Corporate travel payments questioned

20 May 2009
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21 May 2009 | Martha McKenzie-Minifie

A study on the financial relationships between travel buyers and travel management companies (TMCs) has called for a move towards more "transparency".

The draft Remuneration Task Force Report - released this week by the Institute of Travel & Meetings (ITM) and the Guild of Travel Management Companies - also said a transition may be "difficult" and could "come at a cost".

ITM chief executive Paul Tilstone (pictured) said: "Procurement has driven down costs and the TMCs say they are more reliant than ever on the incentives paid by suppliers."

Buyers were concerned that incentives clouded the TMCs' representation, he said.

Corporate buyers equipped with a "complete understanding" of payments would be better placed to judge if a conflict of interest arose from payments made to TMCs, according to the report.

"This would allow both parties to work on looking at improving the remuneration system to be fairer for all.

"Should the corporate require, for transparency's sake, that money be paid back instead then there is a difficult road ahead, with potential risk of increased costs and workload for the TMC. This is, of course, likely to translate into an increased cost to the corporate buyer."

Trevor Elswood, group managing director of hotel booking agent BSI, said he would welcome a move to greater transparency.

"Transparency is vital in all long-term strategic relationships," he said.

"In recent years payment models shaped in tenders are, in attempting to simplify the remuneration model, allowing the lines of transparency to become blurred."

SMmay2009

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