CASE STUDY
Traveller buy-in for hotel program
Key highlights
Outcome
As a top 250 Australian company, in 2017 our client booked 7,234 room nights in 46 hotels across four countries worth $1.6m. With compliance at 75%, coverage was 74%. A year later, its program had found savings of 4-8% with room nights increased to 7,750 in 82 hotels. Compliance rose to 90% with volume boosted to $1.75m.
Our recommendations
Working with FCM Consulting, four specific proposals for change were suggested based on the client’s objectives of cost containment including minimizing cost increases in buoyant markets, improving compliance by addressing leakage and leveraging buying power, ensuring key locations have contracted hotels and discounts across second tier locations and negotiating ancillary benefits, inclusions and discounts.
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A hotel program relaunch to anticipate changes in future business growth that may shift future travel destinations and room night volumes. This would also recommend hotels that are within budget and are in a good location while ensuring traveller experience is not compromised and duty of care maintained.
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Focusing on compliance and coverage by introducing hotel chain agreements to serve booking overflow in high-demand markets. This would also implement serviced apartments to expand traveller choice.
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Increase coverage through additional chain agreements to be implemented into the program while driving savings in second tier locations.
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Sourcing rates to include key ancillary services required by the business without impacting the room rate and alternately negotiating discounted rates for key services.
How the results were delivered
By introducing two chain agreements across Australia and New Zealand savings of 10-12% off BAR were achieved worth AU$34k annually. Compliance and duty of care was also achieved through increasing program coverage by 20% and ancillary service inclusions and discounts resulted in savings of $25k a year.
Introducing ‘Disruptor’ properties into two key markets saw costs down on average paid rates while its top 10 hotel properties achieved a $7.50 rate reduction below the average market movement, resulting in annual savings of $20k. Through outsourcing the entire RFP program to FCM Consulting, $20k a year was saved.
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