Have you heard of travel management companies (TMCs)? Traditional
travel management companiesare specialized travel agencies focused on booking business trips. However, today these companies are no longer the only way to book business travel. Many organizations are now turning to
travel management softwareinstead.
Regardless of the type of travel management solution you choose, when planning your business travel you’ll want to get a good deal and a quality service. Read on to learn more about travel management company fees, how to reduce them, and what your options are.
To better understand travel management company fees for these different kinds of services, it’s important to first understand how the most common fee structures work. Here’s a quick overview:
Essentially, companies charge an implementation fee at the onboarding stage, when you’re starting out with a new software package. The fee covers the cost of implementing the software and training your staff on how to use it.
A management fee is often charged as a recurring monthly payment, usually when there is a binding contract or agreement. Some TMCs only offer long-term contracts, generally with a minimum term of one year.
However, they aren’t always the most efficient way to book travel. Some common challenges with traditional TMCs include outdated software platforms, poor customer support, long-term contracts with rigid terms, and a lack of autonomy in booking.
Traditional TMCs use several different types of fee models.
According to the Business Travel Association (BTA), most TMCs currently charge transaction fees. However, many are now switching to management fee or subscription models, because these offer more predictability for the TMCs. On the other hand, clients tend to prefer a fee structure that “ensures costs are allocated directly to budget centers, and largely avoids the need for central costs.”
Research from The Beatindicates that the average TMC transaction fee is $25.20 on the phone, $18.01 online with agent assistance, and $7.84 online without agent assistance.
Most travel agencies cater to the general public, and aren’t equipped for the specific needs of businesses. Like some traditional TMCs, they tend to work on a 9-5 schedule. Travelers may be left waiting on hold for extended periods of time if they need help outside those hours.
Local travel agencies typically don’t help businesses manage their accounting and track expenses in an organized way. They also won’t be able to help create and enforce business travel policies.
Moreover, travel agents sometimes guide customers towards certain booking options based on the agency’s need to fill a quota, rather than the customer’s needs. They often have limited inventory compared to what can be found elsewhere.
Travel agents traditionally earn most of their fees from hotels, transport companies, and tour operators using a commission model. Many agents also charge additional fees on the client side that may cover security deposits, planning, or à la carte travel services.
While this option appears to have no cost, there are actually significant costs involved. For one thing, travel management solutions can help businesses identify the best seasonal deals and
corporate discountsat any given time. By not using them, companies may be leaving money on the table.
Another factor to keep in mind is the time and effort devoted to booking business travel. While an in-house staff member may be able to handle a small number of bookings, they will end up spending quite a lot of time on these tasks. This will take time away from their other responsibilities and cost the company money.
The self-booking approach may work in the short term if a company doesn’t have much need for business travel yet, but it won’t scale very well if the company’s travel needs grow. If companies make a large number of bookings on consumer websites, they’ll have a hard time keeping track of travel spend and invoices across platforms, and it will be difficult to ensure their travel policies are being followed.
Many OBTs integrate with company travel policies and third-party tools. In addition, they offer functionality such as centralized invoicing,
carbon offsetting, and
Different online booking tools have different fee structures. At TravelPerk, we offer businesses high visibility over their travel spend with transparent pricing. There are three tiers: Starter, Premium & Pro. See
more details of our pricing. You can also pay in other currencies, such as pounds or euros. Each tier offers additional services and functionalities to help you get the most from your business travel program.
When our prospective customers simulate how much they would spend on business travel with TravelPerk vs. their current solution, they typically find that TravelPerk will work out cheaper for them.
If you’re looking to save money on TMC fees, you can
contact TravelPerk todayto compare your current business travel spend with our offer.