How to choose a TMC
Arranging business travel can be extremely time-consuming, not to mention stressful if plans go awry. Travel management companies can ease the burden – but at a price
Knowing you have an experienced individual ready to help you makes a big difference to our travellers
How much time have you spent booking or rearranging business trips over the last year? Have your travel plans been severely disrupted by bad weather, natural disasters, industrial disputes or even acts of terrorism? These are questions that travel management companies (TMCs) ask when trying to persuade the business traveller to use them to manage their travel requirements.
A decade ago, TMCs used to be known as business travel agencies. These days, TMC services extend into areas such as data reporting and analysis, expense management, consultancy, meetings and events management, traveller tracking (allowing companies to monitor where employees are) and creating bespoke technology such as online booking tools. Yet despite this diversification of services in recent years, arranging and booking travel is the bulk of what a TMC does.
WHY USE A TMC?
Tang, regional director, Asia, for the Association of Corporate Travel Executives (ACTE), says: “In an increasingly complex business environment, corporates are no longer looking for TMCs to simply fulfil jobs as an ordinary booking agent. It is critical to have TMCs that offer full-scale services.”
Tang identifies four main areas that TMCs can provide assistance to businesses: providing consultation on how to perfect their travel management processes; optimising costs to better reflect changing traveller behaviour based on firm data; proactively providing analysis and meaningful data during a company’s request for proposal (RFP) process; and enhancing traveller satisfaction within the company’s cost framework.
Lyndsey Atkins, marketing director for Reed & Mackay, adds: “Business travellers are often [relatively] poor. A TMC brings value by providing both cost savings and an increased level of comfort and ease, allowing the traveller to focus on work or get some rest.
“Whether this comes in the form of the right seat on the plane, travel alerts or emergency assistance out of working hours, knowing that you have an experienced individual ready to help you makes a big difference to our travellers.”
Jo Sully, vice president and regional general manager, Australia, New Zealand and Southeast Asia for American Express Global Business Travel (GBT), agrees, adding: “TMCs possess technology and tools to simplify the booking and travel process and can provide the ability to track and communicate with travellers during times of distress. Such support can significantly improve traveller peace of mind.”
If you’re considering using a TMC, the most immediate questions might be: how much is it going to cost, and how am I going to be charged?
These days, most TMCs – whether they are large or small – use transaction fees, a set of fixed rates added to every travel booking at the time of the transaction, as a way of charging for their services.
A rule of thumb is that these transaction fees will be between 2 and 5 per cent of an organisation’s total spending on travel, but this depends on the level of service agreed with the TMC.
Generally, if you are booking the majority of your travel through a TMC’s automated online booking tool, the costs will be at the lower end of this scale. But if you prefer to make your bookings by speaking to the TMC’s consultants, known as offline bookings, then the fees will come in at a higher level. It’s also worth noting that the transaction fee can vary depending on whether it is an air, rail or hotel booking.
SPENDING TO SAVE
But what do you get for spending this extra money on fees? All TMCs claim that they can get significantly lower rates through their deals with preferred airlines, hotels and other suppliers than are available on the consumer market.
American Express GBT’s Sully says: “We’ve seen instances where mid-sized companies in Australia have saved close to A$300,000 [US$217,270] through engaging a TMC. Through our data and insights, we’re able to assist companies in numerous areas that drive cost savings including travel negotiations, helping to change booking behaviour and increasing company-wide travel policy compliance.”
ACTE’s Tang adds: “Nowadays, leading TMCs not only bring cost savings in travel products – air tickets, hotel rooms and so on – to the table, they can provide 360-degree savings through the use of artificial intelligence and online booking tools, as well as when it comes to administrative cost saving such as payment and reimbursement time.”
TMCs also point out that not all airfares and hotel rates are created equal: many of the cheapest public prices are “unbundled” with restrictions such as no changes allowed to flights, or hotel rooms without complimentary breakfast or wifi.
Denise Harman, senior director of programme management for Carlson Wagonlit Travel, says: “If you look at cost, a TMC can gain access to the most competitive rates with added value and more flexible conditions, such as including wifi and breakfast in the rate of your hotel room.”
So how much budget must you commit or how much must you spend on travel to make using a TMC an effective solution? Most TMCs claim there is no real entry point, although some say that a minimum travel spend of US$65,000 to US$130,000 per year is required to make it worthwhile for both parties.
Shelley Mathews, vice president of sales, Europe, for Corporate Travel Management (CTM), adds: “It’s hard to define what level of commitment is needed because this will vary for different clients, depending on the number of travellers, trips, budget size and level of service they want. But there does need to be some commitment, otherwise they won’t get the best from their TMC." It definitely makes sense for any SME [small to medium enterprise] with a travel spend in excess of £100,000 [US$130,000] to use a TMC.”
Benson Tang goes one further, adding that SMEs in particular stand to benefit from employing a TMC precisely because an SME's resources are more limited. “A TMC’s role is even more indispensable for SMEs, as they have fewer resources and/ or travel management leadership,” he says. “Hence, they can rely on the consultation and advice from TMCs.
“Moreover, the economy of scale when it comes to purchasing power is far smaller for SMEs than for Fortune 500 firms. TMCs can therefore unite the buying power of their SME clients to obtain better deals for those clients.”
QUESTIONS TO ASK
If you are seriously considering using a TMC to help you manage your travel requirements, what are the key factors to think about when choosing the company?
TMCs may seem to offer the same services but there can be differences in the types of organisation they specialise in – some may focus on SMEs or sectors such as legal or finance, while others cater for industries with very specialised travel needs, such as oil and gas, or shipping.
“The key factors to consider when choosing a TMC are whether they have the services, tools and technology to support your specific travel needs,” says Sully. “Traveller needs and preferences vary greatly, which is why we provide a variety of ways to reach our travel counsellors including via app or phone. Our travel support team delivers local assistance by travel counsellors who know the business
travellers on an individual basis, and this is supported by our 24/7 global travel network, which can help travellers whenever and wherever they need assistance.”
Jill Palmer, managing director of technology-focused Click Travel, advises that a key step to finding the right TMC is to check out its online booking tool before making any commitment.
“Is it a good tool? Does it have all the travel content you want? Does it allow you to book the providers you really want? Does it have live chat, because that can be really useful for travellers? If you’re looking for more of a comprehensive off line service, meet the team that’s going to be helping you. Getting to know them first makes a big difference, and you can gain an understanding of how they service their customers.”
Julie Oliver, managing director of UK-based Business Travel Direct, suggests meeting with three or four TMCs before making any decision. “Ensure you have an agenda that allows the TMC to tell you about themselves but also allows them to discuss how they could work with you and deliver on the things that are important to you,” she says.
“I would always suggest asking for pricing after the meeting, as it will give the TMC a better idea of what they need to deliver and price accordingly. If price is really important, look for a company that offers an online tool for staff to use at reduced rates, but that also allows you to call an experienced travel consultant to make more complex bookings.”
Andy Hegley, UK general manager at Corporate Traveller, which is part of Flight Centre, says it is also worth asking about a TMC’s technology platforms and how these support an employer’s duty-of-care responsibilities. In addition, examples of success stories regarding existing clients can also be useful – particularly if they are similar types of organisations.
The importance of a TMC’s technology is paramount when choosing a provider – particularly when automated bookings and other processes incur a significantly lower cost for the client. But, on the other hand, a poor online booking tool will be counterproductive as travellers may simply decide not to use it.
TMC booking tools have long been criticised for lagging behind consumer-orientated travel apps in terms of their customer experience and usability. However, they are slowly getting better and offering more “end-to-end” services.
FCM Travel Solutions (FCM), one of Flight Centre’s TMC brands, has developed SAM (Smart Assistant for Mobile), which features elements of artificial intelligence to provide more personalised information to travellers’ mobile devices, as well as allowing them to connect to a human consultant when necessary.
SAM has just gone live on both the App Store and Google Play, with a free basic version that allows users to add trips manually and view traffic, weather and flight updates, as well as local ground transport services. The premium version of the app for FCM clients includes autosynching of travel bookings, a self-booking tool and live chat.
Another way to dip a toe into travel management waters, without making any firm commitment, is to try a service such as Click Travel’s Travel Cloud platform.
“It’s a completely self-service model,” says Click Travel’s Palmer. “It’s online and free – organisations can sign up to use Travel Cloud and can implement pre-approval of trips as well. We believe the automated online approach will be the future of booking travel. Most people don’t want to phone up to make a hotel reservation.
“Users don’t pay a charge for the standard model of policies and implementation, as we recover costs through the supplier chain, such as commission from certain hotels and other suppliers.” This kind of option means those who are nervous about getting locked into a contract with a TMC can get an idea of whether they can benefit from a TMC’s services.
However, not all TMC developments are fixated on technology and lowering transaction fees to gain new customers – service is still an important part of their message and pitch to would-be clients.
Egencia, Expedia’s TMC brand, has launched Egencia Advantage offering a range of services to “support business travellers throughout their entire journey”. These include airport lounge access, traveller risk management, visa services and also help getting compensation for delayed or cancelled flights within the EU.
In conclusion, there are a growing number of options available when choosing a TMC – from increasingly automated (and cheaper) booking systems right the way through to a VIP-style offline service with dedicated travel consultants looking after travellers.
In between these extremes, plenty of hybrid models exist offering elements of both types of service. TMCs hope these will tempt organisations which do not have a managed travel programme to give them a try and see if they can live up to their promises about the benefits they provide to both travellers and their employers.
TMCs claim they can get significantly lower rates than are available on the consumer market