Are Preferred Suppliers a Thing of the Past?

Published July 2017 Analyst: Lorraine Sileo


Are Preferred Suppliers a Thing of the Past?

It's common understanding that corporate managed travel programs require the use of preferred suppliers. After all, isn't that the purpose of corporate-supplier negotiations – to obtain special rates for the corporation, and guaranteed business for the supplier? But in reality, the consistent use of preferred suppliers is likely lower than we think. A recent Phocuswright survey of 2,300 U.S. business travelers found that fewer than half of those governed by a corporate travel policy always use preferred suppliers for car rental, air or hotel. And only about one third said they usually adhere to policy when choosing a supplier.

Sure, this means that 80% or so of managed business travelers always or usually stay within policy. However, looking at this another way, more than half of them have "gone rogue" at least once to book a non-preferred supplier – and nearly 20% have done it most or all of the time.

So how do they get away with it? Nothing is really holding them back. Only about 10% of managed travelers said they won't get reimbursed if they book outside of policy.

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Bottom line: Companies will keep negotiating special rates with suppliers, but travelers will often choose price or convenience first. With more corporations looking to cut travel costs, expect travelers to continue to make their own decisions going forward. That's OK, since only a few are forced to book certain suppliers anyway.

Phocuswright unmasks ten myths of business travel – including mobile bookings, reasons for non-compliance, millennials, duty of care and more – in The U.S. Business Traveler: Debunking Common Myths About Corporate Travel.

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