airline contract management

HCM 9.2011
Best Practice Case Study:
A large multinational consumer goods company and a long time TRX customer, needed to reduce total spend in
their hotel program. Commercial studies have shown on average that 40% of hotel bookings occur outside of the
TMC. To address this issue, it was necessary to import the client’s charge card data to make a thorough analysis of
the hotel spend.
Using TRX’s Hotel Contract Management reporting, the TMC data and charge card data were compared to
identify leakage in the form of both compliance and loss arising from room rate price variance. The resulting
report showed an opportunity to gain $340K of savings through increased compliance. Increased compliance
occurs when employees stay at preferred hotels where the rate is lower than nearby non-preferred hotels, and is
calculated by a 50% improvement. The rate variance savings opportunity was 470% greater than the compliance
savings resulting in an opportunity to save $1.6M globally. Rate variance occurs when travelers book at a preferred
hotel but do not receive the negotiated rate. Aggregate spend data was then sorted by chain and geographical
location in major markets to determine negotiation opportunities resulting in an additional savings opportunity
of approximately $3M globally, $2M in North America. A negotiation opportunity arises when lower, non-preferred
rates exist at a preferred property. Using proprietary hotel database and clustering algorithms, the spend data was
evaluated to determine tier-down opportunities representing a $3.8M savings opportunity. To “tier-down” means to
downgrade by 1 tier (5.0 hotel to a 4.5 hotel) or by 2 tiers (5.0 hotel to a 4.0 hotel).
Through the use of TMC data, charge card data, and TRX’s Hotel Contract Management reporting and consulting,
$7.2M of savings potential was identified.
WHY TRX?
TRX is a world-leading travel technology and data services provider, offering more than 20 software-as-a-service
utilities for analytics and automation. Serving corporate buyers, travel suppliers, travel agencies, and payment
providers, our solutions transform transaction data into actionable insights and enable our clients to realize
otherwise unachievable productivity gains.
TAKE ACTION WITH HOTEL CONTRACT MANAGEMENT.
Value Pack: Analysis of a hotel program
demonstrating different savings scenarios based
on compliance percentages, tier down scenarios
and thrifty traveler.
North America 1-866-815-8001 | Europe +44-1293-608-555 | Asia +91-80-7113-9600
email trxsales@trx.com or visit www.TRX.com for more information.