5.27.2021 UPDATE: The information in this post is since outdated for the post-pandemic world of corporate travel. For the latest tips on negotiating with suppliers and leveraging your travel spend, we recommend reading our recent blog post The 4 S's Critical to Business Travel.
An essential piece of a well-run travel program is the negotiated discounts and/or benefits that are put into place with your travel suppliers. Suppliers can include: airlines, car rentals, hotels, virtual card and credit card companies – discounts with these businesses can have a significant impact on your bottom line. How can your business maximize preferred supplier discounts? Are discounts available for small and medium-sized enterprises? What does your organization need to have in place to negotiate discounted rates?
Before we talk specifically about how to negotiate discounts, let’s first arm ourselves with the information that your suppliers will need to make their best offer.
The information that’s gathered from your travel and expense reporting system will provide your preferred travel suppliers with the data they need to give you the best discount options. Items such as most-frequently visited destinations, largest hotel spend, and the number of travelers each year will allow suppliers to gauge your travel volume and preferences. It’s imperative that you have systems in place to gather this information and that your employees comply with the corporate travel policy. Employees who book travel outside of policy guidelines or who fail to report expenses in a timely manner will hamper your ability to collect accurate and comprehensive data.
If you are a small or mid-sized organization, the word “volume” shouldn’t scare you. While it’s true that larger volumes contribute to greater savings, your size shouldn’t preclude you from seeking discounts with your preferred suppliers. Put your key data points to work by sharing them with suppliers, who in turn can offer discounts based on their thresholds. A large company might have a hundred travelers flying all over the world, but if you have 5 or 10 employees who frequent the same destination each week, you can leverage that information and seek a discount on the specific route with your preferred airline.
When you speak with a supplier about the needs of your organization, they will want to hear about your travel policy and how it’s enforced in your organization. If they sense that your business has minimal control over how and when your business travelers are booking their itineraries, they will be less confident in your ability to meet their requirements for discounted travel. It’s critical that travelers understand and adhere to your business’ travel and expense policy.
Once you have these three steps down, you’re ready to start the conversation with your suppliers for discounted rates. So what are your next steps?
- Establish and work on the relationship. The relationship that you have with your current suppliers can make or break your ability to negotiate discounts. Have your employees been utilizing their services on a regular basis? Does your travel manager touch base with suppliers consistently to address improvements or updates to travel policy? If you’re already talking with your suppliers on a regular basis, the “ask” for a discount becomes a natural next step in your business partnership.
- Rid yourself of the idea that, “my business is too small.” Preferred supplier programs are available to a variety of organizations. These agreements can range from corporate affinity programs where suppliers provide benefits based on volume to group agreements where discounts are given when a certain number of employees are travelling to one location for a meeting. Work with your suppliers to ensure that you are implementing the most beneficial programs for your organization, no matter what the size.
- Ask your most frequently used hotels for a discount. Most likely your travelers are consistently staying in specific brand hotels based on preferences and availability in destination cities. While reaching national agreements is sometimes difficult, you may be able to directly negotiate with hotels in your frequently travelled cities. Consider not only negotiating on discounted room rates, but other considerations as well – such as free Wi-Fi, free parking, room upgrades or easy check-out options. Also, consider partnering with fewer preferred hotels chains to maximize your leverage.
- Don’t forget about car rental agencies and credit card companies. Like hotels, car rental agencies can offer value-added benefits if you direct the majority of your business (not matter the size) through them. As you continue to work on that relationship and your volume increases, you can then negotiate for significant discounts. One example is the Enterprise Plus program. This program is free to join and allows you to earn points towards free rental days and elite status with every rental. You also get access to rental services through National Car Rental and earn points at their North America locations. Credit card companies are also open to negotiating options for your business account. Depending on your business’ total transaction volume, you may be able to negotiate higher credit limits, lower annual fees or frequent-flyer type discounts related to card use. Have you considered using travel/frequent flyer points towards certain travel? If your consolidated corporate credit card offers points, applying those points to offset ticket costs can significantly reduce your travel budget.
- Make supplier negotiation part of your overall business strategy. When you start the process of negotiating supplier benefits, most likely your vendors will supply you with a code that’s used for tracking purposes. As you monitor this process, and are able to efficiently track spending, you’ll better understand what qualifies for a discount. This information can then be used to make strategic business decisions that need to be articulated in your travel policy, with emphasis on the advantages of each discount program. Once shared, this makes it easy for your travelers to comply with the travel policy and as a result, provides increased benefits to your road warriors and your business’ bottom line.
The T&E line item is likely to be the second largest controllable expense in your business’ budget. Knowing how much your company spends on travel, understanding your travel volume and travelers’ preferences can help improve your ability to negotiate meaningful discounts with preferred suppliers. By following the negotiation tips above, you will reap the benefits of discounted travel in no time.