Combined Travel

[AmberLee]

The travel world is still a bit foreign to me but with Hipmunk showing up everywhere marketing to SMB this question keeps coming up.

Why can't similar businesses combine/pool their travel needs to get better bulk discounts? I've worked at large companies until my current one and the negotiating power when your spend is under a million is almost nonexistent. I bet companies would be willing play by group rules if it meant sharing resources and huge savings.

[RichardG]

Good point Amber! For years the 160 Australian Government Department s contracted with airlines hotels and TMCs independently of each other. In 2010 one Department was appointed to contract on the others behalf and it resulted in huge savings!

[arobertson]

I was chatting to a new client of mine who are doing a 30 country roll out about the possibility of they combining their credit card policy with their provider.

Wondering if it is possible and what sort of additional savings they would get.

KR

Angus

[AmberLee]

That's another area that would benefit from pooled resources. A lot of times large, international companies with offices in multiple countries act like independent companies from one another with unique policies and everything. This is done for a reason but what if all the different companies in an area pooled their resources? 

[AmberLee]

Specifically, let's say there are 3,000 Concur clients in North Texas and half of them do only $1MM in airfare a year. One million isn't a lot these days, just ask Dr. Evil, but combined those numbers add up. Again, I'm not a travel expert and I'm sure they have rules around this so the vendors aren't taken advantage of, but if this is being done already I would love to learn more.

[RichardG]

Theoretically it could be done but it would require trust among the combined entities to stick to the terms of the "Whole of small business Texas" agreement with the travel suppliers.
The contract could be a "piggy back" model where entities join to take advantage of the agreed pricing whilst still retaining their independent control in dealing and paying the suppliers. The idea certainly has merit - you just need some strong advocates to give it some traction. When businesses see the potential savings they could make by leveraging their combined numbers at the negotiation table there will be buy in!

[sasrsc]

Where's the carrot? 

If the vendor can sell widgets without a discount then it will maximize it's profit. If we approach a vendor (an airline or hotel) then they want to know what we can do to influence their purchasing decision and move business from abc airline to xyz airline. If we don't have the power to do that then they are less motivated to participate.

Having said that there are plenty of consortium/partnerships that exist that offer the ability for someone to subscribe and potentially get a discount. We do that with our hotel program.

You could say that Concur should be the "consortium" and we'd be able to get Concur rates at hotels and with the airlines. Oh boy, that would shake up the industry!!! Ha.

[AmberLee]

The carrot would look less appealing to large vendors like American Airlines but that doesn't mean the carrot isn't there.

Let's fast forward to the last part of what you said though about Concur being the "consortium"... wouldn't that be similar to how Expedia and Travelocity work? Why hasn't this been yet? This is a big company that's been around a while with thousands of clients so I'm sure this isn't the first time someone has asked this question... or is it? Maybe we just stumbled upon the biggest travel related money saving idea Concur has ever seen?

[walshgroup18 · Accepted solution]

I have heard of this in our industry. I know that there is at least one company that does this.

At CBTA last year a company was talking about their downsizing and how they worked with a group for better buying power since their program has shrunk significantly.  I did follow up with the company and they have a "interviewing" process to see what you can offer and what your needs are to match the group. For us I was looking at the office supplies bulk buying power since there isn't many options out there.

[AmberLee]

Interviewing companies to choose the ones that best align with their values and policy is such a great idea! This is exactly what I was looking for!