Buyers demand transparency on TMC margins

9 July 2006
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10 July 2006 | Rebecca Ellinor

Buyers want travel management companies (TMCs) to be clear about how they make their profits.

In a survey conducted by the Institute of Travel Management, around a quarter of the 90 travel buyers polled said they believe TMCs have a margin of around 15 percent. However, TMCs generally report margins of 2-3 per cent.

The survey showed that while buyers believe TMCs have re-positioned themselves from being suppliers' agents to buyers' agents, they are unclear about their profits and want more transparency.

Colin Goldney, managing director of ITM's research partner Argate Consulting, said many buyers are uncomfortable with the significant income TMCs still derive from suppliers.

He said more than 80 per cent of buyers "want to know more about how, and how much income" TMCs receive in the form of bonuses and target-related payments from suppliers.

The survey also found that more than half of UK firms using TMCs have seen fees increase over the past three years. That figure rises to 62 per cent for companies with a global travel spend.

To obtain a copy of the ITM study, e-mail secretariat@itm.org.uk

SMjul2006

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