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Selecting a travel management company.

Article Excerpt
As the level of travel industry complexity continues to rise, travel buyers have more to scrutinize and more reason to spell out what they are looking for when it comes to selecting a travel management company. With online-originating agencies firmly establishing themselves as players in the corporate travel space, and traditional agencies moving more aggressively to wield technology, lines of distinction are growing ever more blurry and TMCs must work to distinguish their offerings, types and levels of service.

In the past year, Internet travel management companies implemented tools targeted at providing the kind of services required by more heavily managed travel programs, and mega-agencies, while still focused on the large market, rolled out programs geared toward small business travel. Global distribution systems are coming under pressure as content for access contracts with airlines near their expiration dates. Content access and aggregation capabilities top the list of concerns travel buyers express in the TMC selection process.

Recent turns of events have changed the financial propositions travel managers must consider when selecting a new travel management company, whether online or traditional.

They can take a bundled or unbundled approach to commissions, in terms of revenue retained by the agency or revenue returned to the corporation.

Travel buyers have been breaking down their agency needs with greater specificity and increasingly inviting third parties into the process to maximize the trade-off between good service and low price.

Examining the cost and efficiency of agency transaction fulfillment remains important as more companies explore the employment and implementation of offshore, near-shore or best-shore fulfillment centers. Though moving fulfillment offsite can result in cost savings, such an initiative may have significant cultural and business implications depending on the location of the support center.

The outline below details the basic steps in the travel management selection process:

I. LAY THE GROUNDWORK

A. Before beginning to choose a travel management firm, understand your company's overall vision for the program.

1. Does cost or service rise above the other in importance?

2. Is the goal to have a regional, national or multinational program? Where are the volume densities and opportunities for earliest implementation? If you decide to go multinational, be sensitive to cultural, language, operational and pricing differences. Using a North American approach is not always well accepted or understood by foreign locations.

3. Consider your current operational set-up and online booking usage. Do you have heavy use of online booking? Does your company own the online booking contract or is this part of your travel management company offerings? Do you want to increase usage? Do you want to decrease current costs associated with online or self-booking? You also may want to consider securing an ARC Corporate Travel Department designation and contracting all or parts of agency operations.

4. Get a key executive or a cross-functional executive team involved to determine senior-level priorities and opinions of travel services and expenditures. Solicit feedback from as many subsidiaries as possible to ensure that you have their support early on.

5. Have a clear understanding of your company culture. Is it centralized, where divisions and units are accustomed to following a single vision, or decentralized, where business units have been encouraged to do their own thing?

6. Survey travelers and travel arrangers about their perceptions of your current service in order to establish a benchmark of performance for the new supplier. Also use focus groups of travelers and arrangers to identify what is important to each group, what they like and would like to see changed.

B. Set up an agency selection committee of managers from various divisions, including finance, purchasing, information systems and human resources, as well as representatives from legal and all branch and international offices to streamline later contracting. You may want to include representatives from various levels within the organization, such as travel arrangers and frequent travelers.

C. Define service requirements and objectives of your bid solicitation. Establish grounds for cost avoidance and savings on travel expenditures. Make sure each line item is defined clearly to simplify comparisons among bidders. Be clear about what support you expect from the agency, including account management, communicating with travelers and negotiating with vendors. Detail how the agency should measure and report its progress in achieving goals.

D. Based on your expertise and experience, decide whether to involve the purchasing department or hire an independent travel industry consulting firm to assist in the process. Consider:

1. The consultant's client base and industry expertise

2. How much time the person responsible for travel has to devote to the task. Consultants offer expertise without a learning curve and can take over the process and basic analytical comparisons short of making the ultimate decision.

3. The cost versus the potential savings. A consultant can help with ROI and other cost analysis before, during and after the bid process.

4. If the incumbent agency has strong supporters within the organization, yet travelers have numerous service complaints, a third party can help to settle the issues.

5. Your operational goals. Consider whether it makes sense for your company to become an ARC-accredited Corporate Travel Department and to contract out all or part of operations to traditional or online agencies.

E. Communicate early with incumbent agencies. Do incumbent agencies fit the overall program objectives (e.g., does the agency have the capabilities through networking or other relationships to bid within an international consolidation project)? Include those that do in the bidding process. Review existing agreements to be sure there is not a locked period preventing early solicitation, such as a no-termination clause. If there is, make release part of the condition of bidding. A transitional service obligation already should be part of any written agreement with the incumbent agency. If it's not, obtain a written agreement that the agency will assist in a three-to-four-month phase-in period should you change vendors.

F. Look at the history of the travel program. How many agencies have been used and for how long? Determine what the rationale was behind selecting and eliminating agencies.

G. Determine whether there...

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