Managing your travel
Published: 01/10/2005 - Filed under: Archive » 2005 » October 2005 » Special reports » Features » Special Reports »
This month, if travel management companies charge a management or transaction fee, how can they save you money? Felicity Cousins weighs up the arguments
Last month we looked at whether, as a small or medium-sized enterprise (SME), you might need to use the services of a travel management company (TMC). This month we're assuming you have a sufficient level of travel spend to justify using one and will start asking what services you can expect from them.Top of the list for most companies would be saving money. Yet, strangely, few TMCs push price in the rationale for using them. There's a good reason for this. In the past, TMCs – or travel agents as they then termed themselves – charged an agency fee for booking flights, but with the advent of zero commissions, they had to start charging a management or transaction fee. On the face of it, then, using a TMC would add cost to your travel spend.
Peter Reglar, managing director of Ickenham Business Travel, explains: "We did recognise the need very early on to charge fees. But it's the overall spend and what one is getting for that fee that is important".
Mike Platt, managing director of BTI, agrees: "The issue is that we are having to charge fees because commissions have gone." The challenge for TMCs is to add value to the service they offer. As Mike Platt puts it: "We give our customers a bill, they ask themselves what's it for and am I getting any value for it?"
Paradoxically, although TMCs don't like to emphasise price, they can save you money in several ways. Firstly, there is the "opportunity cost" – instead of spending hours booking your own travel, you can pass this task on to the TMC, leaving you to get on with your work. Secondly, a TMC can save you money by finding the lowest fare available, largely as a result of having the necessary technology to quickly compare all suitable fares and carriers. Thirdly, they may well have negotiated lower fares and rates with suppliers.
While booking simple, point-to-point trips may not need a middle-man, the more complex, less frequent travel arrangements can be more difficult.
Michelle Bibby, operations director of the Travel Company, says: "If you've got the time to search all the low-cost carriers as well as BA and the rest, then fine, but we have the sites and the systems, and we include the low-cost carriers in that. What is a lot of work for the SME or individual traveller isn't necessarily a lot of work for us. You have to look at the opportunity cost."
Peter Reglar agrees: "Point-to-point is easy to do online, but you can save a lot of time by using a TMC, which can scan for the lowest fares."
Graham Walsh, director of sales for Navigant International, says: "Our consultants have all the systems on their desktops, so scanning for the lowest fare is almost instant."
There are alternatives to just paying someone to do the work for you. Another option is to use an online solution from the TMC. Alan Coles, managing director of
P&O, says: "On the technology side we offer self-booking tools like the P&O Travel Manager, where SMEs can set up their own profiles for frequent trips... Travellers can
do the 'looking without the booking' or talk to an expert. If there is no intervention from our experts and it is all online, then there is a cheaper transaction fee."
Coles adds: "It is very easy to get sucked in and suddenly a lot of time has gone and you have only saved a few quid. If you have got a good tool available, backed up by expertise, you can get it done quickly and people can get back to doing what they are paid to be doing."
The online booking tools that TMCs use may sound similar to searching the internet, but the technology is faster and has another advantage, as Ian Lawrenson, senior vice president of multinational accounts/global for TQ3 Travel Solutions, points out: "On the internet there is no quality control, whereas using a TMC there is. If customers come to us they will get the service in a quality way. With all the different options on the internet you don't really know what quality of service you are getting.
You are at the mercy of it."
The third reason for using a TMC is for the potential savings an SME can make by riding on the back of a TMC's bargaining power. Navigant is the US's second-largest TMC and, as well as having offices in the UK, it owns 50 per cent of TQ3. Graham Walsh says: "Being as large as we are, we have huge negotiating powers with our suppliers and have good deals with the major airlines as well as access to
low-cost carriers. But instead of dealing with 100 airlines and 100 hotels we deal with, say, 10 and that way we get greater leverage by being constant and loyal."
As well as special online services, P&O uses its contacts to make deals with larger companies. Coles says: "We have the advantage of 'cluster deals' whereby a number of airlines (and also Eurostar) do deals on particular routes. More and more airlines
are open to those sort of approaches to keep the SME market.
"We also know the best loyalty programmes and we introduce them to SMEs. We have our own net deals and cheap deals, which we put on a database. We are also a shareholder member of Radius, so we get some excellent hotel, car and air rates. You just wouldn't get these deals if you booked direct."
Radius is one of the largest business travel management companies in the world with 30 million bookings a year across 80 countries. Shareholder agencies own a single share in the company.
TQ3 offers TQ3 Direct and Your Way, an online tool geared towards SMEs with certain services aimed solely at them.
Lawrenson says: "When the whole online option came around, we had to see what we could do to stop 20 per cent of our customers from walking out the door. We had to ask ourselves what did the service offer look like and what did we need to do to change and make sure we kept our customers."
These are all good reasons to use a TMC, but are there other benefits to their services? Next month we will look at how TMCs can keep track of business travellers abroad, and how they can help companies keep an eye on their travel accounts.
contacts
P&O Travel tel +44 (0)207 805 3821; potravel.co.uk
Navigant International tel +44 (0)1442 847 525; navigant.com
TQ3 Travel Solutions tel +44 (0)207 153 3333; tq3.com
BTI tel +44 (0)1252 372 000; bti.co.uk
Ickenham Business Travel tel +44 (0)1895 625835; ickenham-travel.co.uk
The Travel Company tel +44 (0)207 262 5040; thetravel.co.uk
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