Sourcing strategy

Six steps to smarter sourcing

Get to grips with your data Data is key in developing sourcing strategies. Review it year-round, not just at request for proposal (RFP) time. And use data to understand how your travelers are using the program. For example, expense data can help you identify if travelers are expensing breakfast outside of the hotel. It’s also worth understanding your total hotel spend per supplier, combining transient and meetings & events, so that you can showcase this in supplier conversations. Data takes the emotion out of decision-making, helping reinforce the hard-won gains of your program. Not all organizations can do this in-house. If not, look for a specialist partner who can help. Using technologies like Amex GBT Consulting’s Hotel Lobby, you can identify where your program needs strengthening and understand when to take a negotiation to a property, or to use existing TMC content.

Think creatively to secure availability Consider negotiating multiple room types to help secure availability, especially in cities with high occupancy or that are strategically important to your program. Focus on the availability in the area and be flexible about room type and cost. Be open to taking a higher category room if you need availability in a particular hotel at a busy time. That way, there’s more chance your travelers can stay where they need to, when they need to.

Keep an open mind on dynamic rates Dynamic rates are here to stay, so it’s worth keeping an open mind when they’re raised in your conversations with hotels. Using some dynamic rates could create a more flexible, multi-year RFP, moving the focus from sourcing to tighter in-year management to get the biggest savings from your negotiation. Your travel management consultants may have a tool that can help you manage dynamic rates.

Keep an ear to the ground It’s critical that you know what’s happening in the wider industry. Stay on top of the latest trends and narratives; this can stop you from being blindsided by unexpected developments in negotiations. Understand suppliers’ various brands and the discounts they’re offering leisure travelers. For example, do they offer a small percentage discount to those sharing their email address to access the hotel Wi-Fi? Any discount available to the public should be your starting point for negotiations. Working with external consultants will help build your understanding of your suppliers and their strategies, helping you find a strong starting point for negotiations.

Communication is key It’s easy to fall into a pattern of only talking to hotel suppliers at set-piece moments – issuing the RFP, negotiating, and concluding the deal – then falling silent until it’s time to do it all over again. Talk to your suppliers throughout the year to set the tone for more effective negotiation discussions and a stronger relationship. Keep them updated on relevant developments, e.g. that they may see less bookings at a particular location if you’ve recently closed or relocated a nearby office. Communication within your organization is also key. Keep your employees updated on preferred partners and remind them to use them. Failure to do so can undermine your sourcing strategy.

Take a multi-year view It can be tempting to focus on year-on-year changes in negotiations. In our experience, it’s useful to take a multi-year view. In some cases, you may have accepted high increases two or three years ago, in the expectation that increases would be lower at this stage. If that’s so, you can point to this in your negotiations. If you have had flat rates for several years, you might have to consider a higher-than-average increase.

3 best practices for sourcing a smaller hotel program

Small programs face the same challenges – but there are some specific points to be aware of.

1. Get started with data Data is important when it comes to negotiations. Companies with smaller hotel programs may not have the ability to drive change from their data in-house. The key is getting started. Jump in and take the first step. This can be as simple as a spreadsheet with some clear tables and charts. Build on this over time to develop a clear picture of your program needs. A key topic to track is program compliance; are travelers booking the rates you’ve negotiated or are they going off-program? 2. Consider pre-negotiated rates We’re seeing hotels increasingly ready to offer dynamic rates or non-last room availability (NLRA) rates for lower-volume programs. While larger programs can benefit from dynamic rates, they may mean higher costs for you. In these cases, a pre-negotiated rate (such as Amex GBT’s Preferred Extras, which often include value adds) might be more suitable than a contracted NLRA rate. 3. Stay flexible if your spend is scattered Companies with smaller hotel programs may find that their spend is scattered, with no main locations. For cities where this is the case, there may not be a strong business case for a negotiated rate. Other options, such as a chain discount, might be more relevant. Stay flexible, consider how many room nights you need, and explore the range of options available to you. Amex GBT’s Hotel Marketplace can help you find options in secondary and tertiary locations where you may not need a negotiated rate.

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