Travel managers are sometimes surprised when the pedal hits the metal and they start seeing bills and statements from their TMC. That's why an open and shut agreement, predicated on a closely-watched RFP process, can prove to be quite murky if you don't know what dangers and ambiguities lurk behind TMC operations and charging practices.
We spoke to TMC insiders and their clients to identify some of the hidden costs that could confront the unsuspecting buyer.
When you are switching to a new TMC, no doubt some training will be required to ensure that your travellers and bookers understand the systems and processes of your new provider. Tough negotiations may mean that the TMC has not built the cost of this into their service offering, so you can expect to be charged - unless it is covered in the contract!
2. Set-up and establishment costs
No matter what systems and tools your TMC is offering you, there will be some implementation work required. Even if you are continuing with the same preferred suppliers, the same policy and the same self-booking tool, the new TMC will have some work to do to implement you, which is why some TMCs take upwards of 12 weeks to implement a new client.
The end of the story is that this is a lot of work for the TMC and they are well within their rights to charge you for it. Best to find out from the start.
3. The cost of real management
You’re hiring a TMC for advice, not just to handle bookings. So, you’ll be expecting access to the TMC’s expertise and personnel. If you haven’t included consulting services in your RFP and your contract, then don’t be surprised if you are billed for this service. And, at the same time, be sure to specify what ongoing account management you expect. Your need for advice will not be limited to the start of your TMC engagement – you will require ongoing help with your policy, strategies and tactics. If the contract uses vague terms and if you require frequent and regular meetings with your account manager, you will almost certainly cop some charges for their time.
4. Looking after your people
All travel processes require accurate traveller profiles and while your staff may well input the data, unless it’s spelled out, your TMC will most likely charge you for “profile management”. And this may be a recurring cost. Certainly, every time a new traveller comes on board or someone leaves your organisation, you could be up for additional costs. Specify what’s expected in the RFP and ensure these costs are spelled out before you sign the contract.
5. Dealing with suppliers
Most TMCs make bold claims in their RFP responses about their skills and experience in supplier negotiation. And in most cases, they can deliver on those promises. But don’t assume that the expertise comes for free. Make sure that those services are covered by the scope of the agreement, or you may find yourself forking out for that help as well.
6. The best of the best
Another proud claim in TMC pitches is that their exposure to a range of clients and suppliers allows them to compare your program and prices with those of your peers. Bench-marking obviously has a value – and a price. So, when you see the claim in the RFP, make sure it is included in your contract – and that any costs are stated.
7. Touching the "touchless"
Especially in Australia, where self-booking is prevalent, the TMC agreement often treats “touchless” bookings as the norm and applies a low fee (sometimes even no fee) to self-booked trips. In these cases, it is vital to have a clear understanding of what constitutes a “touch” and how these services are charged. If you’ve agreed to a $50 “change fee”, is that applied just once per booking, or every time an alteration is made? And if the change is made online by the booker, does that incur a fee? Unless you – and your bookers – are aware of what is free and what is charged and exactly what fees and charges are involved, you’re like to be unpleasantly surprised.
8. The cost of checking
They say you can only manage what you can measure, and this means being able to check on charges. Many corporate clients require regular audits of their travel programme, and these can be carried out by the TMC. If you plan on using this service, find out what it will cost beforehand.
9. Breaking up is hard to do
Let’s face it, it’s not a perfect world and business relationships don’t always work out. A number of organisations have found that parting ways with their TMC can be just as painful as the troubles which have led to the split. The TMC holds your data, manages your supplier contracts and integrates your technology and it might not hand that over to the successor without some “encouragement”.
So, while no-one wants to start a relationship talking about how to end it, unless you agree on how a termination would work and what costs and fees would be applied, you may face a messy and costly transition.
Transparency is the solution!
For many years, the corporate travel sector has been fighting for transparency, and TMCs have largely moved from being agents of the airlines and hotels to roles as advisors and facilitators for travel buyers. But as they are still profit-driven businesses looking to make a healthy return for their services, it's important to look beyond the sales pitch and hype and get a solid understanding of what services are being supplyied and at what cost.
The best way to ensure you know what you're getting for your money is to insist on transparency right from the get-go. A well constructed RFP which asks all the right questions of your potential TMCs is the best place to start.
Well, it just so happens we've put together a really simple RFP template for you to use. It will give you an idea of how to ask the right questions in the right way, to bypass the smoke and mirrors.