Title: Tips and Tricks for Negotiating Air, Hotel and All Things Travel
1Tips and Tricks for Negotiating Air, Hotel and
All Things Travel
- University of Notre Dame
- Nancy Fulcher Assistant Director Strategic
Sourcing - Kara Finch Procurement Specialist Travel
2Introductions
- Kara Finch, Procurement Specialist Travel
- Kara Finch, CPSM, joined Procurement Services in
November 2007 as a Procurement Specialist for
Science and Engineering. In early 2010 she
shifted to managing the travel commodity, which
up to then had not been a centrally managed area
of spend. She is a core member of the travelND
team, which launched the Universitys travel
program, including the implementation of an
online travel booking and expense management
tool. Since that time she has issued the
Universitys bids for their football and
basketball air charter services and has
negotiated contracts for rental car services, the
Universitys preferred airline carrier, various
hotels, and charter buses. Kara also manages the
Universitys relationship Anthony Travel
International. Kara received a B.A. from Purdue
University. She later received a J.D. from Thomas
M. Cooley Law School in Lansing, Michigan and is
a licensed attorney in Indiana. Kara is married
and has three small children. She resides in
Elkhart, Indiana. - Nancy Fulcher, Manager of Strategic Sourcing
- Nancy Fulcher, C.P.M., joined Procurement
Services in August of 1990. She was hired to help
the department with the backlog of paperwork.
Then, as a Procurement Specialist she held
responsibility for numerous commodities.
Currently, as the Manager of Strategic Sourcing,
she manages the Sourcing Team and has
responsibility for procurement transactions,
sourcing strategy, commodity and supplier
management, and cost management initiatives
within Procurement Services. Additionally, Nancy
is a core member of the travelND team, a travel
and expense management program. Nancy holds an
MBA from Bethel College and a BA from the
University of San Francisco. She has received the
designation of Certified Purchasing Manager
(C.P.M.) from the Institute for Supply
Management. Nancy serves on the board of Great
Lakes Region NAEP. She has 5 grown children and
almost 10 grandchildren.
3Agenda
- Why Procurement Services Elected To Manage Travel
- What We Did To Manage Travel
- How We Are Going to Meet the Strategic Sourcing
Goals - Lessons Learned
4 Why Did We Elect To Manage Travel?Answer
Untapped Area of Spend
5Travel Expense Assessment Findings (2008)
- 28 - 30M annual spend
- 25,000 expense reports filed annually
- Opportunities existed to
- Provide guidance and assistance to travelers
- Increase process efficiencies
- Decrease environmental impact
- Reduce departmental and grant-related travel
costs - Travel is a complex spend category very personal
in nature (no surprise)
6What We Did to Manage Travel
7- Comprehensive travel program
- Managed by Procurement Services
- Considerations
- Travel Management Company
- Booking
- Expense Reports
- Travel Card
- Travel Vendors
8Quantify the Opportunity
Results of a 2008 Strategic Sourcing Assessment
with Huron.
9Know Your Campus - Savings Drivers
Procurement Dependent
Behavior Dependent
- Travel Card Rebate
- Aggregate card spend (with Chase) ? ?
- Negotiate best financial terms ? ?
- Increase utilization of travel card ? ?
- Travel Supplier Contract Discounts
- Establish agreements with travel suppliers ? ?
- Negotiate best financial terms ? ?
- Drive spend to contracted suppliers ? ?
- Behavior Changes/Demand Management
- Reduce last-minute bookings ? ?
- Choose lower cost travel options ? ?
- Avoid 3rd party transaction fees ? ?
Driven/influenced by travelND/ATI
10Meeting the Strategic Sourcing Goals
11Learn the Industry
- Resources
- Global Business Travel Association (GBTA)
- Society for Collegiate Travel and Expense
Management (SCTEM) - Travel Publications and Blogs Scott Gillespie,
Travel Procurement Magazine - Partner with your Travel Management Company (TMC)
- Meet with your travel reps
12Airline Discounts
13Air Lingo
- Fare basis - KLUT Determines how many
restrictions apply - Class of Service Coach, Business, First
- FMS Fair Market Share
- LLA Lowest Logical Airfare
- GDS Global Distribution System contains
information on availability, pricing and related
service. TMC provide GDS
14Fare Basis/Class of Service
- F
- A
- J
- D
- I
- Y
- B
- M
- H
- K
- L
- U
- T
Highest Price
Few Restrictions Deeper Discounts
First
Business
Economy
Less Discounted Many Restrictions
Lowest Price
15Fare Market Share
- Neutral share probability a traveler will use
an airline in a given market - Ignores price and loyalty programs
- Based on each airlines schedule in each city
pair - Airlines use a service by PRISM to get data
- GDS data
- Direct Connect data not included
16What Makes an Airline Soar?
- Movement and profit margin drive discounts
- FMS what can an airline reasonably expect to
gain - Higher Ed. only has a chance of changing FMS
significantly if they mandate specific airline - ND increased Deltas market share by 10 points
78K savings with contract - Dont overpromise (must be reasonable and
possible) - United has current market share of 25 and Delta
has 40 I cant reasonably or realistically
promise each of them 70
17Business Case Airfare
- Analysis UND Spend By Carrier
18The Truth About Ancillary Fees
- U.S. airlines collected over 5 billion from
baggage and change/cancellation fees alone in
2010 - Airlines do not capture ancillary fees when they
report contract spend - it is your responsibility - After nearly a decade of unprofitable flying,
airlines have finally found their money maker - Airlines continue to increase checked baggage
fees - Hint they are not going away
- Maybe they arent so bad after all
19Athletic Air Charters
- 2010 and 2011 Football Season charter bids issued
through Procurement Services - From 2009 to 2011 the cost/seat/mile decreased
18 while the cost of fuel increased 86 - 2011/2012 Basketball Season charter bids issued
through Procurement Services - Charter services add over 1M to overall air
spend
20Get the (Bed) Bugs Out of Hotel Negotiations
21Learn the Hotel Lingo
- High-stay 25 room nights/year (or is
preferred) - Low-stay 1-24 room nights/year, inside an area
(cluster) - Unused no room nights but inside a cluster
- Orphan not preferred, less than 25 nights /
year, not inside a cluster - BAR - Best Available Rate
- LRA Last Room Availability
- NLRA Non Last Room Availability
- Flat Pricing a negotiated flat/static rate
- Dynamic Pricing a discount off fluctuating BAR
- Squatter rates hotel that knows your rate
access code and loads a rate without a contract
22Past, Present and Future
- Pre-travelND
- 5 star and economy based on budgets and who
- Relied on hotels for data
- Different groups on campus received different
rates at same hotels - No formal price agreements
- Early travelND
- Ask and you shall receive discounts , including
many local hotels - Increased data through expense tool and hotels
- Rates at preferred London, Dublin based on campus
communications - Current travelND
- Local hotel program
- Chicago hotel program
- London hotel program
- Future travelND
- Hotel programs in other high stay locations
- Chain wide discounts
23Hotel Demand in 2012
- Q4 09/Q1 10 demand was low/prices were low
- Revenue/avail. room rate in NYC was down 25
- 2011 demand increased / prices increased to make
up for the prior year losses - 2012 prices are already increasing
- What does this mean? Negotiate now vs. later
24Hotel Sourcing Cycle
- Data Collection
- Find where you are staying city and brand
- Sourcing strategy
- Properties chains, brands, properties
- Rates fixed or dynamic, LRA or NLRA
- Consequences Non-compliance of hotels, payments,
and booking channels - Communications Selling, not telling (Push vs.
Pull) - RFP / RFB
- Implement and Manage
25Clustering Its Not Just for Nuts
- What is Clustering?
- Know your high stay locations
- Small geographic area (1-3 miles)
- Include non-preferred and unused
- Eliminate artificial boundaries zip code, state
lines, city lines - Arlington vs. Alexandria Hoboken vs. Manhattan
- Classify your clusters
- Map and label (High-Stay, Low-Stay, Unused,
Orphan)
26Why Cluster?
- Tells your story
- Where are you staying?
- Where should you be staying?
- Do you have enough coverage?
- Could you tier down?
- Manage compliance, incl. squatter rates
- What should your overall strategy be?
- Tier down
- Roll up clusters by chain/brand
- LRA vs. NLRA
- Flat pricing vs. dynamic pricing
27How to Cluster
L
- Step one Plot the high-stay/preferred
H
U
H
- Step two Plot the low-stay hotels
H
L
L
U
- Step three Look for the clusters
U
- Step four Bring the unused hotels into the
cluster
L
H
- Step five Identify and eliminate the orphan
hotels
H
28Hidden Benefits in Ground Transportation
29Theres More to a Contract than Price
- Car Rental Contracts
- Discounted rates (web fares may be lower)
- Added value in negotiated contracts
- Younger driver concessions
- Discounted GPS
- Reduced city surcharges
- Status matching
- Discounted one-way rates
30The Wheels on the Bus
- Before managed program
- 1.2MM spend on local charters
- 2 main carriers with no discounts offered
- After managed program
- RFB kept 2 companies
- 10-15 off standard rates
- Discounted rates for airport service
- Communicate to campus
31Lessons Learned
32Lessons Learned - Keys to Success
- Executive level support
- Traveler/user satisfaction
- Change Management Support
- Communication
- Vendor management
- Mandate where possible
33Notre Dames Approach
- Centrally funded ATI to drive usage to Agency
(8/10) - T-card charges flow into ER
- Allow choice
- Assumed ER usage will drive travel usage
- Availability of travel data for expense reports
- Agency fee no longer applied to individual
budgets - Contract pricing available
- Choice and convenience in booking
-
- Phased roll out of Expense and Travel beginning
10/2010 - Mandated Use of Expense 7/1/2011
34Lessons Learned - Travel Really is Personal
- Behavior is hard to change unless mandated
- Dont make life too easy, then ask them to change
- Eliminated Agency Service fee which increased
usage of Agency - Our intention was to gain data before we
implemented on-line tool - Then we asked them to do their own bookings
- Look what happened!
35Travel Booking Vision
36Reality
37Next Steps
- Reporting
- Vendor spend
- Meeting needs at budget unit levels
- Tracking the Savings
- Card Rebates
- Bookings
- Behavior Change/Demand Management
- Increase on line bookings vs. agency bookings
- Savings Avoided Costs
- Report Savings to Executive Leadership
- Use New Data to Negotiate Deeper Discounts with
Travel Suppliers - Strategize to increase use of booking tool
Mandate?