Corporate Travel Procurement Leaders Cite Challenging Travel Market Dynamics

Corporate Travel Procurement Leaders Cite Challenging Travel Market Dynamics

With flights to key corporate destinations mostly full and hotel rates stubbornly high, corporate travel and procurement leaders are faced with a uniquely challenging environment as negotiations with suppliers for 2024 business travel volume start this quarter.

With flights to key corporate destinations mostly full and hotel rates stubbornly high, corporate travel and procurement leaders are faced with a uniquely challenging environment as negotiations with suppliers for 2024 business travel volume start this quarter. The return of volume from the depths of the pandemic is forecast to return to 80% in 2023 according to Global Business Travel Association data. While this revival is indisputably a sign of health for the global economy, corporate executives charged with managing travel budgets are increasingly concerned about long-term cost and program management ramifications.

These issues are among a broad set of results from an extensive survey of North American and European corporate travel and procurement leaders by GBTA, the voice of the global business travel industry, and HRS, the leading global corporate lodging and payment technology platform. The organizations jointly released a report today, titled “The Power of One: How Breaking up Silos can Drive Value in Converged Hotel Program Management.”

Beyond the current negotiation climate with air and lodging suppliers, the research offers new findings on the opportunities for corporate programs to enhance transparency, leverage the totality of their lodging segments via convergence, and take ownership of new operational trends impacting travel expenditures.

77 Percent Say Negotiation Environment Favors Suppliers; 55 Percent Report Difficulty in Securing Favorable Hotel Rates in the Past Year

Travel procurement leaders are having a hard time getting discounts and compelling pricing from air and hotel suppliers, and they’re not confident of any change on that front. Notable results from the survey on the current negotiation climate include:

• Less than a quarter (23 percent) of buyers report that over the past year it was easy to obtain favorable hotel rates, while only 18 percent say it was easy to secure favorable air discounts.
• European-based travel buyers are particularly challenged in the lodging arena. Nearly three quarters (74 percent) say it was “somewhat” or “very” difficult” to get favorable rates in the past year. This compares to about half (47 percent) of North American-based buyers with the same opinion.
• When asked to pick two categories that will prove most challenging when it comes to securing favorable terms in the next two years, most respondents pick air (69 percent) and hotel (56 percent).
• Despite this outlook, more than four in five travel managers (84 percent) say their company will conduct hotel Request for Proposals (RFPs) within the next year.

“There is no question that suppliers have leverage today, and corporations remain challenged to keep travel costs in line even as business opportunities grow,” said HRS CEO Tobias Ragge. “That said, the fact that 84 percent will conduct hotel RFPs demonstrates confidence in the evolving procurement landscape. For example, we see more companies taking extra steps to uncover and compile the entirety of their lodging data in the quest to maximize the value of their business to preferred hotel partners. In this environment, the ability to cumulatively bring transient, meeting and extended stay volume together – the core elements of convergence – is a necessary launching point for 2024 supplier negotiations.”

By Collaborating Internally to Break Out of Silos, Leaders are Increasing Program Transparency and Potential

While travel programs meet with some stakeholders regularly (54 percent) − like finance/accounting and sustainability − they typically meet with others on an as-needed basis. In particular, travel programs do not have regular meetings with meetings management and HR departments. Only one-third (32 percent) of travel programs meet with these stakeholders on a regular basis.

• By using a convergence approach to hotel procurement, travel programs can negotiate with hotels for multiple products, segments and services (e.g., room nights, meeting space, room blocks, or extended stay) at the same time or using the same technology. Most travel managers (54 percent) think their company would achieve greater process or savings efficiencies via use of convergence, while only one in 10 say they would not.
• In addition, travel managers point to several anticipated gains from a more converged approach. Top benefits include consolidated data (70 percent), greater discounts (66 percent), process efficiencies (57 percent), and time saved on RFPs (57 percent).
• Half of travel managers (47 percent) say enabling travelers to book multiple segments on one platform would increase traveler satisfaction at their company.

“Travel managers increasingly recognize that convergence should be a significant element of their program approach moving forward,” said Suzanne Neufang, CEO, GBTA. “By collaborating with internal partners in key areas, they can facilitate even more value, cost savings and efficiency for their company, while also driving increased satisfaction among their business travelers.”

GBTA Senior Research Manager Mark Sharoff and HRS Vice President of Procurement Consulting & Supplier Solutions Pauline Robin will discuss the survey results in depth during a breakout session on Monday, August 14^th at 11:00 AM at the GBTA Conference in Dallas. The complete survey report is available on HRS’ web site, as well as for GBTA members on the GBTA Hub.

METHODOLOGY
This survey was conducted May 2-13, 2023. GBTA members and non-members were invited to participate. A total of 251 responses were received from European, U.S. and Canadian-based travel managers and procurement leaders.