Hotel Negotiation

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FCm Travel Solution's targeted approach to hotel rate negotiation and ability to bring added value to its client's hotel program saved the client more than £700,000 with minimal impact on staff travellers.

Here's how we made it possible...

The challenges

FCm's client, which in this case study is referred to as 'the group' has a sizeable travel expenditure, which could be considered 'non-production spend'. Because of this, it is vital the group manage its travel expenditure as cost effectively and efficiently as possible.

In addition, the group's corporate travel requirements vary by division and brand, which means they require the services of a TMC that could accommodate their individual needs and business travel nuances.

The group's main priority has been to reduce and contain the cost of its hotel spend in high density areas such as Milton Keynes, while at the same time balance the different requirements of each brand within the group as well as its specialist group training division.

It was therefore essential, that FCm offer flexibility, choice and provide the best available rates that would drive cost savings.

One of the challenges the group faced was the critical supply and demand issues in the hotel industry. The fact that the industry had greater demand than supply made it difficult for the group to negotiate competitive rates that were available to them throughout the year. The group also met resistance from hotels reluctant to offer favourable terms and conditions and maintain customer service levels.

The solutions

FCm recommended that a comprehensive hotel program be developed for the manufacturing group.

FCm is adept at securing excellent value hotel rates that often include 'value added' options for travellers. As a consequence, FCm has invested heavily in its Hotel Program and leverages the negotiating skills of its account managers to identify cost saving initiatives for clients. This collaborative approach enabled FCm to develop a tri-partite relationship with its preferred hotels to provide the group with an excellent product focused on customer service.

Over the period of the group's contract, FCm developed a comprehensive selection of properties that could accommodate all of the group's requirements. FCm also developed an excellent relationship with properties in the local area to maximise the group's buying power.

This resulted in:

• Keener negotiations including inspection visits
• Fixed rates throughout the year
• The potential to earn volume discounts
• Soft hotel benefits including percentage discounts off other hotel services
• Daily hotel allocations
• Consolidation of properties for certain brands
• Favourable terms and conditions eg. late cancellation policy.

The results

When benchmarked against the previous group rate, FCm delivered savings to the group worth more than £500,000 (26 per cent) in 2008 and over £200,000 (19 per cent) in 2009 in the Milton Keynes area.

In addition to FCm's local level supplier negotiations, the group benefited from FCm's Global Hotel Program which helped to drive savings through excellent value rates and value add-ons for travellers.