Just finished reading all about market conditions in an article in HotelMarketing.com.
In light of this article and all the recent surveys, reports and studies conducted by GBTA, American Express, Carlson Wagonlit and others, it doesn’t take a rocket scientist to figure out that, if you’re managing travel and meetings spend for your company, you are going to have a very rocky road ahead. Even the larger multinational corporations won’t be able to use their volume as much of a weapon during upcoming and on-going supplier negotiations.
In fact, that very volume may make them less attractive to suppliers who are trying hard to maximize their revenue yields, whether that be on a hotel room or airline seat. What we have here people is buyers and suppliers on a collision course with opposing goals -- buyers trying to save money and suppliers trying to maximize the demand for their products with higher profitability.
Add to all of the above, the burgeoning cost of oil and its impact on goods and services costs and you get the picture; this will not be the year for corporations and consumers to save any money. So the strategy then switches to: How can we minimize rising costs ... versus how am I going to beat my savings targets and goals from last year’s performance?
So here’s some tips for buyers of all different sized companies:
1 - Analyze your spend and try to use a limited amount of preferred suppliers to deliver incremental share and revenue to weather the current storm. The suppliers are still seeking incremental market share and spend so you can’t be all things to all suppliers, but being more of a strategic and supportive partner puts you in a better position to get any kind of cost break.
2 - Now is the time to maximize that magical and difficult to quantify “supplier relationship.” Your managers and senior execs may not believe in something that is challenging at best to quantify, but believe me, we all know the “relationship” factor makes a huge difference in a challenging marketplace where demand far exceeds supply and costs are going through the roof.
3 - Analyze and make recommendations on where to scale back for your company. Become an internal hero and develop a strategy for your management to use to mitigate costs. This would include, limiting the number of attendees, trips, meetings, hosting them closer to headquarters or offices, picking venues and destinations with competitive negotiations still in play, etc.
Everyone will need to be smarter and more strategic versus reactionary to weather these rough times. Be smart and pro-active and you will be doing the best that you can despite the perfect storm of supply – demand cycle that we’re currently dealing with for the immediate foreseeable future.
Check out the latest buying trends here as you're negotiating with your suppliers!