Travel buyers missing out on continuous sourcing

4 May 2018

Just 11% travel executives have implemented continuous sourcing models for their hotel procurement.

A global survey of 226 executives found the vast majority of travel buyers still ran annual RFPs, despite those using continuous sourcing reporting improved traveller satisfaction, financial savings and increased portfolio flexibility.

Continuous sourcing involves performing a sourcing process several times throughout the year, often monthly or quarterly, instead of annually. It allows buyers to benefit from fluctuations in hotel rates and allows more flexibility in travel programmes.

The survey, A New Horizon in Hotel Sourcing conducted by the Association for Corporate Travel Executives (ACTE), said education was one of the primary barriers to the adoption of continuous sourcing, with 42% of travel executives who have not implemented it saying they were not familiar with the model. Another third said they lacked the time or resources.

The report said a fifth of travel executives do not stay abreast of business changes that could impact their hotel programmes, suggesting that continuous sourcing can help executives who do monitor business changes throughout the year to act on shifts more quickly.

Greely Koch, executive director of ACTE, said: “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.

“Today, changes in pricing, content availability and your company’s needs can hit within a matter of hours. We live in an age of information overload and constant disruption, and failure to quickly act on market developments can be costly for travel executives, both in terms of dollars and traveler satisfaction.”

The survey also found more than half (51%) of corporate travel programmes have made changes to how they source hotels in the past three years – for reasons including the fragmentation of the hotel marketplace and the amount of time that traditional hotel sourcing takes – and that the vast majority had derived savings from their new direction.

Of those that did make changes, nearly half (48%) outsource some or all of their hotel procurement to a global hotel services provider or a third-party specialist.

Companies that worked did with a global hotel services providers or consultancies reported annual savings of 7%, and those working with a travel management company reported annual savings of 4%.

Separately, a report by Egencia found that less than half (45%) of travelers are required to stick to an approved travel policy, as companies try to find a balance between blocking undesirable behavior and making booking processes easier for travelers.

It found the vast majority of business air travel was done in economy – just a third of international travelers were allowed to book premium – and that even in companies with advance purchasing policies half of tickets are still booked less than two weeks before travel.

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