DHL Preferred Accommodation Programme
Deutsche Post DHL Group is a German multinational package delivery and supply chain management company, with headquarters in Bonn. They are one of the world’s largest courier companies, with more than 590,000 employees and a presence in over 200 countries and territories.
The Group is home to two strong brands: DHL, which offers a comprehensive range of parcel and international express services, freight transport, and supply chain management, as well as e-commerce logistics solutions and Deutsche Post, Europe's leading postal and parcel service provider.
Savings delivered
£301,000
Programme negotiation increase
6 days
Saving per night
8 months
Savings against preferred programme
26%
Objectives.
We have worked alongside DP DHL UK, managing their business travel, accommodation, meetings and event management requirements for over 22 years. Throughout the contract, we have worked on projects to deliver ongoing process efficiencies and savings. One such project was the renegotiation of their preferred accommodation programme.
The DP DHL’s UK programme is negotiated annually and we have always ensured our customer is provided with a best in class hotel programme. Taking into consideration the return to travel and meetings post pandemic and working with DP DHL’s Procurement Manager, we discussed the options available for the 2022/2023 programme. Those options were to negotiate a totally new programme or negotiate an extension of the existing programme - in which case, that would be the third year their programme was extended, and rates held. Like many of our Customers, DP DHL’s profile has adapted and new ways of working adopted post pandemic.
The key focus of our strategy was early engagement with the customer and our hotel suppliers with a view to effectively articulating and agreeing our plan of action. The challenge we had was low volumes of business for the previous 2 years (as a direct result of the pandemic and subsequent lockdowns), along with significant price increases due to pandemic ripples, high occupancy levels and inflationary pressure. The decision was made to negotiate a hybrid programme where we would ask hotels to rollover rates or submit a new rate for the programme.
This is really great work and I had expected a much higher increase than you have achieved.
Indirect Procurement Manager
DP DHL UK
Solution.
Now that our approach was agreed, Agiito’s Account Manager met with DP DHL’s Indirect Procurement Manager to discuss the strategy and approach to negotiating their preferred accommodation programme - which was to engage with our hotel partners to understand their rate strategy. This early engagement proved to be a great first step as it enabled us to have sensible and meaningful conversations with all DP DHL’s preferred suppliers who also recognised the benefits of a tri-way relationship.
The result of those early conversations then led to a joint understanding with key providers such as Jurys and Hilton hotels, who offered a minimal rate increase that would cover their operational cost only.
In consultation with product category specialists that provide knowledge, expertise and insight across all travel-related spend areas, Agiito’s Account Manager oversaw and co-ordinated a four-step process to deliver an enhanced, optimised accommodation programme which fully addressed DP DHL’s compliance and cost reduction objectives.
They undertook a defined 4-stage process which encompassed (1) diagnostic benchmark of the existing programme and supplier deals, (2) strategic sourcing including the renegotiation of the preferred supplier programme, (3) category management and the ongoing optimisation of the programme, and (4) behavioural change, utilising educational collateral and online messaging to positively influence change and drive programme compliance.
We recognised that DP DHL’s profile and traveller requirements also changed and therefore complimented traditional hotels with aparthotels such as Staycity, Staybridge and Adagio brands to give DP DHL’s travellers a new and alternative option of staying in an apartment as opposed to a hotel.
After 3 rounds of negotiation, we presented the proposed programme to DP DHL’S Procurement Manager to agree and ultimately sign-off. The results delivered savings of 26% against DP DHLs 2022/2023 preferred programme.
We delivered savings of £301,000 over the 12-month programme!
Results.
The end result was exceptional, we managed to mitigate cost increases to a number of groups whilst holding existing rates for the majority of groups and independent hotels such as Accor and IHG branded hotels. Properties that were new to the programme including Aparthotels were also very competitively priced for high end brands.
Cost avoidance savings presented to DP DHL’s Procurement Manager and the DP DHL UK team included:
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Savings negotiated against the market average - overall programme negotiation increase of just 4.6% against the market forecast of 20%. PwC had forecasted a 32% increase for London and 8.9% increase for the provinces.
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Preferred rates against non-preferred rates - In preferred locations the overall value of the programme versus non-preferred is measured by the average rate. Preferred programme rates negotiated at £88 against non-preferred rates at £99 - saving the customer 9% per room per night.