Friday 30 September 2022, JW Marriott Grosvenor
21 November 2022, Hilton London Metropole
Business Travel Show Europe, presented by The BTN
Surprisingly, some of the biggest corporates and largest travel management companies (TMCs) transact volumes of business with little or nothing in writing by way of a travel management services agreement (TMSA) or a similar type of contract.
Things can appear to be working well, but we never quite know what is around the corner, and there are obvious disadvantages to either having no contract at all, or for the agreement between parties to be vague or inadequate. Proper contracting benefits both the corporate buyer and the TMC.
Types of TMSA There are various commercial types of TMSA – for example, those driven purely by transaction fees, or those based upon monthly invoices with purchases carried out with the corporate’s lodge card.
It is also possible to have a TMSA based upon a costs plus basis, where management and salary costs are paid by the corporate, plus an agreed level of profit for carrying out the services.
Each of these arrangements needs to be specific, and set out how the travel spend and agreed services are to be paid for, how disputes about financial matters might be resolved and how reconciliations take place, including hotel bill-backs.
The obvious benefit for both parties is to set out the scope of the agreement. Typical contracts will specify exactly what services are to be provided, and which might be excluded or only available at additional cost. There may be a range of pricing subject to the way that bookings are administered or whether there is a self-booking tool.
Further advantages can be the inclusion of a service-level agreement (SLA). There can be an understanding about the quality of the service to be provided and potential sanctions where acceptable standards are not met. This can incorporate any travel policy of the corporate, and other important factors that the TMC is expected to comply with.
A further advantage of the TMSA is to set out how long the agreement is to last (‘term’) and how it might end prematurely (‘termination’).
The power to terminate might extend beyond the usual provisions of material breach of the agreement and insolvency, to include repeated breaches of the SLA, change of control of one of the parties, and other factors seen as important.
The TMSA should also contain the details of any notice period that might be required to terminate the agreement on expiry, and what steps might need to be taken if there is a provision for renewal of the agreement. These important clauses not only affect whether the relationship dies or continues, but also the rights of employees of the TMC, who may well be subject to rights to transfer their employment under TUPE – transfer of undertakings (protection of employment) – regulations, if the provision of travel services is awarded to a new provider.
For many TMCs, the TMSA will re-enforce an agreement that they are to be the exclusive providers of business travel to the corporate in a particular jurisdiction. Quite often the rates and benefits to be provided or given reflect the likely volume of bookings, and exclusivity will prevent the corporate from using competitors or diluting the turnover of its travel bookings.
The TMSA will also include controls allowing one party to protect its business that might be shared with the other party.
For example, it will be important to control confidentiality, personal data, and set out the ownership of information and databases that might be available to the other party. The agreement might well also prevent certain activity after it comes to a close, including post-termination restrictions prohibiting the solicitation of the other parties’ staff.
No one wants to go to court, and provisions for dispute resolution in the TMSA will set out ways in which disputes can be resolved and conflict avoided. These will often include: discussion between management; the escalation of a dispute to discussion between directors; alternative dispute resolution procedures, including mediation; and, finally, if all else fails, the right to have the dispute heard before the court.
For those with no agreements at all, bear in mind that your business partner can change allegiance very quickly and move to a competitor. You may find that you cannot charge extra for work you thought fell outside of your arrangement.
You might have to take action for non-payment, and face difficulties in recovering interest. A well-drafted TMSA can reflect the full range of services, method of payment and means by which the corporate/TMC arrangement can be effectively managed.