A complete and comprehensive guide written by suppliers for buyers.
This guide will show you how to use industry best practice in order to qualify, select and get the best out of your Travel Management Company.
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Preparation
Research
Key things to consider
Commercial models
SLAs
New Distribution Capability (NDC)
Professional licenses
Payment mechanisms
VAT recovery
Procurement process
Tender/Request for Proposal (RFP)
Benchmarking
Presentations
Product demonstrations
Site visits
Contract negotiation
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Travel is an emotive subject. Whether you’re
introducing a new travel management service
for the first time or planning on changing your
incumbent provider, people from every corner
of your organisation will have an opinion on the
matter. When you throw in the potential cost and
time implications of making the wrong decision,
there are a whole a host of reasons why deciding
on a travel management provider shouldn’t be
taken lightly.
In this detailed guide, we will walk through how
to prepare for your procurement, how to find
prospective suppliers, evaluate them, make a final
decision, and then purchase the service in a way
that protects your organisation.
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A GUIDE TO
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A GUIDE TO procuring a travel management service
Preparation
Before you look at potential travel management
companies, services and systems, it is vital to
thoroughly define your needs and what the service
provider you select should be able to do for you.
To do this, you need to engage your stakeholders: the people who
will be using the service, or who depend on outputs from the
service (such as reports and invoices) and who will therefore be
affected by the change. It’s a great idea to assemble a team of
stakeholders who will be involved throughout the process, from
early preparation, Request for Proposal (RFP) development and
subsequent responses, and finally to meeting potential suppliers.
This ensures you have buy-in from users and stakeholders to select a
service, and service provider, that’s truly reflective of your requirements.
Engage yourstakeholders
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A GUIDE TO procuring a travel management service
Preparation
When curating ideas and requirements, try and keep them specified as goals,
objectives and outcomes, rather than nailing down specific requirements,
otherwise you risk stifling supplier innovation. Also, try and keep an open mind;
ask suppliers to suggest what they would do. Here’s an example:
Good Bad
Tell us what strategies you
would recommend to reduce
our hotel spend.
Please confirm that you will implement contract rates at a
maximum of two hotels near to our key locations in order
to drive savings.
It’s also worth breaking up your list into “must haves” and “nice to haves”. When doing this, be careful
to make sure that what goes into “must haves” is actually feasible, e.g. the technology exists, or the
objective is achievable. For example, a “must have” of “deliver all services at no cost” is likely to result in
no suppliers bidding for your business.
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A GUIDE TO procuring a travel management service
Key questions for debate
Q. Should we have an objective to drive online adoption?
A. Driving online adoption reduces your travel management costs by attracting lower fees for bookings made online
through an online booking tool, rather than higher fees for making offline bookings over the phone or by email.
Q. Do we need to review our business travel policy before we engage suppliers?
A. Often, travel policies are dusty documents that were written ages ago and that no one has looked at since. If
that’s the case, it’s probably worth dusting it off and ensuring it’s still fit for purpose before you get going with your
procurement. Your travel policy will be at the heart of your travel programme, so it’s not a great idea to make huge
changes to it right after rolling out a new travel management service.
Before you get into a discussion with any suppliers, you need to be clear on some key
points within your organisation. Below you’ll find ideas as to the right kind of questions
to ask, as well as the reasons why you should be seeking these answers.
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A GUIDE TO procuring a travel management service
Key questions for debate
Q. Do we have detailed travel data available regarding our current travel spend?
A. You need to share as much data as you can with prospective suppliers, in order to get the best advice and best
pricing from them. If you don’t have any data, prospective suppliers are likely to price defensively to ensure their worst
case scenario is covered (e.g. you only book low-cost carriers, and budget hotels from which the revenue stream for
the travel provider is negligible and therefore your fees will be higher). If you’re in this position, it’s worth ensuring
there is a break clause in your contract, such that you can renegotiate prices based on actual data once you’ve been
working with your chosen supplier for 12 months.
Q. Are we trying to reduce our core travel & hotel spend, and if so by how much?
A. Not every organisation is out to slash their travel & hotel spend! Some organisations appoint a travel management
company to ensure that their staff have great service at their fingertips, or are properly cared for and secure whilst
travelling the globe on business. But if you are looking to reduce costs, it’s good to have an idea of what success
would look like to you.
Q. If we’re out to reduce cost, what are we prepared to compromise on?
A. Travel management companies don’t have a magic wand with which to conjure away your travel spend! Serious
cost reduction inevitably means compromises have to be made, so it’s worth thinking about what would be
acceptable and what wouldn’t. Switch from business class to economy on flights? Reduce your per-night cap on hotel
spend? Drive online booking (which reduces cost through visual guilt)? Tighten policy constraints? Introduce pre-trip
approval for bookings over a certain amount?
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A GUIDE TO procuring a travel management service
Research
Naturally, a great way to find potential suppliers is to
search online. Try searching for questions that relate
to your objectives. For example, if you have set an
objective of reducing your travel spend, search for
“how can I reduce business travel spend”. This will help
you find useful articles that are ideally suited to your
organisation’s key interests.
There are a number of business travel publications that
are worth getting your hands on and reading through.
Potential suppliers may advertise or feature in articles
within them. It’s also a great way to find out all about
the latest topics under debate, as well as changes that
are coming in the industry.
Buying Business Travel
The Business Travel Magazine
For a whistle-stop tour of travel management
providers, head to the Business Travel Show in London,
held in February each year. The show really is a who’s
who in the business travel industry, with all major
travel management companies and travel suppliers
in attendance. It’s a great way of getting a feel for
providers and helping you assemble your shortlist.
If you have questions, or want to bounce ideas off
industry experts, then there are various very active
LinkedIn groups in which you can start a discussion.
Here are some of the best to search for:
ACTE Global
Buying Business Travel
Corporate / Enterprise
Travel Management
Institute of Travel & Meetings
The Business Travel Club
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A GUIDE TO procuring a travel management service
Research
Through your research you should be aiming to nail
down your requirements, goals and objectives such
that you can build them into your RFP. In addition, you
should be beginning to build a shortlist of potential
suppliers whom you intend to invite to participate.
Tips on assembling a shortlist
• Keep your “must have” list of requirements in the forefront
of your mind when considering a supplier for your shortlist.
You’re wasting their time and yours inviting a supplier that
can’t deliver your essentials.
• Size isn’t everything. Don’t be fooled by claims that any
particular supplier has huge buying power that they can
leverage on your behalf, travel management doesn’t work
like that.
• Content is king when it comes to reducing your core travel
cost, so make sure every supplier on your shortlist taps into
the widest array of travel content possible - including all
of the big online travel services, such as Booking.com and
Laterooms.com.
• If you have contract fares with suppliers (airlines, hotels,
etc.), or relationships with certain suppliers (like your
favourite hotels) that you want to maintain them, make sure
your shortlisted suppliers can support them.
• Technology is crucial in travel management. From booking
and fare quoting engines, to billing systems and preparation
of management information, technology will play a critical
role in the success (or failure!) of your travel management
service. Make sure your suppliers have it, use it, understand
it, and believe in it.
• Check out their track record. Ask them for case studies;
even better, ask them for references to whom you can
actually speak. Ask for opinions and experiences on
LinkedIn. Google the company name and see what comes
up. Check out their Twitter stream to see if there are
mentions from customers. Often references are the last
thing that people check in a procurement process, but
really they should be the first, to make sure that you get the
right people on your shortlist at the outset.
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A GUIDE TO procuring a travel management service
Key things to consider
COMMERCIAL MODELS
One thing that is often overlooked in the early stages of
selecting a TMC is the commercial model the supplier
uses. It’s a vital consideration that can have a major
impact both on what you pay and the service you receive
as a result. It’s crucial that you spend time understanding
TMCs’ commercial models inside out before making a
final decision. To help you kick things off, you can find the
three principal models explained below.
Transaction fees
A transaction fee model is where the client pays a small
transaction fee for each booking they make. Fees may
also be levied on other transactions, such as cancelling
or amending a booking. There is usually a difference in
the fee level between online and offline transactions to
reflect the lower use of resource in the former. Indeed,
some travel management companies are now even
offering zero fees for online transactions.
The transaction fee model is now by far the most popular
commercial model for travel management because it’s
simple, transparent and accurately reflects the effort
invested by the supplier in the service.
Commission rebates
Sometimes a transaction fee model is combined with a
commission rebate model, which essentially results in
higher transaction fees being levied by the supplier in
return for commissions received from suppliers being
returned to the customer.
This hybrid model is derived from purchasing best
practice, whereby the margin earned by a supplier should
reflect the effort involved and be a fixed margin per
transaction.
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A GUIDE TO procuring a travel management service
Key things to consider
However, commission rebate models are declining in
popularity due to the following:
1 There is no guarantee that you’ll ever get a penny in
rebate
TMCs will tell you, “The amount returned depends on
what you choose to book - it’s out of our control!”
And they’ve got a point. If you choose to book Premier Inn
all the time you will get nothing in rebate. In other words,
the commercial model underpinning rebate-model travel
contracts is dependent upon a figure that may well be
zero and that the customer has no guarantee of and very
little control over. It’s a high-risk gamble.
2 They are totally un-auditable
The travel industry is a complicated mesh of millions
of suppliers, distribution networks, brands and people,
and the revenue landscape is just as complicated.
Some rates are commissionable, some are not.
Some are dependent on the booking channel whilst
others are limited to how they bill. Some require the
TMC to collect commission by hand, whilst others lack
transparency on what happens to any commission. So
when is it accounted for and what happens if the TMC just
don’t bother to collect it?
The simple fact is it’s difficult to audit and few people ever
bother, which increases the risk factor even more.
3 It allows the TMC to take the pressure
off the supply chain
Put yourself in the shoes of the TMC - under the rebate
model, their revenue is guaranteed; it’s the customer’s
rebate that is up for debate. The TMC has no contractual
obligation to pass on any rebate revenue back, so are
they really going to bother hunting down that overdue
commission payment from a hotel on the other side of
the world?
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A GUIDE TO procuring a travel management service
Key things to consider
Thereisplentyofrevenuethatthesupplychainwouldquite
happilypartwithifonlytheywereputundermorepressure
todoso.
ButmanyTMCsjustdon’tbotheraskingbecausethe
commissionrebatemodelmeansit’snotworththeirwhile.
Afterall,itwillliterallycostthemtogettherevenue,onlyto
handitstraightbacktothecustomer.
Under the rebate model, the TMC improves its revenue
by minimising the effort it puts into commission
enhancement and collection. And that’s not good news
for the customer.
The key underlying message here is that travel supply
chain revenue is a risk in itself. Given a chunk of travel
spend, you simply can’t predict what the resulting supply
chain revenue will be with any degree of accuracy. That
makes it a risk which scales with your travel budget.
The key question you should be asking is: who takes that
risk? In a rebate model the customer takes it; conversely
in a retention model - where the TMC keeps the supply
chain revenue in exchange for much lower transaction
fees - the TMC takes the risk. Given that the TMC has a
greater (although not complete) control over that risk, it
makes sense to leave the risk with them.
Management fees
A management fee model involves the client paying
the travel management company a fixed fee per
annum (normally payable quarterly), with all supplier
commissions being returned to the client such that the
TMC makes a fixed margin for the delivery of the services.
The fee is typically calculated by open-book analysis of
the TMC’s costs for delivering the services plus a profit
margin.
However, management fees are rapidly falling out of
fashion due to their inflexible nature: the cost doesn’t flex
with travel volumes, and it’s difficult to attribute the cost
to budget holders.
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A GUIDE TO procuring a travel management service
Key things to consider
SERVICE LEVEL AGREEMENT
It’s an old adage that ‘what gets measured gets done’,
so, at tender or contract negotiation stage, a lot of
effort is put into devising performance measures
to define the customer service your chosen travel
management company will provide. But how often
after implementation are those targets revisited
and discussed? And do you know that your travel
management company can even measure what they’ve
signed up to?
Keep it simple
There isn’t much point in having 5 pages of service level
agreements (SLAs) and key performance indicators (KPIs)
that no one really cares about. It’s far better to have a
one-page, concise and clear document, which is referred
to at every review meeting.
Focus on what’s important
What will your travellers and bookers really care about?
Focus on what matters to your employees. Ask them for
their thoughts before you put the document together.
Make sure you can measure it and hold your
TMC to account!
It’s too easy for travel management companies to fudge
measuring customer service. Here are 3 frequently-used
standard SLAs, how to measure them and 5 traps to
avoid.
1 Phone response times
A realistic expectation here is around 20 seconds. Make
sure your TMC has a phone system that enables it to
measure the service every day for your dedicated number.
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A GUIDE TO procuring a travel management service
Key things to consider
TMC trap 1 - Measuring across the whole
business
Do you really care how your TMC answers the phone to
other customers? Surely it’s only your account you care
about? If you are a sizeable account, insist on a dedicated
line and make sure your SLA performance is about that
number only!
TMC trap 2 - Measuring this quarterly
Wondering why the SLA looks fine but travellers complain
they can’t get through? Perhaps the reservations manager
made 1,000 very short calls on her mobile the night
before the figures were published. Miraculously they were
all answered and the SLA looks fine for the quarter!
2 Booking completion times
How long does it take for a booking to be completed? As
a guide, 2 hours is fine for most bookings, with 4 hours for
long haul/multi sector flights. Can your TMC measure this
for each of your bookings? You should require your TMC to
be able to measure the completion time for every single
one of your bookings made at any time, on any day.
Many TMCs manually spot check a sample of bookings
over a quarter to arrive at this figure, but that’s a sample
audit and is open to error. Your TMC needs to have an
automated SLA reporting system, which can be varied to
meet your specific response time requirements. Ask how
your TMC measures bookings made by phone as well as
email.
TMC Trap 3 - Giving an SLA on first response
It’s not difficult to respond to an email or phone call
- perhaps even with an automated message, which,
unsurprisingly, gives a 100% response rate!
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A GUIDE TO procuring a travel management service
Key things to consider
3 Complaints as a percentage of bookings
You want your account to be noise free. You don’t want
to be fielding lots of complaints from your travellers. So
make your TMC commit to a percentage of complaints vs.
bookings. A figure around 0.03% is a good benchmark,
and your TMC should be giving you a similar standard of
service. You also want to be sure that your TMC resolves
complaints within a reasonable timescale.
TMC Trap 4 - Logging a complaint but with no
action or follow up
Ask for copies of the complaints at your review meeting,
with details of the follow up action for each one.
Hopefully, if you pick the right TMC, reviewing these won’t
take you all day! Ask for a copy of your TMC’s complaints
policy and check if they have a system that accurately
reflects it. Ask them how they record complaints, how
they track when a complaint is going out of service level
and how resolutions are picked up?
If your TMC is ISO 9001 compliant, ask how their
complaint system ties in with their continuous
improvement cycle.
TMC Trap 5 - Committing to a complaint
‘response’ time not a ‘resolution’ time
It’s easy to ‘respond’ but much harder to resolve a
complaint.
Challenge your TMC
Too many times, companies sign up to service measures,
which they know they can’t track, safe in the knowledge
that the customer will not ask for evidence. Don’t just get
the signature, ask for evidence of how service is measured
and reported before you commit.
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A GUIDE TO procuring a travel management service
Key things to consider
NDC - NEW DISTRIBUTION
CAPABILITY
Anyone who sells airline tickets today - from travel web
sites, travel agents and travel management companies
to airlines themselves - does so via a Global Distribution
System (GDS). There are only a handful of GDS’s in the
world and if you’ve not already bumped into them during
your research, no doubt you will. The major ones are
called Galileo, Apollo, Worldspan, Sabre and Amadeus.
However, airlines, desperate to reduce their distribution
costs and gain more insight into their customers are
pushing for radical reform through the creation of New
Distribution Capability (NDC). NDC effectively enables an
airline to sell tickets directly to retailers, cutting out the
GDS and their associated distribution costs.
But this change poses a significant challenge and threat
to the traditional world of travel management, because
the vast majority of traditional TMCs have built their entire
business around the GDS. Everything, from their retailing
systems to accounting, reporting and traveller profile
systems are based upon the GDS.
In order to remain relevant and competitive, the
traditional TMC is faced with the monolithic challenge
of reengineering entire business processes and the
technology that underpins them to accommodate this
seismic shift in the distribution landscape.
The key message for those tasked with procuring a travel
provider over the next few years is this: if you appoint
a TMC whose only source of airline content is the GDS
(which right now is almost every TMC in the UK top 50),
you will be affected by NDC, and it is very unlikely to be
positive for your travel programme. So make sure you ask
your prospective TMC about New Distribution Capability,
their understanding of it and their plans to address it.
Key points
• Over the next few years, IATA’s New
Distribution Capability will become more
and more prevalent in the world of airline
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A GUIDE TO procuring a travel management service
Key things to consider
distribution hence it’s imperative that you
choose a supplier today that is in a position
to support NDC as it comes on stream.
• Traditional folk in the travel industry will
point out that airlines today typically have
“full content agreements” with the GDS,
which in theory means all fares published by
an airline are available in the GDS channel.
But this may not continue in the NDC era.
Airlines may either limit the fares published
in the GDS to the more lucrative fully flexible
classes thus reducing access to content,
and/or levy distribution fees on top of the
base fares thus making it more expensive to
buy through the GDS. The latter is already
happening, albeit on a limited scale.
• Some TMCs are ready for the NDC era, the
majority are not. If your preference is for one
of the latter you should carefully consider
the impact NDC is likely to have on your
travel program during the period you intend
to contract for.
• Explicitly ask potential suppliers to explain
how they intend to provide you with direct
access to NDC content.
• Require potential suppliers to confirm
that bookings will be made via NDC
connections rather than via a GDS where it
is commercially advantageous to do so (i.e.
the ticket price is cheaper, or the product
includes more flexibility or soft benefits
when booked via NDC).
• Require potential suppliers to confirm what
distribution charges levied by airlines and/
or distribution channels will be passed
on to you, specifying the airlines and
circumstances to which the costs will apply.
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A GUIDE TO procuring a travel management service
Key things to consider
PROFESSIONAL LICENSES
Your organisation is likely to have a standard pre-
qualification (PQQ) questionnaire for potential suppliers.
This document will typically cover legal and regulatory
items (such as bankruptcy, criminal records etc), together
with your organisation’s internal policies (such as financial
standing and track record).
However, it’s well worth checking at PQQ stage that
suppliers hold suitable professional travel licenses, to
ensure that you eliminate unsuitable suppliers at the
earliest opportunity.
A mandatory requirement should be an IATA license
(which empowers the supplier to issue air tickets), an
ATOL license (which provides protection against airline
failure), and, if booking UK rail tickets is a requirement
of your project, an RSP license (which empowers the
supplier to issue UK rail tickets).
Hint: To deliver travel management
services, suppliers don’t need an ABTA
license (which is required for packaging
tours and holidays into a single price). It is
a fatal mistake to make an ABTA license
a mandatory requirement because you’ll
automatically eliminate all leading travel
management companies, and limit your
procurement to leisure travel agents who
have little to no experience in corporate
travel management.
If you can’t squeeze this into your PQQ, make sure you
include it in your RFP.
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A GUIDE TO procuring a travel management service
Key things to consider
PAYMENT MECHANISMS
Credit cards
Credit cards are simple and universally accepted, but if your spend is large they can become problematic from a data
perspective.
Pros Cons
Some credit card companies
provide points and prizes based on
the amount of spend that you put
through your account
Your credit card account is portable
- you can take it with you if you
switch providers, or even use it with
multiple providers at the same time
Paying by credit card can sometimes incur merchant fees, which
could otherwise be avoided
Data will be next to non-existent beyond the merchant name, and
linking it with travel data provided by your travel management
company will be virtually impossible
In the UK, credit card statements cannot be used for VAT purposes
which means you still need to collect original VAT invoices for every
transaction that appears on your credit card statement
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A GUIDE TO procuring a travel management service
Key things to consider
Lodge cards
A lodge card is a credit card which is specifically designed purely for business travel expenditure. There is typically one
credit card number which is “lodged” with your travel management provider, and to which all expenditure is charged.
Whilst they are relatively simple and universally accepted (because they are effectively just a clever credit card), they can
become problematic from a data perspective if your spend is large.
Pros Cons
Some lodge card companies
provide points and prizes based on
the amount of spend that you put
through your account
Your lodge card account is portable
- you can take it with you if you
switch providers, or even use it with
multiple providers at the same time
Paying by lodge card can sometimes incur merchant fees which
could be otherwise avoided
Data will not be perfect as it is dependent on consolidating data
from many different sources
In the UK, lodge card statements cannot be used for VAT purposes
which means you still need to collect original VAT invoices for every
transaction that appears on your lodge card statement
You can come unstuck if you have a query about a charge as it’s
difficult for the TMC to investigate
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A GUIDE TO procuring a travel management service
Key things to consider
Credit account
Many travel management companies will offer a credit account directly with them. Because these accounts are built into
the TMC’s systems and processes, they typically offer by far the highest data quality - in fact, the data quality should be
perfect.
Pros Cons
A credit account with your travel management
company should provide perfect data
You will be able to avoid almost all merchant fees
You’ve only got one relationship to manage - there’s
no blame game between your payment provider and
your TMC when charges are in query, or data is not
acceptable
Terms and credit limits may not be as good as those
offered by credit and lodge card providers
Some travel management companies won’t allow all
travel to be charged to your account
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A GUIDE TO procuring a travel management service
Key things to consider
VAT RECOVERY
VAT can be a complicated subject in travel, but by
carefully choosing the right travel management partner,
you shouldn’t ever have to worry about it. With some
suppliers you can choose to have a credit account for all
of your travel purchases, which they will consolidate into
a single document, from which you can recover all the VAT
you are eligible to. Some important points to look out for:
• Be careful when comparing prices. For example, a £100
pre-pay rate on Expedia is more expensive than a £110
post-pay rate from a travel management company.
Why? Because you should be able to claim VAT back on
the latter, but you can’t on the former.
• The VAT charged on transaction fees made by the
travel management company should follow the service
for which the fee is being charged. For example, if the
service is a UK hotel (which is a standard-rate VAT
supply) then any associated transaction fees should
have standard rate VAT applied to them. Whereas if the
service is a UK train (which is a zero-rate VAT supply)
then any associated transaction fees should have zero-
rate VAT applied to them.
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A GUIDE TO procuring a travel management service
Procurement process
TENDER/REQUEST FOR PROPOSAL
Issuing a tender or RFP isn’t something you must do when
choosing a TMC, but it certainly helps to bring structure
to the process and keep you focussed on your objectives.
Whether you’re following a formal tender process or
just want to engage with suppliers informally, bear the
following points in mind to keep things running smoothly.
1 Assign one person to manage the process from start
to finish to keep the project on track. If the person
responsible changes part way through, it can lead to
confusion and duplication of work. This is especially
important if using a third party consultant – make
sure you have the same consultant or project team for
the duration.
2 Keep it short and simple, and only ask questions that
will help you decide which supplier(s) to appoint.
There are lots of template RFPs available; if you are
using one, don’t just copy them word for word, pick
the questions that are relevant to your organisation
and make sure you add the ones that aren’t already
there. You won’t be able to make an informed
decision if you’re asking questions that aren’t relevant
to your business travel objectives, especially if the
template you’re using is out of date.
3 Include your mandatory requirements within your RFP
so that the responses you receive are from suppliers
who stand a real chance of winning the business.
Giving suppliers the information they need to qualify
the opportunity and make an informed bid/no bid
decision saves all parties a lot of time and money. It’s
possible that you’ll have fewer responses to evaluate,
but every response should be a genuine contender.
4 Invite incumbents, strong contenders and a few wild
cards. Some procurement departments only send
their RFPs to suppliers they’ve worked with previously
or the biggest names in the industry. By doing so you
may miss the opportunity to bring in new innovations.
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A GUIDE TO procuring a travel management service
Procurement process
5 Enlighten the bidders with as much information as
possible; what you currently do, your objectives, your
business travel profile and transactional breakdown.
The more information you provide, the more accurate
and innovative their bids will be.
6 Give clear instructions on how you want bidders to
respond. If all suppliers respond in the same format,
it will make it easier for you to evaluate and quickly
draw fair comparisons.
7 Hold a bidders conference before the tender is due.
This is a great opportunity to bring your requirements
to life and address any areas that require further
clarification. Use this time to make sure suppliers
really get where you’re coming from and understand
what you want the successful supplier to deliver. The
cost of holding a teleconference is minimal, but it
allows suppliers to ask questions anonymously and
means they hear the same answers at the same time.
8 Allow plenty of time for suppliers to respond.
Suppliers are often working on multiple bids at
any one time and therefore have to prioritise and
distribute workload to meet deadlines. Try to give
suppliers 3 to 4 weeks to respond to your RFP, making
sure you extend the deadline to accommodate any
crucial or game-changing clarifications. If you give
suppliers ample time to respond, you’re more likely to
receive high quality, well-thought-out responses.
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A GUIDE TO procuring a travel management service
Procurement process
Benchmarking
Many organisations attempt to benchmark travel
companies as part of their procurement process.
However, the techniques used invariably lead to dubious
results that can undermine your entire procurement
exercise.
Ifyou’respendinglotsofmoneyonaregularbasis,say,
stationery,benchmarkinganarrayofsuppliersmaybea
valuableexercise.Youpresentyourshortlistofsupplierswith
anarrayofuniformproducts(abiroisabiro,astaplerisa
stapler)andthesuppliersprovideyouwiththeirbestprices.
Onceyouselectasupplieryoucanreasonablyexpectthem
tohonourthepricesquotedduringthebenchmark.You
mightevencontractthemtodoso.
With travel, it just doesn’t work like that. Prices change
all the time. Availability changes all the time. And there
is no guarantee that any of the quoted prices you see in
a benchmarking exercise will ever be available for you to
purchase in the future. Worse still, you don’t even know if
the prices are real.
So what should you do?
Firstlyunderstandthathavinggreatpricesisonlyhalfthe
story.There’snopointhavingthebestpricesintheworldif
youcan’tcontrolwhichonesyourstaffcanandcan’tbook.
Yourbiggestsavingsaregoingtocomefromchanging
buyerbehaviour,nomatterwhatthepricesare.Sofocuson
figuringoutwhichsupplieryouthinkhasthebeststrategy
todrivebehaviouralchange,andthesoftwareneededto
deliverit,suchasarock-solidtravelpolicysystem.
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A GUIDE TO procuring a travel management service
Procurement process
Secondly, look at where suppliers are sourcing content
from, as huge reductions in core travel spend can be
made by buying through channels such as booking.com
and laterooms.com, rather than the traditional Global
Distribution Systems. Ask them to confirm which travel
distribution channels are providing content, and make
sure all the big online travel discounters and low cost
carriers are on the list.
Finally, if you really must price benchmark, do it yourself.
Insist that every potential travel management company
provides you with a login to their online booking tool
and conduct the price benchmark using your own
staff, in your own time. That way you can ensure you’re
comparing real prices on a truly level playing field.
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A GUIDE TO procuring a travel management service
Procurement process
Presentations
After the RFP stage, it’s good practice to get those
suppliers left in the running to come in and present their
bid to your stakeholders. This gives your stakeholders an
opportunity to meet with key members of the supplier’s
team, and get a feel for the kind of organisation they are.
It also gives you the opportunity to ask questions about
the supplier’s bid, and clarify any areas you felt were not
entirely clear.
Tips for presentation days
• Provide each supplier with a bullet point list of the items
you want them to cover in their presentation, but allow
them some flexibility to cover items they feel they want
to highlight from their bid too. It’s a two-way event -
they want to make sure you’ve seen and understood
the unique aspects of their bid, and you want to ensure
that you clarify any areas that were not clear to you in
their submission.
• To ensure the presentations run smoothly, make sure
you are crystal clear about what technology will be
available to the suppliers:
• Can they use their own laptop computer or are you
expecting them to present from your equipment?
• If they are using your equipment, what software will
be available (e.g. Powerpoint, Adobe Acrobat) and
what version?
• If you are expecting a system demonstration are you
providing suitable wifi, or do they need to ensure they
come equipped with mobile connectivity?
• If you are expecting a system demonstration via
your equipment, which browser and version will be
available?
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A GUIDE TO procuring a travel management service
Procurement process
• Afford suitable time to each presentation. Given the
level of effort that both you and each supplier have
already invested, cramming a presentation into 45
minutes is a risk at best, insulting at worst. A reasonable
guide would be to allow 1.5 hours for each supplier,
including Q & A time.
• Take a photo of the presenting team. It really helps
people recall details when discussing presentations at a
later stage!
• Make sure you have an agreed scoring mechanism in
place, and build time in between each presentation to
discuss, normalise and finalise a presentations score
before moving onto the next. There is nothing worse
than attempting to recall a presentation hours, or even
days later.
• Once all the presentations are complete and have been
individually scored, have a recap session to make sure
that opinions on the scoring of earlier presentations
haven’t changed in light of latter presentations.
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A GUIDE TO procuring a travel management service
Procurement process
Product demonstrations
Comparing features across various solutions can help
you understand what you’ll be able to achieve with each
platform, and how these capabilities align with your
goals. Here are a few questions to keep in mind as a sales
rep demonstrates his or her product:
Is the demo live?
A live demo can tell you about more than just the
product’s capabilities— it can show you the pace at
which the product will function. If a sales rep shows
you screenshots of what can be done instead of
demonstrating the capabilities him or herself, it could be
a sign that they’re concerned the product will freeze up or
not perform accurately in the demo.
Does it cover the basics?
You’ll begin to notice differences between platforms
as you continue to explore your options, but all travel
management platforms should include some basic
capabilities. In each demo, look for these basic features of
travel management:
• A single sign-on to access all features and travel content
• Ideally a single solution (i.e. once logged in, you are
not redirected to other services to complete certain
functions, or book certain travel types)
• The ability to book, amend and cancel all core travel
types (hotel accommodation, rail tickets, air tickets and
car hire)
• Integrated profile management, which incorporates a
single, universal traveller profile for each person within
your organisation
• Integrated reporting with the ability to run and
schedule reports for future delivery
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A GUIDE TO procuring a travel management service
Procurement process
Site visits
If you have the time, paying a visit to the offices of your
prospective suppliers is a big win for your procurement
process. It gives you the opportunity to meet the actual
people who will be working on your contract, and it gives
the supplier the opportunity to present to you a much
wider array of key people within their organisation that
wouldn’t be feasible at the presentation stage, or earlier in
the bid process.
If you want to kill two birds with one stone, you could
combine the presentation stage with a site visit (i.e. get
suppliers to present at their offices, rather than yours).
Ahead of a visit, communicate to the supplier any
outstanding concerns you have about their bid so that
they have the opportunity to address them during your
visit. Also make sure to request attendance from any key
staff that you’d like to be present, such as the proposed
account manager and the senior management team.
Take as many of your stakeholders along as possible -
after all, it is they who will be interacting most often with
the operational staff you’ll meet.
Post visit, make sure you have a thorough debrief with
all of your staff who attended. Get an understanding of
how they feel: are they confident they can work with the
team they just met? Do they have any concerns? Is the
organisation compatible with yours on a cultural level? Do
you feel you can strike a good working relationship with
the supplier’s team, and at all levels?
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A GUIDE TO procuring a travel management service
Procurement process
Tips for site visits
• Treat the sites visits just as you would an interview. Just
like when hiring people, your mission is to determine
whether you think you can create a really successful
working relationship with the supplier’s team of people.
• Ahead of the visits, assemble your stakeholders and
prepare questions that are relevant for the people you
are going to meet. For example, asking reservation
consultants how they would handle real-world
examples is a great way to get them talking (e.g. “We
have a traveller stranded in the far east, it’s 2am, they
need to get home, what would you do?”).
• Make sure you get to meet the actual operational team
(reservation consultants and associated management)
who will be looking after you. Pay particular attention to
the team leader as they will be pivotal in the success of
the service delivery.
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A GUIDE TO procuring a travel management service
Contract negotiation
Going through the legals is not the most interesting part
of the process, but investing time at the outset should
prevent a costly break-up further down the line.
Tips for contract negotiation
1 Define what they are actually going to do for you
Make sure you have a tight definition of the services that
your supplier is going to provide. If you are contracting on
your own legal terms, the standard services agreement
(that the legal team has just dusted off) is unlikely to
be bespoke to travel management. So make sure your
agreement actually covers what you expect them to do.
2 Incorporate the service level agreement (SLA) into
the contract
Many organisations spend a fair amount of time
discussing service levels at the tender stage and then
forget to incorporate the SLA into the legal agreement!
This gives the travel management company the chance to
wriggle out of delivery.
3 Agree what happens if your partner’s ownership
changes
If your preferred business travel agent gets bought out by
another supplier (this happens quite a lot in the business
travel industry), the service could be very different. It
could even be the supplier you dismissed at the first stage
of your tender! So make sure that your contract includes
a ‘change of control’ clause enabling you to terminate if
your supplier’s ownership changes.
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A GUIDE TO procuring a travel management service
Contract negotiation
4 Look at the termination clauses carefully
Can you terminate easily if things are not going well? What
if they fail to deliver at all? You need to be able to move
on if it’s not working and the mediation has failed. Look at
how easily your travel management company can get out
as well - they may be able to terminate on three months’
notice at any time, which is the last thing you want after
all your hard work in appointing them.
5 Watch out for crafty price increase clauses
If you’ve contracted for a set period of time, your travel
management company should commit to that price for
the entire contract. Make sure they haven’t slipped an RPI
(Retail Price Increase) clause into the small print.
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A GUIDE TO procuring a travel management service
What’s next?
We hope you’ve enjoyed your guide to procuring a travel management service.
Next up in our series of travel management guides is our equally comprehensive guide to
implementing a travel management service; in it you’ll find expert, spin-free advice on how to
get things up and running efficiently and painlessly once you’ve selected your TMC.
You may also be interested in our guide to implementing an online booking tool, which details
the most effective ways to ensure your people get on board with your new online booking tool
from the outset.
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A GUIDE TO procuring a travel management service
What’s next?
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Whitbread, Jamie’s Italian and many others came on board with Click Travel.
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These complimentary, comprehensive guides give you exclusive insider insight
into specific areas of travel management. From procurement practice to
implementation information, our guides will have you in the know in no time.
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