There are 2 ways to increase profits. Sell more or spend less. While most travel companies invest the majority of their efforts in selling more, we would like to give some tips on how to negotiate better rates with travel suppliers for B2B travel.
Shop Around
If you are currently using a specific travel supplier and would like to negotiate better rates, prior to doing so, shop the market to see what similar services or offerings are available and at what price. This valuable research will be the first step in gaining leverage when approaching a renegotiation. If you are looking to negotiate rates with hotel wholesalers (bedbanks), here is an interesting tip. Pruvo´s repricing customers get access to a dashboard where they can see which suppliers' rates are being reshopped the most, and which suppliers' rates are "winning the new business". This data can serve very useful when preparing your negotiation strategy.
Jot Down Your Strengths
Several factors can affect the B2B travel rates, including the destination's popularity, time of year, demand for accommodations, transportation costs, and the size of the traveling group. Review your past years’ results. How much business have you provided a certain supplier? Do you have higher than average sales volume for a specific destination? Are you about to launch a campaign that will increase sales for a specific period of time? This will be the second step in creating leverage for your upcoming negotiations with your B2B travel suppliers.
Negotiation Goals
Prior to engaging in the negotiation with your supplier, know ahead of time the potential satisfactory outcomes that you are aiming for. Is it a specific percentage? It is better payment terms? Is it a sliding scale based on achieving milestones? Are you interested in additional add-on services? Now it’s time to prepare the strategy.
If you feel that your results and volume justify your proposal, then make your best offer first. It can be “your wildest dream” offer that you most likely expect them to reject. Even if the offer is rejected, it raises the bar of their counter-proposal. This strategy will only work if you can truly justify why you deserve an improved rate or terms.
If your offer is rejected, tell your supplier that you are familiar with other offerings by competitors for the rates you encountered, so they are aware that you have options. Businesses that can justify their claims for better rates with results and that have other options if things go south enter negotiations from a much stronger position.
Conclusion
Negotiating better rates with B2B travel suppliers developing a negotiation strategy and conducting thorough research to offer counter proposals and discussing additional benefits and value-added services, each of these elements plays a critical role in securing the best possible deals and building strong long-term relationships with suppliers.
By taking a proactive and strategic approach to negotiation, B2B travel businesses can position themselves for success in an industry that is highly competitive and constantly evolving. With careful planning and effective communication, businesses can maximize value, reduce risk, and build strong partnerships that drive growth and success over the long term.