For Travel Buyers, Negotiating Hotel Contracts Offers the Biggest Bang for the Buck


Where do travel buyers get the most valuable add-ons for the lowest cost to their organization? According to a new survey of over 100 travel buyers across North America sponsored by Amadeus, it is hotel contracts where travel buyers can provide the most sought add-ons for their travelers at the lowest cost to their organizations.

The survey, Valuable Vendor Contract Add-ons: Prioritizing + Communicating = Saving found that free Wi-Fi was seen as the most valuable hotel add-on – with 99 percent of respondents saying it was valuable. Last Room Availability (97 percent), free breakfasts (96 percent), and fixed rates (95 percent) were all deemed highly valuable as well. These four add-ons were negotiated into hotel contracts over 80 percent of the time.

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While travel buyers are generally successful in negotiating the most valuable add-ons into hotel contracts, they also spend the least amount of time negotiating these contracts. The Amadeus-sponsored survey found that travel buyers spend from two hours on an individual property contract to five hours to negotiate with a hotel chain. Negotiating a contract with a chain hotel costs about $260.*

Negotiating airline add-ons are much more challenging for travel buyers, by contrast. The most valuable add-on – no fees to make changes or cancellations to an itinerary – was either always or often negotiated into a contract only 25 percent of the time.

Travel buyers were more successful in negotiating name change waivers for tickets and ticket credits, having these add-ons appear 61% of the time. The third most valuable airline add-on, waiving checked bag fees, was only negotiated into contracts always or often only 15 percent of the time.

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Even though the most valuable add-ons are rarely included in the final airline contract, negotiations with airlines are far more difficult and expensive. The average airline contract costs about $850 to negotiate despite the fact that travel managers cannot get as many add-ones for their travelers.

What is driving the difference between hotel and airline contract negotiations? There are a number of factors at play within the business travel industry, but one possibility is that fewer options exist with airlines compared to hotels, both in number of suppliers and number of potential amenities, which may contribute to the increased difficulty negotiating with airlines.

 

*This statistic was derived using a figure from GBTA’s annual Compensation and Benefits survey showing the average Travel Manager earned $110,000 in 2015.

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1 Comment

  • Timothy Gray
    March 25, 2016 at 11:22 am

    I could not agree more. To add to the above, I believe that too many companies rely on their preferred TMC to handle hotel and airline negotiations. While TMC’s are an integral part of a company’s overall Travel Program (responsible for bookings mostly), negotiated contracts should be handled internally and/or, if time and resources are an issue, by non-vested 3rd party consultants. They can drive substantial savings especially if a client has hotels on its radar.

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