Easing the Pain of Hotel Booking and Travel Spend Management

services sector Viacheslav Lakobchuk/Adobe Stock

Spend Matters welcomes this guest post by Julian Kulkarni, vice president of marketing at Roomex.

The lodging offered by your preferred supplier is 20% cheaper and you have never had any reason to doubt the quality of its service.

But a senior sales executive insists that you book lodging at a swanky hotel that’s closer to a key account – otherwise the hot deal he is negotiating might be at risk. Trouble is, the more expensive hotel may not comply with your strict T&E policy. You just don’t know and you are having trouble getting answers. So, what do you do? It’s a classic procurement manager’s dilemma. You’d like to be flexible and make an exception, but if you are not careful, an exception can become the norm, and costs (both direct and indirect) spiral out of control.

Hotel accommodation can be an even bigger status symbol than who has the best executive chair back in the office, or who drives the best company car.

In many organizations – of all sizes – hotel accommodation still goes largely unmanaged as a spend category, or is poorly managed, or is simply not a priority. The possible sources of supply are huge, including travel agents / travel management companies, online leisure travel booking platforms, hotel chains and booking directly with individual hotels, and negotiated rates. Compare this with airline travel, where there are usually a relatively small number of operators servicing a specific route, so costs and policies are easier to manage.

Yet in many companies, especially those with a lot of representatives or workers out in the field (for example, those engaged on a lot of external projects or field sales) the budgets are substantial. For others the budgets might be smaller, but the choice of hotel can be important in terms of projecting the right image or managing costs that are then passed on to the firm’s customers. Last but not least, even in companies where hotel accommodation is not a strategic item for the procurement team, it has high visibility. If the CEO is unhappy about the choice of accommodation when visiting an industry forum or trade fair, the procurement manager will certainly hear about it!

The procurement team faces a variety of opposing challenges. To name a few:

  • We are under pressure to reduce the average cost per room-night;
  • Finding the best deals is time-consuming;
  • We need to check whether suppliers conform to our travel policies;
  • We have negotiated rates with preferred suppliers but know we could sometimes do better;
  • Last-minute changes of travel plans are part of our business;
  • Our business travellers have varying expectations of quality of accommodation and service;
  • We need to reduce the administrative burden imposed by various payment methods;
  • We have a duty of care to ensure that business travellers can be easily contacted at a moment’s notice; and
  • We want to reduce our exposure to credit card risk.

These challenges cannot always be resolved. Costs saved addressing under one heading often pop up under another. You can of course shift them elsewhere by engaging a travel management services (TMS) company to handle things for you as a single source of supply but this will impose further costs and, unless you are one of the TMC’s major accounts, you may not get the attention you feel you deserve.

There is an alternative. The challenges can be greatly simplified if you centralise the hotel booking process (it would be a good idea to assign this within procurement, rather than leaving it to people in different departments). This will also make it easier to automate travel reporting and management, which will enable you to avoid, or at least mitigate, any possible compliance and audit complications. This will be all the better if you can consolidate all (or the bulk of) your hotel expenses under a single account.

I aim to discuss some of these points in further detail in forthcoming articles!

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