Buying Busines travel what do you need to include in the Travel Managment Company (TMC)ITT?
1. Dedicated Account Manager- you want a main point of contact for all your queries (not for helpdesk enquiries but to manage the overall account)
2.The Travel Management Company should actively promote the travel services to users
3. Provide value-add services such as information on vaccines required
4. Provide support for visa services
5. Provide travel safety information
6. Continuously offer the best rates for hotel bookings both national and international
7. Act as a one-stop shop offering fully integrated service for hotels, conferences, rail, air, taxi, etc. air, rail, or sea bookings, within company travel policy (including low-cost carriers)
8. Benchmark cost to ensure VFM is offered
9. Offer negotiated routes
10. Timely invoicing using consolidated invoices by Department or cost centre
11. Helpdesk 24 hours including being available for international travellers
12.Provide specialist advice on money saving trips by offering suggestions for the travel itinerary. Ensure traveller is fully aware of most economic
fare, within travel policy
13. Quality assurance process for avoiding booking mistakes. Process confirmations of flights for overseas visitors. International Air Transport Association (IATA)
carriers and also Miscellaneous Charge Orders
14. Be clear and transparent on pricing i.e. no hidden extras. E-tickets and associated refund process
• arrange TODs (Tickets on Departure)
15. Offer an online booking tool and phone option. Compile full itineraries
16. Miscellaneous – Issue traveller’s cheques and foreign currency, obtain passports and visas and so on, undertake miscellaneous duties, such as an issue of international driving licences, checking authentication of documents at Embassies.
- TMC specific• technology to be provided
• levels of support and training
• out of hours cover
• sickness and holiday cover required
• internal audit checks required
• staffing levels
Travel Management Company ITT- what to include in the SLA
- Airfare savings and benchmark
- Rail savings
- Hotel savings (target rate for region/area)
- Price guarantee
- Response times
- Bookings compliant with travel policy
- Complaints handling
- Process for refunds
- 24-hour service
- Monthly Management Information Reports to include: Tota £l by category of spend/department, number of transactions, Top suppliers, average ticket/ hotel price, fare savings report, booking patterns, compliance with policy
- Monthly service reviews
- Disaster recovery plan
- Customer satisfaction survey – bi-annual or upon request
Pricing (fixed fee per transaction)
a) Management fee – ‘open book’ with all commissions and overrides passed on by the TMCto the client and the client paying all the TMC’s costs associated with your account and a management fee (or profit). The fee may be a % of sales or a fixed fee and it may be incentivised through a SLA. The overheads within the TMC costs may also be a % of sales.
b) Transaction fee –
(bundled) all commissions and overrides passed on by TMC to the client, but a transaction fee is charged for each booking. This fee may vary with the type of booking, for example. air, rail, hotel and so on, but will cover the TMC’s costs and a profit margin. Smaller TMCs may keep commissions and overrides and charge a lower
• (unbundled) as for bundled above, but the transaction fee only covers the TMC’s indirect costs and profit and the travel manager monitors the TMC’s direct operating expense. A mixture of management fee and transaction fee.
5.1 Management fee contracts – an example of layout
Sales By market sector
Income Commissions passed on from:
• car rental companies.
• direct (mainly manpower)
• corporate overheads.
Total of Costs & Profit – express as a % of sales
Very good 5-6%
>7% You should begin to have increasing doubts.
Income – Costs & Profit = Residue
Move to negative residues
With reducing commissions/overrides and net fares, income is reducing, but TMC costs, however, stay the same or more likely increase. These two factors combine to give negative residues. When residues were positive, it was hard for the client to get the residue back from the TMC (usually quarterly at best or more commonly annually). Now that residues have gone negative, TMCs are trying to get the client to
pay them in advance or at least monthly in arrears.
TMCs cash flow is under pressure.
What does a client do with a negative residue?
• have their own budget?
• back charge to travellers’ departments?
• move to transaction fees?
Another way of covering TMC costs and profit is moving to transaction fees. These will tend to vary from market sector to sector, for example. domestic air, European air, international air, low-cost carriers, hotels,
rail and so on. What is a transaction? There is a definite need to clarify
this at the beginning of the contract. What about changes and refunds?
- Domestic Air £
- European Air £
- International Air £
- Low cost carrier£
- European Rail £
- UK Rail £
- Passport Application £
- Visa Application £
- Aiport Services £
- After Hour Services £
- Implementation Cost £
- Annual Support Cost£
- Other Cost £
CRS = Computer reservation system
GDS = Global distribution system
GDSs evolved from CRSs – they form the ‘front-office’ of the TMC. The major players are Galileo, Sabre and Amadeus.