Getting the best deals on hotels for business isn’t just about price - Part 2: Added value for the procurement function

[fa icon="calendar"] 10-Nov-2017 10:04:51 / by Julian Kulkarni

Julian Kulkarni

This is the second in a series of posts taking a broad view of the value you can unlock when booking hotels.

Part 2: Added value for the procurement function

Hotels are a spend category that has gone unmanaged and uncontrolled for many years. This has been the case for a number of reasons, but the main one has simply been that with digitalisation, it seemed very difficult for procurement officers to squeeze any additional value out of hotels. What is the point of negotiating corporate deals when anyone can go online and get a better deal on hotel booking sites?

Well actually, there is a point. A very big one. In most medium sized businesses, the cost of travel is the second or third largest controllable expense – and that’s a pretty substantial chunk of change. Once hotel bookings reach a certain critical mass, you want to know where the money is going, and you will want to put some controls on user behaviour. No company would give all its employees carte blanche to go out and buy or lease their company car, yet their hotel spend over the course of a typical lease period may well amount to more.

Management information and spend data will always be important, especially if you have internal travel policies and even more so if you are in a sector that has to comply with external regulations or norms. That information will be unavailable to you if employees are doing DIY hotel bookings.

So, while getting a good price for hotel bookings is important, as any procurement officer understands, price is not the same thing as value. But what if you could have both? One option is to outsource the whole business of booking travel to a travel management company (TMC). But why pay someone to do something if you could do it better yourself? Unless you are an exceedingly large buyer of business travel, you may not be a high priority for a TMC.

We set up Roomex precisely in order to combine the benefits of searching for the best deals online with the benefits of control over the spend category. In fact, it is rather like having your own TMC in-house, but under your control, with no contracts, fees or commissions.

We can typically do a much better job on price than the digital platforms that are focused on the leisure traveller. And for a number of reasons: first, we access 35 sources of supply (and that includes popular leisure sites) to identify the best deals. Second, we also negotiate directly with leading hotels and chains – and we now do a sufficiently large volume of business to get significant discounts. Third, every time we make a booking it is automatically benchmarked against the hotel’s best rate, so you can be sure that no money is left on the table. 

The value then comes with the visibility we provide. Reporting in clear and easy-to-understand dashboards on the Roomex platform. All information, including spend, savings and performance against negotiated rates, is stored in live reports which can also be broken down by hotel, division, cost centre, etc. Your hotel spend is then consolidated on a single invoice from Roomex, which gives you between 30 and 60 days’ free credit, eases payment, and eliminates credit card risk.

An additional consideration is the safety and well-being of your business travellers. No doubt they sometimes say to procurement, ‘I can get a better deal myself’. What happens though if things go wrong? For example, they turn up thinking they have booked a room, but it turns out the hotel never received a confirmation? Who is responsible? Who picks up the extra cost when the hotel manager says, ‘OK that room is gone but we can offer you another one at twice the price’?

With Roomex, that simply does not happen. The booking process is automated, and in the unlikely event of something going wrong, we have a support team working to assist you.

In summary, booking through Roomex unlocks the following benefits, which we estimate to be just as valuable as price savings:

  • Consolidation of hotel spend on a single invoice
  • Time saved contracting / dealing with hotels
  • Policy compliance control & measurement
  • Control over spend from single gateway
  • Reporting and visibility
  • Duty of care

To find out more about the procurement challenges involved in managing the hotel accommodation spend category, please join our forthcoming webinar hosted by Spend Matters. You can register free here.

Topics: Corporate Travel, Cost Savings, Business Travel, business travellers, cost savings in business, procurement