FOR procurement professionals, cost savings and tailoring organisation requirements according to compliance considerations have always been a priority. Yet, beyond just clinching discounts for their company, procurement professionals have started to take on more strategic roles within their businesses, one of which includes travel management.
With a broad range of responsibilities to juggle each day, procurement professionals often outsource travel management functions to travel management companies, some of which include evaluating and negotiating with travel service providers.
While these partnerships generally work well, if left unattended or managed poorly, there is a risk of standards slipping in the travel programme. According to data from a report released by HRS in early 2016, hotels are a key area where these standards may slip.
Furthermore, research by the Chartered Institute of Procurement and Supply indicates that a well-documented, well-implemented and well-monitored policy can reduce travel costs by at least 10 per cent and up to 30 per cent. With these savings in mind, procurement managers stand to maximise the value they are getting from the money spent on travel by closely monitoring the following key areas:
Finding the best value
When it comes to hotels, pricing can be confusing and inconsistent. Whenever someone books accommodation, they most probably would have gotten a different price for the same hotel by booking via another channel.
Travellers therefore often assume that open booking allows them to secure the best value for their accommodation. According to an internal survey conducted during the 2016 Corporate Travel Forum in March, 78 per cent of travellers believe that open booking provides them with better rates, while another 69 per cent do it out of habit.
However, lower rates do not necessarily equate to best value. Findings from the same survey reveal that over 50 per cent of open booking rates do not include breakfast or Wi-Fi connectivity; more than 60 per cent of open bookings are not accompanied by a flexible cancellation policy; 23 per cent involve a more tedious travel expense process; and 57 per cent of firms do not know where their travellers are, thereby compromising on duty of care.
Streamlined MICE solutions can help companies save time and costs spent on tedious research, and one way of optimising the procurement procedure is through HRS’ Intelligent Sourcing – a five step process in which we source, negotiate with and constantly refresh companies’ hotel portfolios based on their individual travel data. This provides not only the ideal value-for-money ratio, but also full transparency and predictability as compared to dynamic, volatile daily rates.
Ultimately, procurement professionals need to be convinced that their travel partner fully understands all the various rates that exist, is able to benchmark these against their data, and has the flexibility to clinch the best available rate.
Ensuring a simple payment solution
From our conversations with procurement professionals, we found that payment and expenses processes are a common source of frustration. As travel should be quick and easy to manage for both employees and procurement managers alike, time-consuming payment processes can be a serious problem, but it is one that can be avoided.
Some companies use more than one option for managing payment. For instance, some require employees to pay on personal cards or company cards and then expense back, while others use a bill-back system where the travel partner pays the hotel bill and then invoices back to the company the cost of the room as well as other additional costs.
These methods lack transparency, and can be complicated and expensive. To alleviate these pain points, procurement professionals can partner hotel specialists that offer digitised payment solutions. One example is an automated process that collects and integrates all booking, payment and invoice data, dramatically streamlining the expense process.
Moving beyond chain hotels
Many travel procurement managers are hesitant to incorporate independent hotels into their travel inventory due to security concerns and the fear of compromising on duty of care. This echoes the sentiment expressed by business travellers themselves, with 75 per cent of survey respondents saying that they prefer the safety of a chain hotel, in comparison to 21 per cent who would select independent hotels, according to a survey conducted by the Guild of Travel Management Companies in June.
However, in a market where hotel chains are becoming more consolidated and with younger travellers looking for more variety in their accommodation options, relying on a few players may not necessarily be the best strategy. In order to build market intelligence, procurement managers need to source more widely and talk to the entire market. This brings about cost savings opportunities too, given that hotel chains tend to absorb higher overhead fees when managing their brand distribution – as opposed to smaller, independent chains.
We are witnessing the slow shift towards independent hotels across Asia-Pacific, a region with a high proportion of millennial travellers. HRS data shows that the hotel market in the region already has an independent hotel supply at approximately 80 to 90 per cent.
With independent hotels slowly becoming the reality of business travel, HRS works to offer more choices with its portfolio of business-grade independent hotels.
Providing access to 180,000 independent hotel properties that fit into the framework of business travel programmes both big and small, travel managers are able to seek alternative options for their hotel programmes. So long as sourcing can be done at the same quality and consistency, there will be a time when reliability surpasses the brand as the primary decision-maker of which business hotel to stay in.
At the end of the day, procurement professionals who fully understand how to add value to their current travel programme and work with the right partners will be able to attain the best possible quality, value, payment solutions and advice for their business.
The result?
Even greater savings to their bottom line.
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Kimi Jiang is the vice president, Asia-Pacific, of Hotel Reservation Service. HRS is a global hotel solutions provider with more than 40,000 corporate customers worldwide. Her core responsibilities include leading the organisation’s regional expansion across markets like Great China, Japan, Singapore and India. Jiang also initiated the HRS Corporate Travel Forum – an industry event for travel management in China and Japan.
This article is written by Kimi Jiang
