Spend management / Hotels
with lower volumes. “They’re happier with smaller volumes,” she says. Rather than be swamped with a few larger accounts – which would be risky if they lost one of them – luxury hotels will often take the lower-risk option of more, smaller accounts. She also believes that of all the potential soft benefits, Last Room Availability (LRA) – whereby a hotel is obliged to sell you its last available room at your contracted terms and rate – is the most difficult to negotiate. “You need high room night production and tight controls in place to deliver what you’ve promised,” she explains.
Rates with benefits
More easily achieved in the negotiations process, perhaps, are soft benefits such as free wifi access, cocktails on arrival, F&B discounts, dinner concessions, gym access (which in some markets is charged for), early check-in, parking or a shuttle bus service to/from the airport. Each negotiation process is personal to your company and its business travellers.
Another cost-saving strategy is to hand the choice back to the traveller and achieve higher policy compliance. Introducing a rate cap by destination allows the traveller to either splash it all on a five-star hotel outside London and commute in, or downgrade to a Travelodge.
Putting it into practice
It’s a frustration for Richard Childs, Group Procurement Category Manager at Biffa, whose significant hotel spend – the majority of which is domestic – constitutes 80% of the company’s annual spend. The spend may be sizeable but it’s also fragmented, which challenges preferred suppliers to negotiate discounts. Biffa’s single biggest supplier, Premier Inn, accounts for just 15% of its business. “Most hotels want 200 bed nights a year and above before offering a rate so it’s
difficult for us to get deals because we haven’t got the volumes,” says Childs. “Our fragmented spend is a frustration as we know we could get better deals. “We have deals with IHG, Premier Inn and Best Western and we use whatever’s local to our site and negotiate preferred hotels regionally,” says Childs. So the Village in Newcastle and the 2,000 bed nights a year the business can offer the Holiday Inn in High Wycombe – Biffa’s HQ – shaves something off the rate. Childs pays close attention to quarterly data in case new projects may have changed travel patterns and he’s
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