Phat Data focuses on the strategy and deliverables of data within the managed travel program. One of the items that is often identified when building out a data strategy is the fact that buyers and suppliers rarely have numbers that match. This apparent discrepancy can cause serious issues when it comes to negotiating supplier discounts and contracts.

Often if procurement people are involved, they have a hard time understanding the ‘why’ behind how the numbers can be so different. When there is doubt in the numbers, that spills over into doubt about the overall relationship.

Let’s explore how buyer and supplier can come together to have symbiotic relationships based on not just the numbers but an overall partnership.

Building out a harmonious partnership is not the easiest thing to do and it can be fraught with challenges. However most of these challenges can be overcome when thought through thoroughly (I dare you to spell that fast three times).

Probably one of the most difficult conversations to have is the one with procurement folks, trying to convince them that preferred vendors are more than just negotiated deals. We would all agree that the discounts and deals are very important to the managed travel program; however, we have to communicate with our procurement teams to help them understand the overall value proposition of the preferred supplier relationships. This is critical because of the personal nature of travel and how without understanding of these relationships, gaining compliance can be difficult if not downright impossible.

If we don’t balance the needs of the travelers – aligned within policy – even the best of discounts don’t drive travelers towards one supplier over the other. Travel buyers need to ensure that they have done their homework and have picked the right suppliers for their programs and their business objectives. Then they negotiate the heck out of those discounts.

Pearls Beyond 
Price Now this certainly doesn’t mean that you don’t drive competition in the marketplace. All other things being equal (schedules, times, property type and the like), a good travel buyer will leverage that to obtain the best discounts.

But buyers must consider other things besides price alone. How is their working relationship with that supplier? Even though we’re in the business travel industry, these relationships are working in the hospitality industry.

There will be times when a buyer may need waivers and favors from a supplier. How will that work if you just forget about the “relationship” piece of the business and only focus on the numbers. It is less likely that account managers and others in similar positions will want to really step up and help when those favors are needed. Why would they? If they’ve just been nickeled and dimed to death, they may feel that the buyer only values numbers. So when they’re asked to choose to do a favor for one program over another, they may be less inclined to help out the numbers-only travel buyer.

When you are working with procurement, these are the types of things that you need to explain to them. There are many soft benefits that the managed travel program can bring to the company when there is a good blend between discounts and relationships.

Traveler compliance is also critical to the success of the buyer-supplier relationship. When buyers take into consideration the long-term partnerships that many travel programs have had with suppliers over the years, they often find that their travelers have adapted to those suppliers and probably prefer the stability of that familiar experience versus an every-changing kaleidoscope of suppliers.

Travelers become known regulars at hotels and with air carriers. They are comfortable with their travels because they know what to expect. If buyers use only numbers to determine their supplier base, they could be creating more compliance challenges, because travelers are often resistant to change. Remember, even the best discount when not used is no discount at all. There must be a balance. Buyers often find that good strong partnerships with their suppliers can often overcome pricing-related issues.

Case in point: A solid airport hotel in a major market which is attached to headquarters building of an organization had been getting $279 per night. When the recession hit in 2009, the hotel was forced to drop their rates to $109 per night, just to be competitive and keep the business they had. Over time as the economy rebounded, hotel management found itself in a predicament; they could get back to that $279 rate as market conditions improved, but the travel buyer for the organization could in no way take a sudden $170 rate increase back to $279.

The buyer and the hotelier partnered and over a three-year period did two things: First they had slight year over year rate increases over a few years and, second, they looked at their traveler portfolio and provided all travelers coming to that property with at least Gold status, and not just for their property but for all of the chain’s properties. This step alone mitigated thousands of dollars in spend in the organization’s overall hotel program, because now on that brand Internet and breakfast was included for all those travelers.

It’s Complicated 
So back to that most interesting conversation between travel and procurement, the one where procurement folks often raise the question, “How can it be that the rate we negotiated wasn’t applied?” Which is often followed up with, “How come we can’t track 100 percent of our spend?”

Well, the answer is, it’s complicated, especially from a procurement perspective. In many past Phat Data stories, we’ve highlighted the industry’s ongoing challenge with the differences in spend data between the buyer and the supplier. But when buyers share their Phat Data strategy with their suppliers as well as their internal stakeholders, they create a safe place to reveal challenges and opportunities that yield a better, more effective data set – actionable data that serves multiple purposes for multiple stakeholders.

There is one other area buyers should consider that may be the elephant in the room. What happens to the buyer-supplier relationship, when the travel management company’s supplier relationships are counter to the buyer’s travel program? Being aware of how back-end incentives, TMC preferred relationships and the rest could impact your program is critical.

Buyers need to track supplier compliance and identify potential areas of concern with their TMC so they can work together to strengthen their preferred partnerships. While it is most important for buyers to be focused on their individual supplier relationships, they should understand the overall potential impact of the TMC’s preferred relationships too.

The buyer-supplier relationship can’t be all about the numbers. Travel is too personal, and a successful program focuses on a balance between the numbers and the experience. If done correctly, that balance will enable preferred partnerships to grow and mature over time. This how to build those symbiotic relationships within the managed travel space.

Jennifer Steinke is vice president Global Travel Experience at WHoldings, and an industry thought leader with over 30 years experience managing corporate travel. She holds an MBA plus Certified Corporate Travel Executive (CCTE) and Global Travel Professional (GTP) certifications from GBTA. Jennifer strives to deliver innovative and thought provoking ideas to the corporate travel industry.