In a typical year, hotels increase corporate rates by 3% on average. US-based biotechnology corporation Genentech needed a creative way to combat these rate increases and realize savings.
With today’s environment of ride-share usage, enhanced hotel loyalty programs and benefits, and inability to fully report on hotel amenity redemption, Advito and Genentech’s approach was to solely focus on competitive corporate rate discounts (both static and dynamic) and to forgo items such as breakfast and parking in lieu of a more competitive corporate rate.
Genentech and Advito pre-emptively connected with all major chain partners to inform them of the new approach and set expectations early in the sourcing process, along with communicating this request to key independent hotel partners.
The hotels where breakfast and parking were not complimentary or included as part of the rate for all travelers were asked to reduce their negotiated rate. Most of the hotels agreed with this request, others required additional conversations, but ultimately the goal of full rate transparency was established.
“We were years into a seller’s market with significant volume in compressed markets, so we needed to be creative with how we were going to minimize YOY increases. By taking a step back and understanding how we were creating value and measuring savings, we were able to simplify the process and focus our energy where it mattered – on rate, high volume hotels and markets, and partnerships.”
Amy Perrone, Genentech
By focusing strictly on rates, Genentech achieved an overall rate decrease of 3% compared to the market index forecast of a 4.2% increase. Removal of amenities from the sourcing conversations allowed the team to focus on the true room rate and like for like in rate re-shopping in tools became simpler. Genentech’s travelers continue to receive their daily per diem for meals and transportation costs, if needed, but removing amenities in the hotel rate overall resulted in direct savings of nearly $834K and cost avoidance of $3M.
By focusing on maximizing competitive corporate rate discounts, Genentech:
- Achieved an overall rate decrease of 3% vs. a market index forecast of a 4.2% increase
- Realized direct savings of $834K and cost avoidance of $3M
- Simplified like-for-like in rate re-shopping tools by focusing on true room rate and removing amenities from negotiations