The ultimate goal of any travel management company (TMC) is to provide an exceptional experience for its travellers in terms of service, safety and cost. The relationship between buyers and suppliers is essential to achieving this.
In the last month there have been two major industry announcements – in the hotel and airline sectors – that could have an impact on the buyersupplier relationship, altering how travel is bought, and how it will be procured in the future. The first was news of the pending consolidation of Starwood Hotels and Marriott. The situation raises some questions around how procurement professionals will interact with this nascent super brand. Will this be a boon for buyers or will they find their negotiation ability is limited?
The combined room availability of both Starwood and Marriott could lead to the new group holding a stronger position in certain key cities. But, unlike airline industry consolidation, which may create regulatory concerns over certain routes, it’s worth remembering that, globally, Marriott and Starwood properties only account for a small proportion of the total. So, generally speaking, there will still be plenty of competitors in any given destination so that travel buyers will still hold on to a strong platform for meaningful negotiation. However, this means travel buyers may need to be open to working with more parties within their hotel programme. These alternative properties may not be among the larger players.
Additionally, this deal could benefit loyalty card users, as the new group will undoubtedly align the two companies’ schemes, providing a greater opportunity to earn points, ultimately driving down costs. But it is important for travel buyers to monitor carefully the traveller quest for loyalty points and stays against programme compliance and cost containment. Furthermore, when negotiating hotel rates, a higher volume of bookings usually equals better discounts, so the potential merger may actually provide bigger overall volume with which to negotiate. Companies need to drive policy compliance to maximise savings, and travel managers must influence traveller behaviour to ensure hotel bookings are made through a consistent, approved channel.
MULTI-CITY TRIPS The second announcement, which has attracted far more criticism from TMCs and industry bodies, including ACTE (Association of Corporate Travel Executives), Business Travel Coalition and GBTA (Global Business Travel Association) was the recent decision by some US airlines regarding changes to non-refundable tickets on multi-city trips. Transparency is a fundamental ingredient of a successful buyer-supplier relationship. However, the fare changes have made it more difficult for travel managers to fulfil their key responsibility: to get travellers to destinations in the safest, most cost-effective manner. Under the new structure, travellers will likely be charged a higher fare for each sector of the journey. This may result in significantly higher fares for complex, multi-segment trips. Critics have claimed prices could rise by a factor of six or seven. Some of the carriers have stated publicly that these are unintended consequences of a necessary change and that they will correct the situation.
Predictably, to avoid higher fares, travellers have been drawn to purchasing one-way segments of a journey rather than much costlier multi-city round-trips. However, many are unaware that itinerary changes can cost up to US$200 a segment, writing off any costsavings if delays do occur. While we don’t know how long it will take for the situation to be resolved, it is now more important than ever for companies to encourage travellers to take advantage of their TMC’s travel counsellor expertise. When booking multi-city, complex trips, frontline consultants are trained to ensure travel policy is enforced. Furthermore, if you have negotiated rates with certain carriers, speak to your airline representatives to convey concerns about the cost ramifications and complexities of this decision. We’ll be following both these developments. Travel managers and travellers should speak to their TMC about any concerns they might have.
Jennifer Charlton is head of supplier relations, EMEA, at American Express Global Business Travel. She has worked in the travel industry for nearly 24 years, previously with KLM and Thistle Hotels. She joined Amex GBT in January 2015