01 March 2007 | Antony Barton
A third of UK businesses are unaware that travel management companies (TMCs) receive incentives from the companies they recommend to clients.
Just over half of firms believe their TMCs offer independent advice and a quarter think they don't earn the fees they charge, according to the UK companies business travel report by the Hotel Reservation Service. It surveyed 300 firms of varying sizes.
Richard Plummer, senior partner with travel consultancy the Corporate Travel Partnership, told SM at last month's Business Travel Show in London that the findings reveal a broad misunderstanding of TMCs. "TMCs have always been partly funded by the supply chain, which is okay if the process is transparent," he said. "But it's important for clients, particularly smaller firms, to work to a firm agenda. Otherwise, if an agency has a target to reach with an airline, for example, then staff of smaller clients will probably be booked on to those airlines."
He said kick backs for TMCs were a small concern compared with the savings firms could make by improving
internal travel authorisation processes.
Iain Palfreman, head of sourcing at PricewaterhouseCoopers (PWC), said it was essential that good TMCs received incentives: "It's important to leave room on the table for TMCs to make a profit. If you have in-house travel expertise you will know where the big kick backs are and can look out for them in TMC proposals."
He said in-house travel expertise at PWC was gained by outsourcing all elements of the travel programme except policy development and key supplier relationship management. "It's not about outsourcing travel management but insourcing travel expertise," he said.
Speakers at the show stressed the importance of maintaining healthy relationships with TMCs. Paul Tilstone, executive director for the Institute of Travel Management, suggested firms benchmark TMCs to ensure competitiveness and research potential suppliers.