23 July 2014 | Jon West
This is the perfect time of year to review sourcing strategies and remember what an important role they play when procuring hotel accommodation.
The hotel market is fragmented and highly complex which means that many companies often lack the necessary analysis tools and benchmark information needed to obtain and negotiate an efficient hotel programme.
Many companies underestimate their own hotel expenses – in fact according to the Concur T&E Report 2012, accommodation costs accounted for some 22 per cent of the total travel costs.
Here are my top tips when reviewing sourcing strategies:
• Evaluate hotel spend and design an effective programme strategy. The first step in optimising hotel spend is making an accurate assessment of where the programme stands in terms of spend, the corporate hotel policy, preferred supplier rates, negotiated conditions and the ability to book through global distribution systems. Once a clear and concise overview of bookings has been obtained, specific recommendations for actions can be derived and formulated.
• Reduce the hotel portfolio in order to decrease the rates by bundling the volume. Bundling hotel volume leads to a reduction of average rates per room night.
• Include newly-opened hotels within your reduced hotel portfolio. When given the chance to bid alongside established hotels they are likely to offer competitive rates and will give your hotel programme a more efficient structure.
• Consider distance of hotels from work locations in order to reduce the total cost of the trip. The hotel may be cheaper, but how much does it cost to get there if it’s further away?
• Don’t forget the employee-preferred hotels to encourage compliance. One of the main frustrations for procurement professionals is leakage from travel programme. Without compliance it is not possible to achieve the efficiency and cost savings that full control brings. Having the right hotel portfolio for travellers will have a direct impact on compliancy to travel policy.
☛ Jon West is managing director of HRS