BTN Europe presents an overview of business travel and MICE predictions for this year
Virtual, 25 February 2021
ExCeL London - 22-23 June 2021
It’s unusual for corporates to switch TMCs, so what prompts them to make a move, and how can the process be made easier?
The pain of breaking up has been an enduring theme in popular culture for centuries but how hard is it to end a relationship with a TMC – particularly if it’s a long-standing partnership with strong personal and business ties between key employees?
In theory, it should be a relatively simple process – a case of just changing a business supplier after all – but travel management has always been a bit more, well, complex and heartfelt than buying stationery. All buyers know how quick business travellers can be to show their annoyance when things don’t go to plan during their trips.
While most TMCs boast about client retention rates of more than 90 per cent, there are still plenty of organisations looking to move TMCs for a variety reasons. But what challenges face clients who choose to take the plunge and move TMCs?
What triggers a review?Nobody likes change unless it’s absolutely necessary, so there have to be compelling motivations to make any organisation consider moving TMCs.
Jill Palmer, chief executive of Click Travel, says business travel is “quite sticky” when it comes to clients staying with their TMC. “Clients generally don’t move unless something goes wrong – and that’s mostly about technology and service,” she adds. “Our biggest competitor isn’t other TMCs, it’s inertia.
“They may choose to move when they just get fed up with the service and know they are getting ripped off. They start to think we can get it cheaper elsewhere.”
Palmer says that some organisations may not have looked at switching TMCs for many years and could be relying on outdated manual processes.
“We had one customer where they were still sending somebody to the rail station to get the train tickets,” she adds. “Those travel managers who haven’t had a look in the market for some time will get a pleasant surprise about what’s available.”
Of course, some types of organisations – particularly in the public and educational sectors – have to adhere to strict rules about putting their TMC contracts up for tender every three to five years. Meanwhile, larger companies with vast procurement departments will have regular tendering and benchmarking reviews hardwired into their procedures.
Clients not tied down by these formal procurement rules will often only trigger a review into their TMC when “something is not quite right”, says Simone Buckley, chief executive of TMC Fello. “Something triggers the review – there could be too many service issues or it could be cost. There might be a change in staff at the TMC and it could be that two personalities don’t fit together,” she says.
In the SME market, adds Buckley, a change in TMCs can often come about when a personal assistant switches company and wants to bring in the TMC they have worked with before to their new organisation.
For larger multinational organisations, the drive to work with a single global TMC across the world can be a major incentive to make a change.
Jo Hillman, CWT’s senior director, sales UK and Ireland, says: “One driver is to find a global or multinational TMC because a company wants to consolidate across more than one country and its TMC only has a local presence. It wants to consolidate from an efficiency point of view.”
Ben Park, senior director procurement and travel at Parexel, agrees many buyers in multinational companies are now looking to move to a global TMC rather than using a range of local agencies.
“The other reason is that buyers are not satisfied with the value offered and they are not getting as much flexibility from their current TMC. Some see their incumbent TMC not keeping up with new technology implementations and others see the flexibility and customisation options getting less and less, as well as the personal touch getting lost,” adds Park.
The technology offered by TMCs is regularly criticised by travel buyers for failing to match up to the kind of services available for booking leisure travel. This is an area where TMCs are striving hard to catch up but technology often comes up as a reason for switching.
“Most client moves are now predicated on a desire for improved technology solutions,” says Adam Knights, regional managing director for UK, France and Benelux at ATPI. “Most of our new client wins recently have involved a move by the client from their existing technology solutions to newer more traveller-centric tools.”
One UK-based buyer adds: “Technology was one of the main reasons why we switched TMC – the booking tool wasn’t great and travellers were always moaning about it. The new TMC’s tool is better, although there’s still work to be done to improve it further.”
What to considerThe transaction fees charged by TMCs have long been a bugbear of buyers, so if the primary reason for switching agencies is to save money then it may be tempting to focus most attention in this area. Although securing the lowest (or even zero) transaction fees is not necessarily the best deal for the buyer.
Yvonne Moya, principal at consultancy Festive Road, says: “While concentrating only on the fees, they are just a small portion of the overall costs. Maybe the new agency cannot deliver the same content as the old partner. Maybe their approach to account management is different and now there are costs for reporting. Maybe there are fees for using certain technologies.”
One practical example where buyers can be caught out with a new TMC is in the area of out-of-hours charges. If the new TMC operates a significantly longer out-of-hours period than the client’s previous agency then the buyer could suddenly face more of these higher out-of-hours charges.
But not everything is about price – there is the importance of ensuring you get the type of service you want from the TMC. If there is too much focus on just securing low transaction fees then the service given to travellers may not be up to scratch, and could represent a downgrade on what was being offered by the previous TMC – something sure to be noticed by regular road warriors.
“The biggest challenge is that many of the decisions to change TMC are made on price without understanding the full requirements of the end user – the traveller,” says Paul East, chief operating officer, UK, Europe & Americas, at Wings Travel Management.
Making the switchHaving made the decision to move to a new TMC, what are the practical steps that have to be taken to ensure this transition is a success and that the process is not tripped up by any unexpected issues?
One area that buyers can underestimate is in how much planning is needed to make the transition pain-free. Securing “buy-in” from key executives for the change is also a key factor.
“Depending on their experience, one of the key areas that clients can underestimate is the amount of resources involved in change management when switching TMC,” says Rob Grant, vice-president, head of global sales international, at American Express Global Business Travel.
“We will advise and support them from the earliest stages on what the process entails and provide support throughout. Neither side would want to progress down a lengthy and costly RFP (request for proposal) process, only for it to be abandoned at a late stage.”
CWT’s Hillman agrees it’s crucial to secure “executive buy-in” so that senior managers support the decision to switch. This can be important when implementing a global TMC where some regional offices may be initially resistant about moving away from a local agency they have been working with for years.
Another complicating factor is if the corporate client has “implanted” staff from the previous TMC working in its offices. Under the UK’s TUPE (Transfer of Undertakings Regulations) law to protect employees, the incoming TMC is required to take on these implants. This includes any staff who had been dedicated to working on the client’s account at the previous TMC’s office or were providing the same service from their home.
Jo Greenfield, UK general manager for FCM Travel Solutions, explains: “TUPE applies if the incumbent TMC has employed consultants who spent at least 75 per cent of their working hours on one client, so effectively would be made redundant if the incumbent loses the client. As the new TMC, we have to provide those consultants with jobs.”
This is not as much of an issue now in the UK as it would have been ten to 15 years ago as the number of implants has dropped hugely over this period. However, the practice remains more common in some regions, such as India and the Middle East, which may have to be factored into the arrangements for the roll-out of a global TMC.
One of the obvious questions after deciding to move TMC is, how long is this going to take? This depends on the size of company and its travel programme, whether it’s in one country or a multinational project, as well as other potential competing priorities within the client’s organisation.
Most TMCs quote a transition time of between six and 12 weeks, but are also quick to stress that other factors, such as the client’s corporate card arrangements, can draw it out.
Egencia’s Ronan Bergez, who is head of sales EMEA, claims the Expedia-owned TMC can transition a client within one week. “We have created a specific offer for companies who want to manage the implementation themselves,” says Bergez. “It takes one week to switch from their current TMC to Egencia but to do this they have to have a basic travel programme, one travel policy and bookings are made with individual credit cards.
“If a company is using lodge cards you will have some delays – sometimes there are certain timelines you cannot compress or reduce.”
While breaking up is never easy, there should be no reason for things to get fractious during the transition; after all, the jilted TMC may be bidding for the same client again in a few years’ time.