The resurgence of corporate travel post-COVID is prompting some travel programs to take a closer look at the contractual relationships with their travel management companies. From realistic KPIs to technology innovation, the elements covered by any TMC contract are getting more in-depth analysis as the business travel landscape continues to shift and adapt.

The role of TMCs and how they work with travel managers evolved during the pandemic, with buyers taking on added responsibilities to stay up to date on global travel guidelines, requirements and restrictions. And that level of responsibility continues unabated today, including a key role in insuring traveler safety, according to Charlie Sultan, president of Concur Travel at SAP Concur.

The 2023 SAP Concur Global Business Travel Survey found that global business travelers cited health and safety as the biggest threats to business travel, followed by international or local conflicts and tensions, inflation, and budget cuts or travel freezes. “It’s the responsibility of the TMC to help companies and business travelers navigate these threats and challenges,” Sultan says. “If companies aren’t receiving this kind of support or if they haven’t evaluated their travel programs in the past few years, now is the time.”

The relationship between companies and TMCs is becoming increasingly important, agrees Maureen Brady, COO, North America for Corporate Travel Management (CTM). “Corporations are looking to the future and seeking a TMC partner with financial stability, long-term market viability, and an eagerness to invest in the technology and people required to deliver and support their program in a dynamic market.”

Gabe Rizzi, president of ALTOUR, part of the Internova Travel Group, points out the post-pandemic era is an opportune time for companies to re-evaluate their TMC relationships. “The changes in corporate travel demand a more strategic approach where TMCs are expected to provide value-added services, embrace technology, prioritize traveler safety and contribute to sustainability efforts,” he says. Such a re-evaluation will not only ensure that companies are aligned with a TMC that meets their evolving needs but will also foster stronger, more effective partnerships for the future.

Successful Contracting

Negotiating a successful TMC contract will have long-term impact. “The TMC you partner with can significantly affect the success of your organization’s managed travel program, traveler satisfaction, and the company’s bottom line,” says Jorge Cruz, EVP global sales and marketing, BCD Travel. Program friction, rising costs and mandated processes are common reasons for initiating a TMC re-evaluation, Cruz says. But the process can be complex and time-consuming. “This process should ultimately lead to a successful, long-running partnership aligned to your company’s values, culture and objectives,” he explains.

Organizations should look for TMCs that are transparent and flexible in their approach, Sultan says. “Ideally, they should be able to cooperate with a variety of partners and are not boxed into their own solutions.”

Even if you haven’t yet officially initiated an RFP, Phil Wooster, vice president, sales, EMEA at CWT, says it’s important to maintain openness to meet and engage with potential TMC partners. “We want to understand the company and travel program well in advance of the formal RFP commencement,” Wooster advises. “Adopting a closed-door approach to a TMC expressing interest in learning more about your needs and vision poses a risk.” He adds that responding to RFPs can be a demanding process, and TMCs generally prefer assurance of a high likelihood of success before committing. If a TMC perceives a lack of familiarity with your requirements and expectations, it might choose not to submit a bid.

Rizzi suggests looking for clear commercials that are simpler than the long rate cards of the past. “The contract should clearly outline what is included in the management fees, such as booking fees, technology fees and support services.” He says that duty of care expectations should be stipulated, such as possible real time traveler tracking, evacuation services and priority assistance lines for VIPs.

From the start, Rizzi says expectations should be clearly set about what your organization is looking for in your next TMC. This could include details on everything from booking processes to global coverage. “One of the elements not often touched on in the RFP is company culture,” Rizzi cautions. “The TMC and the client need to be right for each other, as the relationship goes both ways.” Such considerations might include, for instance, the company’s position on matters related to issues like sustainable travel or DEI.

“A TMC contract should be seen as a legal agreement that helps to establish clear expectations and responsibilities for both parties involved,” says Chris Weedon, vice president, global sales and services for GlobalStar Travel Management. It should detail what services are provided, where they are provided and the conditions under which they are provided. The contract should also enable resolution if either party fails to deliver on the agreed-upon terms.

That requires a clear outline of the scope of work and services to be provided. This includes specific deliverables, timelines, pricing, delivery schedules, quality standards and other key details that must be met. By defining expectations up front, both parties can ensure alignment and avoid misunderstandings down the line. “The contract needs to be specific,” Weedon says. “Don’t try to make a product contract fit a complex service solution. Most TMC’s will have a robust contract that can be used as a starting point for negotiation.”

Too, pricing and payment terms must be addressed in detail. The contract should specify how much will be paid for each service, as well as any additional fees or expenses that may arise during the contract period.

In the process, it’s best to avoid lengthy questionnaires. “The TMC RFP is a necessary but time-consuming activity for both parties, but long questionnaires are not helpful,” Weedon notes. “There are many generic RFP templates available with hundreds of questions, but the more questions you ask, the more you have to review.” Instead, make the process easy for both parties with questions that are relevant to what you want to achieve.

Weedon also stresses the importance of clarity in all aspects of the process. A clear description of the company’s objectives and the intended outcomes of the procurement process is crucial, he says. “In the RFP document, strive for comprehensive details to enable TMCs to formulate and present responses tailored to your specific requirements.”

KPIs and More

An obviously important factor is realistic KPIs, but there is much to consider when determining and measuring program success. “On the employee side, business travelers expect a seamless experience and they have told us their top concerns are health and safety,” Sultan says. “Companies should factor this into their program KPIs.”

This requires setting goals around alerts and warnings, and the TMC’s ability to alert travelers of delays, cancellations or safety issues that may arise on the road. On the business side, TMCs should help enforce policy compliance. The RFP process can be used to establish goals for increasing policy compliance throughout the travel process.

Technology innovation is another area warranting a careful look. “When evaluating TMCs, they will likely provide a list of top tools and apps to meet business travel needs,” Sultan notes. “Ensure that the TMC does not have a conflict of interest in offering their own tool over industry-leading alternatives.” It’s also wise to make sure your preferred booking tool is provided, and there’s an easy way to integrate content or services from providers the TMC might not support.
Brady cites RFP trends that focus on data security, addressing how TMCs collect, utilize, share, store and secure information. “Sustainability also remains high on the agenda,” she adds, “especially with the Corporate Sustainability Reporting Directive by the European Commission coming into effect this year.”

Wooster suggests that travel and procurement managers can enhance knowledge of current trends by participating in educational sessions and webinars before initiating an RFP. He also emphasizes the significance of addressing payment-related matters, including the existing setup, potential gaps, needs and objectives, in preparation for launching an RFP.

Step-by-Step Process

For top results, the contracting process is something that can’t be rushed. The best way to set yourself up for success begins well before the RFP is issued, Cruz says. This means getting serious about your goals and what you want out of a partnership, as well as involving the right stakeholders in the process to understand a wide range of needs. “This process should be robust,” he says. “Building out a team with key stakeholders will be crucial.”

As Sultan points out, each TMC has its own supplier discounts and sources of travel content, so it pays to inquire about existing partnerships such as arrangements with hotel programs. “The travel industry is changing how it displays travel content,” he notes, “so it’s also important make sure to ask about the source and display of booking options.” Examples include non-traditional sources of content, such as direct connects for rail or car, or NDC content for air, and whether the TMC can help capture travel bookings made outside the booking tool. Also clarify which global distribution system the TMC uses and verify that the regions needed are covered.

Weedon cautions against moving hastily. “Rather than leave it until the last minute, if possible, include your preferred terms and conditions at the beginning of the tender process so you can avoid surprises at the end,” he says. “Better still, ask TMCs to send you their contract with their tender response.” This gives you ample time to review the contract, run it past your legal team and resolve any ambiguous issues during the negotiation and clarification stages.
Travel managers would do well to foster clear communication between procurement, the legal team and the TMC partner, according to Brady. “Many standard business contracts are not written with travel services in mind, so reviewing TMC contracts can be unfamiliar territory for legal teams,” she says. “Acting as a collaborator and educator between your legal team and the TMC will expedite the process.”

After all the work has been concluded, a thorough final evaluation is a must. “Before signing any contract with a TMC, review it carefully to make sure that everything you have negotiated has been included, and think about what happens if things don’t work out – such as persistent service failure,” Weedon says. “I’ve seen some shocking contracts with no termination clauses, leaving buyers locked in for the contractual term.”

Rizzi also emphasizes the need for contracts to include exit clauses. “Flexibility is the key,” he says. “If your travel budgets or patterns change, there should be an opportunity to reevaluate the program and make the necessary adjustments to keep it relevant and effective.”

The devil may or not be in the details, but when it comes to developing contracts, the more details the better, according to Weedon. “Detail where you are today and provide a detailed breakdown of travel spend per country, and document existing processes,” Weedon advises. Among the questions that should be part of the evaluation: How is travel booked in each country in each of the travel categories (air, hotel, rail, car rental, etc.)? Which third parties do travelers use? Do they book online or by phone? Is the trip booked directly by the traveler or by other staff on their behalf?

He adds that the most important step is taking time to meet with TMCs before sending out an RFP. “See the people and technology in action,” Weedon says. By taking the time in advance you can see if there is a fit in terms of company culture and capabilities. “It’s much easier to do this face-to-face than on paper. If you don’t see a good fit at this stage, it can save time for all parties.”

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