard savings figure to our finance folks," she said. "Now we do benchmarking for our peer groups and see where they are in the market versus where we are in the market."
Laurie Kazimer, manger of travel sourcing for Target, said she focuses mainly on the traveler's actions to drive savings. "We give travelers advice that they should be staying at hotels that do not exceed the expense limit and [the booking tool] shows them hotels that are within that expense limit," she said, adding that Target conducts daily hotel bookings audits. "If they don't make the decision to take our recommendation, they are then put on senior management reporting that shows they were over the expense limit and were not staying at a preferred supplier. This is pretty impactful. It has been very successful over time to get that traveler's behavior to shift."
