IF ONLY CHOOSING A TRAVEL MANAGEMENT COMPANY were as easy as swiping left or right on a dating app. “Ooh, I like the look of the transaction fees on that.” Swipe right. “I’m not sure about the idea of servicing our account from central Europe.” Swipe left. “The account manager has a nice smile.” Swipe right.
There may be a gap in the market for an enterprising app developer but the reality is that choosing the right TMC involves more than first impressions. Picking the right partner involves looking at the geographical and cultural fit, as well as pricing and access to content.
GLOBAL OR LOCAL?
The decision on whether to have a global, regional or local TMC structure will depend on how much of your spend you are managing through those locations and should reflect your organisation’s hierarchy.
“Don’t start an RFP without knowing what you are tendering and what the needs of the local organisations are,” says the ITM’s director of education Sandy Moring. “You should have stakeholders in each of those key locations and have a true picture of what the business needs are rather than the wants.”
She adds: “If you are looking at a global TMC, you need to ask whether it is an owned network or part of a shared network. Most global TMCs will have ownership in key locations but a smaller TMC is going to be a member of a consortium. That will suit some companies as long as they have the trust that servicing is equal across the consortium and that, most importantly, the data is consolidated.”
Nathalie Ansermoz, EMEA travel manager at Santen, formerly at Bacardi, says a ‘glocal’ approach is important. Speaking at a conference panel session about choosing a TMC, she said:
“Not all TMCs are the same everywhere. Try to find the best fit by region and by country to meet the different needs in your company. You have different stakeholders, travellers with specific needs who might need 24-hour support, and others who might be looking for specific information on finance or data.”
Choosing a TMC that is derived from the same DNA – or at least has a similar culture – is vital.
Independent consultant Chris Pouney says: “The first thing I would do is look at other parts of your organisation to see how things are done. Take catering: if you are an organisation that has a separate executive dining room for key clients, you are not going to want to go to a TMC that conducts most of its business online, you’d want that service element behind it. Car usage is another one. If executives use chauffeur-driven cars, that gives you an indication of the DNA of the company. You might want to tailor that culture to the travel offering.”
Moring agrees that culture is important. “An investment bank is very different to a high-street retail bank,” she says. “You also need to know that your TMC has a positive image within your organisation when it is launched. Do they uphold the same trading ways as you? Do they have the same profile in the market? If you have a formal corporate culture but your TMC is more relaxed, how will you work together?”
BBT’s annual ‘50 Leading TMCs’ rankings (the 2017 supplement is included in the May/June issue) shows that while some TMCs like to say they look after companies in all sectors, others claim to be specialists in particular industry sectors, such as Diversity Travel (NGOs and charities) and Reed & Mackay (law and finance). Some TMCs also create specialist divisions which, in reality, are often cosmetic, with the business handled in just the same way as for clients in other sectors.
ITM’s Moring says: “You have to look at the type of transaction TMCs do rather than the sector they are in. Some firms don’t want to be serviced from where other same-sector companies have gone because they are concerned about the sharing of information and strategy. In reality that never happens.”
“However, if you are working in a highly regulated industry, such as the pharmaceutical sector, there are external rules and compliance requirements, and you need to know you are working with a TMC that understands those and has them embedded in their systems.”
BANG FOR YOUR BUCK
Cost control is usually the top concern of travel buyers and often this translates into a headlong rush for low transaction fees. The rise of procurement has accelerated this trend but it should not be the only consideration when selecting a TMC.
“Technology is a great driver of productivity and that is where the majority of savings can be made,” says Moring. “This means you need to know how much of your spend is going to be online and how much offline to see the cost reductions that are achievable.”
BCD Travel director Tony McGetrick says: “All buyers are of course interested in obtaining the best possible value. It’s fair to say that access to the best fares and rates is very much part of that equation, and it’s underpinned by the ability to reach the widest possible range of content. Increasingly, buyers are seeing this as a starting point though.”
“Procurement folk are maturing when it comes to travel,” adds Pouney. “You can only squeeze the lemon so much. If the transaction fee is too low, you get poor service and poor innovation – ultimately the TMC will seek their money elsewhere.”
He says buyers comparing TMCs on transaction fees must look at the ‘should cost’ – i.e what the service should cost based on labour, overheads and profit margin. “When you are buying TMC services, you need to know the minimum price it can be provided at, taking into account salaries, heating and so on. You can therefore say the fee should not be less than X pounds or euros a transaction.”
As fees only represent a single digit percentage of total spend, getting a feel for achievable fares and rates can be useful in choosing the right TMC partner. Many buyers, especially those running consultant-led tenders, run fare-benchmarking exercises to achieve these. They ask TMCs to provide sample rates for key routes on specific dates and within specified booking windows.
Moring, however, is cautious about their use. “During an RFP, benchmarking is fine as long as it is part of a controlled process,” she says. “It has to be done at the same time using the same information and based on live availability with screenshots taken to prove what was really available. If the benchmarking is a general exercise to find out the price for a particular route, I feel there is no value to that at all.”
Companies with low travel spend are often focused on a TMC’s transactional abilities – how it handles its bookings – and its ability to get spend under control and implement an online solution to reduce fees. But often, it is little more than that.
The greater the spend, the broader the range of requirements – such as safety and security cover – a company will expect its TMC to meet. In firms with low spend, safety and security are likely to be considered as peripheral issues and a travel insurance policy may be the only nod to this.
“Duty of care is also centrally important, with customers looking for support in this area on both a proactive and reactive basis,” says McGetrick. “They’re really concerned about their ability to understand, at any time, exactly where their travellers are and to help them whatever the situation. So they need a partner who can deliver high-quality data at a moment’s notice, with the expertise and global capability they can trust to then support them in the most trying of circumstances. This is a great illustration of the point that price is what you pay and value is what you get.”
MAKING A COMMITMENT
Once the right partner has been appointed, the communication shouldn’t cease as soon as the ink has dried on the contracts.
“Best practice would be to have quarterly review meetings if you have a business of any decent size,” says ITM’s Moring. “Once you have put the change in and embedded it into your processes, you need to monitor and analyse performance, look at further improvements and consider other areas that were not previously addressed.”
This is typically monitored through a service level agreement (SLA).
Pouney says: “I have seen a number of negotiations with TMCs fail because they are not prepared to put their money where their mouth is with an SLA. It shows a level of confidence and trust and gives the travel manager ongoing reassurance that the relationship is working.”
“We have to move away from tactical SLAs, such as phone answering times. I think they have a part to play – if you are a business traveller, you want the comfort [of knowing] these things are being monitored. But you need to get deeper than that. As an industry we can learn a lot from HR, which understands and is leveraging more strategic KPIs.”
Ultimately, travel buyers need to ensure that their chosen TMC continues to understand their needs and desires as they move through their contract. If not, they risk getting dumped. And there are plenty more fish in the sea, as they say, and it is very easy to start swiping left and right.
CASE STUDY - Oiling the wheels
ALICE LINLEY-MUNRO, GLOBAL TRAVEL ANALYST at Oil Spill Response Limited (OSRL), says the involvement of stakeholders from around the world was crucial in bringing onboard a new TMC.
“The first step was to explain why we should go to tender and get a feel for what they wanted. Once onboard, we could make things better. The finance department had previously had problems with invoicing but we asked for bespoke solutions from the TMCs to make things easier for them.”
In order to pull together a shortlist of TMCs to pitch for the company’s travel business, she not only consulted BBT’s ‘50 Leading TMCs’ supplement but also visited the annual Business Travel Show in London.
“You have to do your homework,” says Linley- Munro. “I went to the show and spoke to as many different TMCs as possible to learn where they fitted in the market. I got a feel for what their strengths were and how they might fit with our culture.
After this initial research, she compiled an RFI (request for information), which she distributed to 12 TMCs.
“It had just four questions but with some information about our company. It was a quick way to work out which companies we wanted to move forward with and give them a heads-up of what was important to us,” she says.
“I also talked to my peers to get a feel for the industry and used some parts of the RFP templates they had used.”
The template was then circulated to the stakeholders and the IT department, which generated 300 questions. “We didn’t want the business to think it was just the UK [office] telling everyone what they should do,” she says.
Low transaction fees were not the most important factor in choosing the TMC.
“Our top priority was risk management, traveller tracking and duty of care,” she says.
Linley-Munro then invited four shortlisted TMCs to bid in a competitive tender.
They were asked to complete a spreadsheet, which had been put together by one of the team at OSRL. “Quantitative questions were marked with a one or zero, depending on whether they were yes or no, while the qualitative questions were marked on a scale of one to three, with three meaning they had met what we needed and exceeded it.”
“Scoring was a mammoth task,” says Linley-Munro. “The spreadsheet did all the work of collating scores with the weighting but there were 23 people involved in scoring.”
The two finalists had matching scores so we began to think about asking further questions to identify a match.
“My chief executive turned round and said, ‘Who do you think you can work best with day-to-day?’ Relationships can’t drive the decision but have a huge influence on its success. If the personalities don’t match, it will be a struggle.”