Business travel

Global Business Travel: How Growing Companies Can Save on the Increase…

As revealed in the new report on hotel prices 2023 from American Express Global Business Travel (Amex GBT), our corporate clients should prepare for higher hotel rates in 2023. Due to a combination of challenges – including inflation, pent-up travel demand and shortages of hotel staff – we expect rates to increase at most hotels. cities.

This situation places small and medium-sized enterprises (SMEs) in a difficult position. As we published in our earnings report, SME travel is recovering faster than any other customer segment. In Q2 2022, SMB travel transactions were at 84% of 2019 levels compared to 76% for all other customer segments.

So how can SMEs continue to grow their business travel businesses without being penalized by rising hotel prices? Amex GBT’s Anu Kuchibhotla, Global Head of Hospitality Practice Line, and Nina Marcello, Senior Sales Manager, share some strategies.

Partner with a few select vendors

If you have employees who repeatedly travel to certain destinations, you could potentially save a lot by establishing a relationship with selected properties in those locations and making them your preferred suppliers. Many properties require a minimum annual commitment of 100 nights to qualify for a corporate discount. In major cities squeezed for supply, that limit can be as high as 500 overnight stays, Anu said.

To determine the cities where you could benefit from such a program, you must first analyze your data and identify the places your travelers visit most frequently. This task can be tricky if you don’t have the right data capture tools and methods.

“Due to certain booking practices, such as when a traveler books directly with a property, you may not have access to the data you need,” Anu explained. To combat this problem, she recommends that travelers use the travel management company’s (TMC) booking tools to seamlessly capture the necessary data. When this is not possible, a lot of information can be obtained using credit card data if the company mandates the use of a credit card for travel expenses.

When determining which suppliers to work with, Anu also recommends reviewing the current mix of hotels in use and introducing lower category hotels that will cost less – without compromising employee safety. Looking at hotels slightly further away from the office location can be another way to save, she said.

Set up a travel policy

Having a travel policy is fundamental to saving money. Without one, travelers have no spending limit. Yet many small businesses do not have formal policies because they have evolved or grown so quickly. “They say, ‘Oh, we’ve always done this’ or ‘Bob’s secretary calls and books everyone’s trips. “But those are the kinds of things that can cost companies money,” Nina said.

Some policy guidelines that will help reduce hotel costs include:

  • Book online with the TMC, not directly with a hotel or consumer website, for easy spend visibility.

  • Selection of preferred suppliers in your program when there is a corporate discount.

  • Simple travel booking using the online booking tool instead of the potentially more expensive live agent option.

  • Booking TMC discount fares when company-negotiated fares are not available.

Apply the travel policy

Having a policy is a good start, but its value depends on whether it is followed and enforced.

“If you have a policy that says you can’t do certain things or book beyond certain price caps, but everyone on your team knows there won’t be any repercussions if they break the rules, it becomes ineffective. have validity and it’s not going to lead to the results you want,” Nina said.

So only create policy guidelines that you can enforce.

As Anu noted, there are tools that can help determine compliance rate. If your percentage is skewed in the wrong direction, digging into the data can help find the root of the problem.

“Is it because you don’t have the right program in place? Is it because you don’t have the right properties in place? Data can help you understand what’s driving non-compliance and help you fill in the gaps,” said Anou.

The online booking tool is another policy enforcement ally.

“Using an online booking tool can create what’s called visual guilt,” Nina said. “By design, when your policy settings are set in the online booking tool, it directs people who want to comply to the right choices by guiding them to the best choices. Just by guiding them there- down, you’ll see some of the savings.”

Take advantage of your TMC’s relationships and solutions

For one-time trips or trips to destinations where you don’t have a preferred provider program in place, Nina recommends booking content with rates negotiated by TMC.

Through our Preferred Extras™ hotel program, guests can access special discounts, ranging from 5% to 50%, at more than 34,000 properties worldwide.1 Many also offer free Wi-Fi, breakfast, and other perks, such as food and drink discounts, room upgrades, and late check-out.

We also offer a hotel repurchase solution that can help reduce costs.

“With the re-shop system, once a hotel is booked, they will continue to shop until maybe a day or two before the actual date of stay. If a better rate is found for a room similar, it will automatically rebook at the lowest price,” Anu said.

Check the contract carefully

As mentioned in the Hotel Price Report 2023, hotels are doing what they can to increase revenue and recoup lost revenue due to the travel shutdown. If you’re negotiating with hotels, you can expect the big chains to push for a dynamic corporate rate that fluctuates with supply and demand. Resist in places where you have enough volume to get a static rate, which stays the same regardless of price fluctuations.

“Even large companies are hesitant to adopt dynamic rates because if the best available rate keeps going up, there’s no benefit to having that dynamic rate in place,” Anu said. “We’re pushing hotels quite heavily on this.”

If you have enough volume in one destination, continue to negotiate a flat rate.

As indicated in the forecast, we are also seeing more and more hotels pushing the availability of rooms other than the last in their contracts. This means that a hotel may charge a higher rate than agreed during peak times.

If you are stuck in this situation, check if you can get a better deal with TMC content. All of our Preferred Extras properties offer the latest room availability. This means that as long as there is a room available, you will get it at the contractual conditions and prices.

Another thing to be wary of: some hotels approach SMEs with what appears to be a great offer, but in reality it’s a minimal discount from the chain.

“When you don’t have a formal program it might seem attractive, but the channel’s discount is usually less than the best available rate. With the best available rate being as high as it is today, it doesn’t may not be the best for the company from a cost management perspective,” Anu said.

SMBs should be very choosy when looking at chain discount options and limit the number they accept. Ultimately, by consolidating spend to a limited number of partners, your savings will be greater than if you had low discounts with many brands.

Do not hesitate to call on the advice team of your TMC

Whether it’s helping to craft a policy designed to increase compliance, diving into your data to uncover cost reduction opportunities, or going to the negotiating table on your behalf, our Global team Business Consulting (GBC) can help you reduce your hotel spend.

Think you’re too small for consulting services? Think again.

“We serve a variety of clients and always make recommendations to our clients based on their peer groups and against their own benchmark,” Nina said. “In other words, we’re not recommending a customer who’s spent $700,000 at the hotel take the approach of someone who’s spent $70 million at the hotel. We’re changing the recommendations to meet the needs of customers of different sizes.”

For more advice on sourcing strategies — and to see how high hotel rates can go — Download Hotel Rates 2023. If you would like more information on how your business can work with our GBC team, contact Nina whether your business is based in North America or anu if you are based elsewhere.

1 Based on American Express Global Business Travel contractual agreements and availability as of October 2022. Program content subject to change without notice. Individual results may vary. Additional terms may apply.