Author: Tony O’Connor
Your TMC arrangement is the most important element in your travel supply chain. The details of your deal, how the TMC performs and behaves, and the quality and diligence of their people and systems will have a bigger impact on your travel costs than all your airline and hotel deals combined, not to mention the service and risk management outcomes.
Butler Caroye has been managing travel tenders for corporate and government travel buyers for nearly twenty years. We’ve built up a mountain of category knowledge over that time, and developed thorough and efficient procurement and supplier management tools. Travel is a complicated and opaque supply chain. There’s a lot of detail. And there’s a big difference in costs and outcomes if you get it right. Over the next few months, let us advise you, provide benchmarking or a health check, help with internal policies or process, or help you with a tender for TMC, airline, hotel, car, or card, at reduced rates.
1: Avoid independent booking consultants
Some TMCs have independent booking consultants working on their premises. They essentially hire the TMC’s desk, systems, IT, deals etc and operate as their own micro businesses. These people are the most likely to mark-up your airfares and operate with conflicted interests since any additional margins, commissions and mark-ups go directly into their pocket. They belong in the retail space; not B2B business. You generally need to ask to find out if a booking consultant is an indy. They tend not to happen in larger TMCs.
2: Ask how the TMC staff are remunerated
The people providing you service should not get more money based on transaction numbers, commissions, travel revenue or profit, at any level. This is certainly the case with booking consultants, but also should apply to account managers and anyone providing you with ongoing service or advice.
3: Be absolutely vigilant about mark-ups
Say you have one TMC that charges transaction fees of $3 online, $14 domestic offline and $65 international offline. Another charges $9, $22 and $95. Which should you choose? Take it from me. Go for the latter. Very low fees are a flashing red light that the TMC intends to make revenue with hidden arbitrary mark-ups where it can, mostly on wholesale international airfares. And mark-ups can occur whatever the fee level. Differences in fees are trivial in the face of a $500 or $1,500 dollar addition to the fare. Most TMCs don’t mark-up systematically, but the problem is it is nevertheless not uncommon and hard to detect. We offer an airfare auditing service based on irrefutable base data called airocheck. See www.airocheck.com
4: Head for the TMC fee sweet spot
In nearly twenty years of TMC tendering, one thing has been constant; the amazingly wide range of TMC service costs. When you calculate and add everything up, there is often an 80% or more difference between the financial offers. Usually, there’s a pack in the middle, with maybe a more expensive one floating above, and usually one or two way down the bottom. Avoid these low-liers and head for the middle.
5: A few IT things are more important than the many
So I guess this is the point at which I really should say “please contact me for further advice”. But basically … There are growing differences between TMCs’ systems and their IT capabilities. A lot of it probably doesn’t matter too much, but some of it really does. You can now get good online data and analysis from most TMCs. They all should have good profile systems and map-based risk management. But the travel inventory they connect to is important. The capabilities of their online booking tool are key. Their post-booking auto market-searchers can be a savings spinner. Etcetera
And always take note if a TMC person talks about “selling” you travel. These are the words of a commission-based sales agent acting on behalf of the supplier. They’re meant to be “buying” you travel in your interests and on your behalf.
Please let me know if you’d like to have a chat over summer.
Butler Caroye Asia Pacific, 0409 944 911, firstname.lastname@example.org.
Tony O’Connor has been Director at Butler Caroye Asia Pacific (independent corporate travel management consultancy) since 1998. For more information, visit: www.butlercaroye.com.au