ON-THE-GROUND SAVINGS – WHO GETS THE DEAL RIGHT?

27 Feb 2017

When it comes to negotiating the best deals for on-the-ground costs, both travel management companies (TMCs) and their clients have important roles to play. Roles vary depending on the size and bulk-buying capacity of the client companies.

Many large corporations have existing so-called ‘best deal’ corporate agreements in place with hotels, car hire companies, shuttle services, etc. However, even though most have their own dedicated procurement teams, they often choose to partner with a reputable TMC for their hands-on expertise, knowledge and experience in the operational and strategic management of these agreements.

“Essentially, the TMC’s job is to add value by saving the client money,” says Sharon Nash, Club Travel Corporate’s Travel Operations Director. “One way in which we do this is through analysing and examining our clients’ corporate travel reports and expenses on a monthly basis,” says Sharon. “Then if necessary, strategising and implementing solutions for improved productivity and profitability.”

“For example, if we perceive that our clients’ spend on accommodation is scattered rather than focused, thereby maximising their spend rather than maximising their saving, we may suggest reducing the spread of hotels, hereby increasing leverage power to negotiate better rates.”

In addition to managing clients’ existing best-deal agreements, a TMC can add huge value in assessing the value of new proposed deals. Suppliers often approach clients directly with their corporate deals. In such cases the TMC is often called on to analyse the deal and, if necessary, confer with the suppliers to streamline and improve the offering.

“Most importantly, we often initiate best-deal agreements on behalf of our clients,” says Sharon. “Sometimes the agreed upon contract is directly between the client and the supplier, sometimes it is between the TMC and the supplier.” The latter enables the TMC to offer smaller companies the same cost-saving benefits normally only offered to larger corporations.

The travel industry is dynamic, continuously adapting to the ever-changing, fast-paced world in which we live. Negotiated, annual contracts regarding on-the-ground costs reflect this fact. Rates increase, international currencies fluctuate, and businesses’ fortunes change; one year their corporate travel is prolific, the following year, less so.

When change occurs, the contract, which is always based on a certain spend, needs to be renegotiated. TMCs very often play a facilitating role in this process.

Successful, sustainable and mutually beneficial pricing incentives require solid relationships, proven expertise, trust and respect.

“When it comes to negotiating savings on on-the-ground costs, I believe both clients and suppliers respect and trust us. Reason is, our input is based on indisputable facts. Our research is thorough and our data comprehensive. When we promise to save our clients money, we deliver,” concludes Sharon.