The BTA's chief executive Clive Wratten
[This article has been updated with comment from the Institute of Travel Management]
The Business Travel Association has issued guidance on how TMCs should be remunerated and to act as a reference for the day-to-day management of the relationship between TMCs and their corporate clients.
The publication follows an eight-week consultation which ended in December.
The BTA CEO Clive Wratten said, "We consulted extensively with representatives from a number of leading TMCs and corporates to develop this industry guidance on standards. The positive contributions received throughout are an encouraging sign that this guidance will be well adopted.”
The guidance covers three different pricing models – transaction fees, subscription fees and management fees – and compares these to how pricing models in the mobile phone industry work.
Corporate clients should also “be transparent as possible about the services required, providing their best estimates of spend, travel patterns, preferred agreements and transaction numbers,” it said.
It also calls on corporates to “be as open as they can be when defining what value represents for them in their travel programme”.
Announcing the launch of the consultation in October, Wratten told BTN Europe that there was a need for more transparency in the business travel sector.
Some buyers will be disappointed that the new guidance does not offer greater transparency over TMC incomes.
For transaction fee and subscription fee models, the guidance states that the TMC is not expected to declare earnings. For management fees, the guidance states that the TMC is expected to provide full disclosure of the profit and loss related to managing the customer business.
However, it goes on to say that “the ‘open book’ aspect of this [management fee] model is viewed by the TMC as only applying to the management of the client business and not that of their overall business and profitability. Therefore, it should not be assumed that certain aspects of the TMC business will be disclosed or shared as a standard. These include business development funds, GDS fees and override agreements.”
Announcing the launch of the guidance, Wratten said: “This year, more than ever, TMCs and corporates need to work closely together to define and redefine their relationships.
“These should be strategic partnerships which recognise the value a TMC offers, and go beyond everyday transactions to encompass the knowledge and expertise that enables their corporate customers to deliver a duty of care to their travelling employees.
“These standards are designed to be a benchmark that can be adopted across the business travel eco-system, and provide consistency and best practice for all stakeholders.”
The BTA said Clive Wratten would represent the organisation "in leading talks with Cortas, NBTA, Capa and NATM as they look to adopt similar practices”.
Commenting on the launch of the new guidelines, Scott Davies, CEO of the Institute of Travel Management, said: “The creation of this high level overview of TMC pricing models by the BTA is a welcome initiative and provides corporates with a clear and easy-to-use resource. It’s particularly relevant and useful at this time as many corporates and TMCs will be re-evaluating their commercial agreements and alternative pricing models as the business travel sector emerges from the pandemic.
"However, in order to see real progress in defining commercial standards, corporates will need to move away from allowing different pricing structures from TMCs as part of the bid process. The TMC sector has always been very competitive and this has tended to be reflected in pricing scheduled on an iterative basis. To maximise transparency, facilitate recovery and support a movement towards more robust pricing models both sides of the negotiating table may need to adopt new approaches and start to push back on bidding that results in a race to the bottom.”
The BTA guidance and the consultation that preceded it were developed in partnership with consultancy Nina & Pinta.