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Three years is the most common TMC contract length, with more than a third of respondents indicating their current TMC deal extends for that period. Not surprisingly, three years also happens to be the most common interval at which corporate travel buyers go out to rebid. After three year deals, five-year contracts were the second-most common response, representing nearly 28 percent.

MORE THAN A THIRD OF COMPANIES BID ON TMCs EVERY THREE YEARS
How often does your organization bid for TMC services?

SOURCE: The Beat June-August 2016 survey of 160 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume Totals may not add up to 100 due to rounding.

MORE THAN A THIRD OF COMPANIES BID ON TMCs EVERY THREE YEARS
How often does your organization bid for TMC services?

SOURCE: The Beat June-August 2016 survey of 160 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume Totals may not add up to 100 due to rounding.

However, “averages can be misleading,” said Louise Miller, BCD Travel executive vice president of global business solutions, sales and marketing. “The larger the company, the bigger [the] barriers to change and the smaller [the] population of qualified bidders.”
BCD Travel, like its mega agency competitors, goes after large, multinational clients. Miller said “the vast majority of our clients bid no less than every five years.”
She added, ”Contract terms of two to three years are common but typically there are extensions granted with the mid- and large-market to TMCs when the relationship is productive.”
While the norm, three- or five-year deals are not universal. A few buyers put their business up for bid every couple years, while others take a decade before they do so, according to respondents. One respondent's company has never switched TMCs or went out to rebid. Another indicated bidding every year.
Several buyer respondents noted that they have no specific timeframe at which they’ll go out to bid. They do so as their needs change or if the incumbent’s performance or pricing warrants a look elsewhere. One noted their organization goes out to bid “when the need arises,” the last time being five years ago.
Another respondent’s company has used the same TMC “for a long time” and conducts a “due diligence” check every three or four years. Another's incumbent TMC “has the opportunity to extend if benchmarking shows pricing is competitive” and if it meets service-level agreements and key performance indicators.
Just as companies are all over the place when it comes to bid frequency, there are also various shapes bids can take.
Menkes said, “We’ve seen it all.” That includes what he called a “pseudo RFP,” where the company just wants to check market prices to see if their incumbent is providing a good deal. Those are viewed as “a waste of the TMC’s time, to bid on something for which they have no chance,” said Menkes.
After that, some companies opt for a request for information where the bidder is not seeking the full set of RFP questions and answers, but perhaps wants to explore competitor pricing, Menkes said. “We don’t consider that to have value because no TMC is going to put in their best pricing when they're asked to quote rack pricing.”
While Miller noted that some “companies use less formal processes before the RFP as they try to decide whether to bid or not,” when it comes to formal bids: “The vast majority of our 400 global bids are handled through a formal RFP,” she said. “About 10 percent use consultants to manage the process. The smaller market are likely less formal and use consultants less often.”
While some use the assistance of industry consultants who lend their own models and bidding methodologies to rate TMCs, others use e-procurement software, notably Ariba. Some even conduct the process over email. Some lean on RFP templates, such as those published by the Global Business Travel Association. Yet, few agencies or consultants recommend using these blindly or without modification.
"There's a lot of templates out there,” said Alexandria, Va.-based MacNair Travel Management CEO Michael MacNair. “In January, we got six RFPs and four of them were the same one—word for word.”
Consultants and agencies suggested that the RFP should focus on the needs of the client—which would not be appropriately represented in templates. Menkes said those templates tend to commoditize the process.
One buyer responded that, when it comes to RFPs or formal bids, “We do not waste time doing this. We ask the incumbent to propose reasonable pricing at the end of the term. Anyone can come in and low-ball the program.”
Now into the second year of a three-year TMC deal, Washington, D.C.-based private regulatory association FINRA manager of corporate travel services Carol McDowell said, “We’ll have to see what the climate is in the company and in the industry to see if we renew or if we have to do a refresh and see what else is out there.”
Echoing the sentiment of many others, “Changing agencies is something a travel manager never wants to have to do,” she said.
The last time FINRA went to bid, it changed its agency from American Express to Adtrav Travel Management. McDowell took a different approach to sourcing that time around. Having worked in corporate sales prior to becoming a travel manager,
McDowell did away with some of the bidding rigmarole, but used the assistance of a consultant. “What used to drive me crazy was you’d get this 50-page document and all these pat answers,” McDowell said of some RFP processes. Instead, FINRA invited about a half dozen agencies “to an information session” with FINRA’s TMC selection committee to discuss the program and travel management goals. “
That way everyone had the same level of information, and then they could decide whether they wanted to move forward or not,” she said. “If they wanted to move forward, the next day we scheduled separate meetings with each agent separately.”
After that, McDowell did send out a modified and “condensed” RFP, but “it wasn't your standard, humongous document.” She added, “People put all this work and money into these RFPs, and you don’t really know what the customer is looking for and what’s most important to them,” she said. “And no one reads them. … They just go to the pricing page first.”
While many TMC execs bemoan what they call commoditization of their services, McDowell said, “I did not share pricing with anyone on our committee until the end. I wanted to take that out of it so we could focus on who would provide us the best service.”
Only when the committee finalized a TMC short list did pricing factor in, she said.
THREE-YEAR TMC DEALS ARE THE MOST COMMON
How long is the contract term with your current primary TMC?

SOURCE: The Beat survey of 160 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume, conducted June-August 2016 Total does not add up to 100 due to rounding.

AFTER TRAVEL DEPARTMENT, PROCUREMENT IS MOST INVOLVED IN TMC SELECTION
How involved are the following internal stakeholders in selecting your organization’s TMC?
AFTER TRAVEL DEPARTMENT, PROCUREMENT IS MOST INVOLVED IN TMC SELECTION
How involved are the following internal stakeholders in selecting your organization’s TMC?
Very Involved
Somewhat Involved
Not very Involved
Not at all Involved
Not applicable
Travel manager/travel department
89%
2%
1%
0%
9%
Procurement
68%
15%
5%
8%
4%
Finance
27%
35%
23%
13%
3%
Legal
19%
43%
23%
13%
3%
Risk management/safety/security
17%
30%
24%
23%
6%
Key geographic business leaders
15%
40%
20%
19%
6%
Budget holders/business unit managers
8%
27%
34%
25%
6%
Frequent travelers
6%
33%
30%
25%
6%
Human resources
4%
20%
32%
40%
4%
SOURCE: The Beat survey of 159 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume, conducted June-August 2016 Totals may not add up to 100 due to rounding.
A SEAT AT THE TABLE
After the travel manager or travel department, procurement is the most heavily involved internal stakeholder when it comes to TMC selection. The rise of procurement’s involvement in travel management has been well documented.
Indeed, 83 percent of respondents noted that procurement is either very or somewhat involved in TMC selection. Other internal organizations commonly involved are legal departments (critical to reviewing contracts) and finance—no surprise, as travel is often among the highest controllable expenses at many companies.
Still, companies take many tacks as to which internal stakeholders they include in TMC selection and exactly how to include them. It is common practice for companies to survey their most frequent travelers for input prior to bidding. Though only 6 percent said frequent travelers are very involved, nearly a third said they are somewhat involved.
“Frequent travelers weigh in through sentiment and surveys for sure and sometimes in the actual procurement process time window by sitting on the committee or evaluating a tool during a pilot,” said BCD’s Miller.
Risk management departments also have buy-in to the TMC selection process at many companies. Indeed, risk management and security initiatives— such as traveler tracking, which TMCs facilitate—in the past 15 years have become a growing facet of managed travel. Risk management departments are very involved at 17 percent of respondent companies, and somewhat involved at an additional 30 percent.
“Beginning about five years ago, we began seeing a trend of risk management and human resources becoming more involved than ever before,” said Miller.
While some suggest human resources is poised to become more involved in the management of travel, especially if companies begin to put more focus on employee engagement, their influence is not especially felt in the selection of TMCs, based on the survey. Only 4 percent of respondents indicated HR is very involved, though another 20 percent noted their HR professionals are somewhat involved. Most respondents see little to no involvement from HR.
Sabre CEO Tom Klein is among those who expect increased HR involvement. “We’ve seen this 10-year trend where travel was really in a procurement track,” he said in an interview this summer. “It went up to the CFO; it’s about procurement; it’s about expense. I think that will be balanced, where travel will become as much of an interest of the chief human resources officer, not just the chief financial officer.”
Klein said the most important thing companies can do “in a talent-starved world” is focus on people—” where we’re getting them, how we care for them, how we keep them safe, how we keep them efficient, how we measure outcomes and, maybe, how we control costs. All those things play into the travel experience.”
MOST BUYERS ARE SATISFIED WITH THEIR COMPANY’S TMC
How satisfied are you with your primary TMC?

SOURCE: The Beat survey of 154 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume, conducted June-August 2016 Totals may not add up to 100 due to rounding.

FEW BUYERS SEE TMC RELATIONSHIPS DETERIORATING
In the past 12 months, your TMC’s relationship with your organization has:

SOURCE: The Beat survey of 154 corporate travel buyers with at least $500,000 in annual U.S.-booked air volume, conducted June-August 2016

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