Defining Preferred Suppliers in Managed Travel
Preferred suppliers are the backbone of an efficient and cost-effective travel program. These vendors, which may include airlines, hotel chains, car rental companies, and ground transportation providers, are carefully chosen through negotiations and contracts. The goal is to secure the best possible rates and terms while delivering dependable service for employees on the move.
For businesses, establishing a network of trusted suppliers simplifies travel planning, supports compliance, and creates opportunities for savings and added value that would not be achievable through ad-hoc bookings.
Why Preferred Suppliers Matter in Corporate Travel
For travel managers and procurement teams, preferred suppliers are not simply cost savers — they are strategic partners. By leveraging volume and long-term relationships, organizations can negotiate favorable rates, perks, and flexible terms that directly benefit the business and its travelers.
Preferred supplier agreements help:
- Simplify booking by narrowing options to vetted, approved vendors
- Reduce maverick spending by encouraging bookings through trusted partners
- Improve safety and duty of care by partnering with suppliers that meet company standards
- Generate consistent data for spend analysis and supplier performance reviews
How Preferred Supplier Agreements Work
The Selection Process
Selecting a preferred supplier typically starts with identifying organizational needs. Travel managers assess current travel spend, destinations, traveler feedback, and existing contracts. Then, they prepare a detailed Request for Proposal (RFP) or enter direct negotiations.
Suppliers submit bids highlighting pricing, service capabilities, safety standards, sustainability practices, and added value. Travel managers review proposals, compare options, and select partners that align best with the company’s travel goals and policy.
Contracting and Negotiation
Once a supplier is chosen, the parties negotiate contract terms. These often include:
- Special rates and fare classes
- Room night commitments or flight volume targets
- Service level agreements (SLAs)
- Reporting requirements
- Terms for cancellations or changes
- Added traveler perks (upgrades, loyalty bonuses, flexible changes)
These agreements are not static. They are reviewed regularly to adjust rates, address traveler feedback, or add new suppliers when needed.
Real-World Examples
Many companies designate preferred airline alliances for key routes, major hotel chains near frequently visited client sites, or car rental companies that provide consistent pricing across regions. Some even select preferred ground transportation providers that align with sustainability goals by offering hybrid or electric vehicle options.
A global consulting firm, for example, might negotiate a worldwide agreement with a major hotel chain to secure discounted room rates and guaranteed availability for consultants traveling to client sites on short notice.
Benefits for Companies and Travelers
Savings and Predictable Costs
Preferred supplier deals often provide rates below market average. For large travel programs, even a few percentage points in savings can translate to substantial cost reductions over a year.
Policy Compliance
Preferred supplier partnerships help travel managers reinforce compliance. Booking tools can prioritize preferred options, making it easy for travelers to follow policy without sacrificing convenience.
Improved Traveler Experience
Approved suppliers deliver reliable, consistent service and perks that enhance the traveler experience, such as loyalty points, early check-in, or priority boarding.
Enhanced Reporting and Insights
Suppliers provide data that supports spend tracking, trend analysis, and program performance measurement, which helps travel managers identify opportunities for further savings or service improvements.
Common Pitfalls When Managing Preferred Suppliers
Even well-structured preferred supplier programs can face challenges:
- Leakage: Employees may book outside preferred channels for perceived convenience, eroding savings and data accuracy.
- Underutilization: If employees aren’t aware of preferred options, adoption rates drop.
- Service inconsistencies: Vendors may struggle to maintain promised standards, requiring travel managers to step in and address performance gaps.
To counter these issues, companies should maintain clear communication with employees, conduct periodic training, and review supplier performance through scorecards or traveler feedback.
Technology’s Role in Enforcing Preferred Suppliers
Today’s travel management technology and online booking tools (OBTs) make it easier to guide travelers toward using preferred suppliers. These systems can highlight approved vendors during the booking process, automatically apply contracted rates, and alert travelers or travel managers if a booking falls outside of policy. This use of technology strengthens compliance while simplifying the booking experience for travelers.
Supporting Sustainability Goals
Selecting preferred suppliers can play a significant role in furthering a company’s sustainability objectives. Many organizations consider environmental initiatives when identifying airline, hotel, and transportation partners. This may involve working with airlines that are reducing emissions or choosing hotels with certified sustainability programs. Prioritizing preferred suppliers with strong environmental practices can help organizations align travel with broader ESG commitments.
Frequently Asked Questions
Why should companies negotiate with preferred suppliers?
Negotiating with preferred suppliers secures better rates, consistent service levels, and value-added perks for travelers. It also makes policy enforcement simpler and enables companies to capture and analyze spend data for better decision-making.
How often should preferred supplier agreements be reviewed?
Organizations typically evaluate their preferred supplier agreements once or twice a year to measure vendor performance, adjust terms as needed, and confirm that partners continue to meet required standards. This regular review ensures agreements remain beneficial and responsive to shifts in travel volume, traveler needs, and company objectives, strengthening supplier relationships over time.
What happens if employees don’t use preferred suppliers?
When travelers book outside preferred channels, companies lose visibility into spend and miss out on negotiated savings and traveler support services. Travel managers may address non-compliance through policy reminders, booking tool controls, and traveler education.
Can preferred suppliers help with traveler safety?
Yes. Vetted preferred suppliers meet agreed-upon safety standards, which supports duty of care obligations. Trusted suppliers provide reliable emergency support, clear communication channels, and a consistent level of traveler assistance when issues arise.
Are smaller suppliers ever used as preferred partners?
Absolutely. While large hotel chains and airlines are common preferred suppliers, smaller local providers can be valuable partners too. Regional suppliers often deliver unique services, local knowledge, or niche perks that align with specific traveler needs.