Want to negotiate with travel vendors, but hate to haggle?
Here’s the secret: Let your travel and entertainment (T&E) expense data do the work for you.
No, the data won’t come to life and start wheelin’ and dealin’ on your behalf.
It will, however, help you to build a business case so compelling that it will be difficult for travel vendors to deny you a deal.
Here’s how you can start building your case with your expense data.
1. Illustrate your travel footprint and volume
To begin, you’ll have to start thinking like a travel vendor.
Hotels, car rental agencies and airlines all want to see proof of your company’s travel footprint and volume before they offer you a discount.
Your footprint is where your company has travelled. Your volume – how much and how often you spend on travel – shows why you need their service and why that’s not going to change.
For example, if you can say that 10 of your employees are staying at a hotel every month to work on a long-term project with a client, it will show hotel vendors that there’s a long-term opportunity for you to give them business. With a combination of footprint and volume, you’ll make it a no-brainer for the hotel to give you a preferred rate.
Be as specific as possible when you gather your data as this will help to drive what rate you receive. Look at how, where and on what your employees are spending. This information will help you create benchmarks within your organization about where your expense budget is going. Then, you can start allocating your budget funds.
Once you have a better understanding of your budget, it’s time to start talking to your vendors.
2. Start negotiations
Hotels
Like with most things, exclusivity is appreciated and creates greater leverage. Hotel negotiations are no exception.
But that’s not to say you can’t have multiple hotel relationships. It will depend on your company’s needs and what kind of travel is required.
If your T&E data shows that your employees are traveling nationwide, it might be better to negotiate with a hotel chain’s major accounts or national accounts. If your employees are only visiting one location, it could make sense to go directly to a local hotel’s general manager.
Here’s a bonus tip: If it’s local, consider contacting a newer hotel that’s looking to establish a client base. They might be more willing to negotiate, especially in a city with a mature market where they’re competing with other hotels.
Either way, once you’ve identified who your contact should be, send an email explaining who you are and what you’re trying to do. Give them some details on your organization, hotel requirements, budgetary expectations and the related expense data you have available.
For example, say you have a major client in Cincinnati, Ohio, and your employees are frequently staying in a particular hotel there when they meet with the client.
You can then go to that hotel and say: “We’ve spent X-dollars on 15 employees’ lodging in Cincinnati in the last year. We’re looking to leverage that – possibly in one partnership – for a corporate rate that better aligns with our budget.”
Additionally, you may want to consider negotiating a better rate for other amenities, such as meeting space, local transportation, parking, breakfast and Wi-Fi. The reality is that you want your people focused on things that are revenue-generating to your business. Staying at a hotel isn’t one of those things. The less decision-making there is around their travel, the more they can focus on doing their job to best of their ability.
Rental cars
Like with hotels, you will need to determine if you need a national car rental vendor or a local solution.
Look to your expense analytics to serve up stats again. If your organization is typically using one agency over another, that creates buying power.
If you can’t yet prove that you can deliver volume, consider using milestones as a negotiation tactic – meaning, if you reach certain milestones on volume, you receive an improved rate throughout the year. For example, you might propose that if you spend $100,000 in the first quarter, you would receive a 10 percent discount from that point forward.
To standardize the car rental experience for your employees, include add-on options in your negotiations, like prepay on refuel and GPS for all rentals.
Also, a quick caution on car rental agencies: Pay close attention to their billing methodology. What may seem to be the cheapest option may not be because their add-ons aren’t always articulated up front.
Airfare
Negotiating with airlines is more challenging. You usually don’t have as much to leverage as with a hotel or car rental agency.
What you don’t want to do is compete with an airline’s mileage club. Instead, look at your spend data – if you see a trend that everyone is flying on one airline, you can negotiate aspects of flights with that carrier.
When you’ve prepared your business case, reach out to the airline’s head of business development and/or strategic partnership. It’s hard to negotiate an improved rate with airlines, but if you have the volume, it’s not so difficult to negotiate some of the amenities, like free upgrades, reduced change fees or use of lounges or clubs.
3. Get it in writing
Once you strike a deal with a vendor, you’ll want to get it in writing.
A simple letter of intent is the easiest way to put it together. However, in some organizations, a Request For Proposal (RFP) process – which evaluates multiple vendors – might be preferred, or even mandated, depending on the size of the opportunity.
The RFP process is effective, but a lot of work. It requires your company to dedicate resources to develop an RFP, identify the vendors you want to send it to and select the vendors who fit your budget.
4. Get your employees onboard
Once you have rates and amenities negotiated, you’ll want to make sure your employees are using them, or your effort will be for nothing.
For starters, having a written travel policy can be a useful resource for employees.
A good expense management system can be a powerful tool, too – as employees navigate the system they will quickly learn what they can and can’t do through system controls.
It can also be helpful to have a travel booking tool – and it’s even if better if it integrates with your expense management system.
Without technology, you’ll need to clearly communicate with employees who the new preferred vendors are and how to properly book their service.
Looking for expense management software?
Insperity® ExpensAble® provides expense management software with service. In addition to collecting expense data, it helps you spot and track data trends so that you can easily negotiate travel deals. And, with an integrated travel booking tool and the ExpensAble® Prepaid Plus MasterCard®, tracking and controlling expenses is more efficient than ever.