Travel Business CPR

Corporate Travel Purchasing Negotiations

Corporations are going directly to travel suppliers to discuss possibilities for discounts. A travel management company (TMC) can play a key role in assisting organizations with negotiating supplier discounts:

1) TMC is a logical source for the purchasing history a company needs to begin such negotiations

2) TMC has the expertise to analyze corporate travel habits

3) TMC usually knows the appropriate people to contact to discuss discounts

TMCs which proactively look for opportunities to approach vendors on behalf of clients with significant purchasing power in a particular market can create programs which do not jeopardize the agency’s compensation system.

The opportunity here is one of positioning: TMCs are best served by positioning themselves as professional consultants who know what a corporation is buying and which suppliers are best suited to that corporation’s needs.

To achieve that positioning, TMCs should begin by taking a more active role in collecting and interpreting purchasing data for their large corporate accounts. Perhaps a quarterly meeting with corporate management to discuss purchasing history, patterns and possible emerging opportunities would be appropriate. At such a meeting, the TMC can review changes in the market-place, new programs which have been negotiated by other corporations, as well as changes in the legality of particular purchasing configurations.

By taking this proactive role, the TMC develops its image as the resource best suited to representing the corporate interest in supplier negotiations.

It is important that TMCs work closely with corporate clients to gather travel pattern information to be used in negotiating rates. Most importantly, the TMC can enforce the company’s preferred suppliers. By controlling suppliers, corporate travelers gain effective control of buying power.

Tharwat Abouraya, CTIE
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