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The TMC Model Is There A Smarter Way?

Explore the current Travel Management Company (TMC) model and discover opportunities to enhance corporate travel efficiency. Uncover the key benefits, deficiencies, and revenue opportunities, along with recommendations for changes. Delve into smarter approaches for TMC compensation and new value propositions, aiming to drive cost savings and improved services.

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The TMC Model Is There A Smarter Way?

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  1. The TMC Model Is There A Smarter Way? CBTG Boston – August 4, 2011

  2. Good Morning • Objective & Process Today • Antitrust Ground Rules • Relevant Background • Value Proposition Exercise

  3. Travel Manager & TMC Feedback What are the must-have deliverables today to corporate travel programs from TMCs? TRAVEL MANAGER TMC EXECUTIVE • Traveler tracking • Full content • Global relationships • Timely, accurate reporting • Good self-booking tool • Mobility platform • Proficient agents • Single source customer service • Analysis & savings ideas • Traveler tracking • Full content • Global capabilities • Accurate reporting • Multiple GDS capability • Consulting services • Personalized service • After hours reservations center • Ticket tracking (unused, non-refundables)

  4. Travel Manager & TMC Feedback What are the key benefits of the current TMC model for your organization? What’s really working well; worth preserving? TRAVEL MANAGER TMC EXECUTIVE • GDS incentives working well • Professional counselors • Vendor liaison • Client advocate • Crisis management services • GDS • Customer service • Booking tool • Social networking tools • Industry knowledge • Central data repository • Travel policy administration

  5. Travel Manager & TMC Feedback Where does the TMC add the greatest value today? TRAVEL MANAGER TMC EXECUTIVE • Policy control • Risk management • Negotiated savings • Capturing data centrally • Efficient travel operations • Cost savings ideas • Experienced people • Technology • Supporting policy compliance • Locating travelers in time of crisis • Supplier negotiations* • Data management & reporting • Transparency in spend • Superior customer service • One-stop shopping • Ally with suppliers

  6. Travel Manager & TMC Feedback Where could a TMC add greater or totally new value? TRAVEL MANAGER TMC EXECUTIVE • Mobile systems • Better global reporting • Better support of online booking systems • Address existing flawed pricing model • Ability to book all products through the GDS • Offerings however the traveler wants them • Better global support • Better data • Better customer relationships • More consultant than agent

  7. Travel Manager & TMC Feedback What are the key deficiencies of the current TMC model for your organization? What’s really broken, in your view? TRAVEL MANAGER TMC EXECUTIVE • Financial transparency • Traveler access to expertise • Too GDS dependent • Securing real-time global data • Pricing model • Constant unbundling

  8. Travel Manager & TMC Feedback Does the TMC transaction fee, as a central component of the current model, remain useful? Is there a smarter approach to TMC compensation? TRAVEL MANAGER TMC EXECUTIVE • Monthly management fee a better model • Yes, easy to allocate costs • Annual management fee would be better • Transaction fee works if there is transparency in costs to provide services • Cost plus model better • Transaction fee does not capture efforts where no transaction takes place

  9. Travel Manager & TMC Feedback Are there TMC revenue opportunities worth exploring that could help sustain the model and benefit both TMCs and corporate clients? TRAVEL MANAGER TMC EXECUTIVE • Consult on mobile • Consolidate traveler servicing to one expert group • Figure out how to collect a higher percentage of hotel commissions • More consultative assistance with supplier contracting • Help with meetings management • Diversify portfolio to include peripheral solutions to include solutions for global traveler • Manage more information and products • Sell airline ancillary services • Lower transaction fees and unbundle work products

  10. Travel Manager & TMC Feedback What overall changes would you recommend to the current TMC model, if any at all? TRAVEL MANAGER TMC EXECUTIVE • Secure all content • Work as data management company rather than as a travel fulfillment vehicle • Reduce GDS dependence • Focus on mobile • Expand services • Greater TMC / client collaboration Vis harmful supplier policies • Work toward multi-sourcing systems

  11. Travel Manager & TMC Feedback Are there whole new models worth exploring that you have considered? TRAVEL MANAGER TMC EXECUTIVE • Would reconsider old fashioned rent-a-plate or CTD • Direct connections with vendors • Multi-sourcing environment • Yes, but the marketplace is not ready for them

  12. Travel Manager & TMC Feedback Are there other thoughts and ideas that you would like to add? TRAVEL MANAGER TMC EXECUTIVE • Greater flexibility and speed to make program changes • Clients need to help TMCs develop new products and services • Corporate procurement has caused a shift in focus to the 2% transaction cost away from the 98% total cost

  13. The TMC Model • What Could A New Model Look Like?

  14. Must Deliver • Full content • Traveler tracking • Booking tool • Data & reporting • Analysis & cost-savings ideas • Mobile platform • Global capabilities

  15. Barriers To Change • Travel / procurement manager performance measurement • Cost allocation to business units • Compelling business case • control of program • cost savings • new value • quantifying program success • risk mitigation

  16. Financial Options • Status quo transaction fee model; improve value proposition communications Benefits Drawbacks Variations

  17. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus Benefits Drawbacks Variations

  18. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee Benefits Drawbacks Variations

  19. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services Benefits Drawbacks Variations

  20. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online Benefits Drawbacks Variations

  21. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online • Other? Benefits Drawbacks Variations

  22. Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online • Other? Benefits Drawbacks Variations

  23. Immediate Next Steps • Flesh out models • BTC analysis to the industry • Broad travel manager survey • Regroup with you • Expand BTC Kitchen Cabinet

  24. Thank You!

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