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BBT July/August 2018
July/August 2018
For Business, Corporate Travel & Meeting Buyers & Arrangers

Changes in hotel sourcing produce cost savings

New research reveals that more than half (51 per cent) of travel managers who have changed their approach to hotel procurement in the last three years have derived savings as a result.

The study, titled A new horizon in hotel sourcing, was conducted by ACTE Global (Association of Corporate Travel Executives) in association with hotel solutions provider HRS shows that managers were driven to change their programme by multiple pressure points, including rising hotel rates, a fragmented marketplace and the amount of time traditional sourcing takes.

Nearly half (48 per cent) of those surveyed who made a change in their procedure decided to outsource some or all of their hotel procurement to either a global hotel services provider or a third-party specialist.

Those who chose to work with a global hotel services provider or a consultancy reported annual savings of 7 per cent, while those working with a TMC saved 4 per cent.

Around one in ten programmes implemented continuous sourcing, a new practice that sources hotels year-round rather than during a limited RFP process at the end of the year. Companies that made such a change reported positive outcomes, such as improved traveller compliance and satisfaction, financial savings and increased portfolio flexibility.

When the study dug deeper to find out why so few companies have implemented continuous sourcing, it found education was a major factor; 42 per cent of travel managers polled were not familiar with the concept. A third cited lack of time or resources.

A fifth of travel executives polled admitted they do not stay up to date on business changes that could impact their hotel programmes, such as an emerging need in a new geographical market, unless it’s RFP season. ACTE says this suggests that those who do monitor such shifts could act on changes more quickly by implementing continuous sourcing.

Greeley Koch, executive director of ACTE, commented: “We live in an age of information overload and constant disruption, and failure to quickly act on market developments can be costly for travel executives, both in terms of dollars and traveller satisfaction. “More than half of early adopters of continuous sourcing report savings – illustrating how travel managers can leverage cutting-edge practices to position themselves at the forefront of the changing business landscape and as leaders in their organisations.”

Marco D’Ilario, vice president of sourcing for HRS, added: “Hotel sourcing offers travel programmes their best opportunities for both financial and strategic change. This global survey depicts an industry where programmes are clearly seizing newfound opportunities and leveraging irrefutable data to gain not only savings, but superior programme performance. It’s nothing less than a redefinition of the RFP process.”

Download the full report here.

acte.org; corporate.hrs.com

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