Case Studies

Silicon Valley Giant achieves 10% savings through hotel sourcing on a global scale

“Our savings target was exceeded and we saw huge improvements
in working with all our hotels. ” Global Category Manager – Accommodation

Creating a global hotel sourcing program to match the hotel needs of 60,000
employees in 70 countries is a formidable challenge. To meet its ambitious
requirements, a major multinational technology company based in the U.S. decided to
optimize its hotel procurement with HRS. Going into its second year, the partnership
has achieved substantial savings and an efficient consolidation of the hotel program:

TOTAL COST REDUCTION OF MORE THAN 10 PERCENT

• Almost 900,000 room nights negotiated in 200 global destinations
• Around 2,000 hotels were solicited and 750 accepted to the hotel program
• Share of independent hotels in portfolio raised by 25%, which provided
rate optimization of 10%
20% of existing hotel portfolio replaced with similar alternatives,
resulting in 9% savings
E-auction system facilitated process and achieved 11% overall savings

CREATING VALUE FROM DATA

Case study image 1On a global scale the sourcing program included 200
destinations in 70 countries. The goal was to achieve
savings and an optimization of the hotel portfolio,
with different requirements and approaches in the
markets. Provided with the company’s travel data, HRS
segmented destinations based on volumes. The data set was matched with HRS benchmark data of 3,000 global corporate customers and 750,000 negotiated rates. HRS then outlined a sourcing strategy and calculated possible savings through renegotiating rates, bundling of booking volumes, as well as replacing some hotels through similar properties.

FLEXIBILITY THANKS TO MARKET-SPECIFIC APPROACH

Case study image 2HRS owns and leads the negotiation process in sourcing projects. Different
negotiation options allow for a flexible approach: In certain markets the
company handles the negotiations themselves for relationship purposes. In
others HRS enters the negotiations on behalf of the company. Hotels can take
part through the HRS RFP tool and bid, taking into account non-negotiable
global prerequisites. For destinations with higher competition in the hotel
sector, an e-auction system can help facilitate the process. The HRS RFP tool meets GBTA standards and provides the flexibility to respond to various negotiation scenarios. Throughout the whole process, the company’s travel management remains in full control, while local stakeholders can be included to give recommendations and suggestions.

FULL TRANSPARENCY AND CONTROL

Case study image 3The RFP project was exceptionally fast for its size and was completed before the scheduled time. A hotel response rate of over 95 per cent was achieved. “The user-friendliness of the RFP tool is an industry benchmark and we were
able to exceed our savings target,” the company’s project lead points out. Unlike dynamic rates, which give corporates a discount on the Best Available Rate at any given time and can fluctuate significantly, the negotiated program provides consistency, allowing corporates to plan and control spend much
easier. This approach ensures full transparency. The key to achieving significant savings and an optimized hotel portfolio lies in three major levers: Renegotiating rates supported by benchmark data, bundling booking volumes, as well as searching for similar hotels that offer the same standard for a better rate. Further savings are delivered through the HRS “best-buy” principle: For every booking, the company-negotiated rate is compared with the spot market and the exclusive corporate discounts only available through HRS. The booking is then processed for the best available rate at the time of the booking. In this global project the company achieved
savings of more than 10 percent. In the next step, the client and HRS will work together to drive adoption through tailored communication between travel management and travelers.

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