Travel Management Companies (TMC’s) – A Luxury or a Necessity?

The top level benefits of using a TMC are clear; management information, access to better fares, policy development, access to expertise and savings in both organisational time and budget.

However, it is a common perception that the associated fees of using a TMC only pay off when the annual travel budget is in excess of £500,000, or that the savings/benefits

can not be realised until the medium-long term (6-12 months).

So the question is…When times are tough and budgets are tight, is a TMC a luxury or a necessity?

With travel budgets in many organisations ranking as the second largest cost after payroll, proper management is key for financial security.

So how do TMC’s prove their value and how quickly can these benefits be realised?

Travel Management Companies

The Role of a TMC

Using a TMC essentially offers a centralised purchasing process, where travellers and travel bookers can book all of their travel requirements in one place. This allows them to benefit from the economies of scale developed by the TMC with its travel suppliers (airlines, hotels etc.), as well as using specialist fares that might only be available to a non-profit organisation.

As well as providing a booking service, TMC’s operate in a very consultative way with client organisations; setting travel programme objectives, assisting in the development and implementation of travel policies, evaluating trends, educating travel bookers and helping to support objectives by, for example, negotiating bespoke contracts with suppliers.

Consolidated management information provided by the TMC enables easy analysis and detection of buying behaviours, trends and cost saving opportunities, which could otherwise go unnoticed for long periods of time, resulting in unnecessary costs.

Time as a Tangible Cost

Time is another tangible cost that needs to be considered in this context. The broad product portfolio of a TMC can mean sizeable reductions in internal administration time, enabling the booking of multiple travel items in one transaction (air, hotel, conference, rail, visa, car hire, lounge passes etc).

The number of online travel websites and their popularity for booking leisure travel means that business travellers often attempt to book travel themselves, believing they are saving money. This is in most cases a false economy, and often results in an individual being absorbed in the task for a considerable period of time, cancelling out any perceived savings.

It is also worth noting that travel products bought online are often sold on a non-refundable basis, with expensive change fees and limited after-sales support, meaning that should plans change, (and they do in the non-profit sector), the consequences can be very expensive and time consuming.

Risk Management

Exposure to risk can also pose a real and potentially damaging threat to any organisation on many levels, from loss of capital, damage to reputation and in the worse case personal injury.

Many organisations are unaware of the potentially disastrous outcomes of their processes, as more often than not they are not called into question until after a crisis or incident has exposed them as inadequate. This is the case for fragmented travel purchasing, characterised by individuals within organisations making their travel plans in isolation, with no centralised guidance, control or monitoring of how and where travel is procured.

The single point of reference a TMC offers is an invaluable support in the event of a crisis. If an emergency situation arises, you shouldn’t be wondering where your employees are. By using one TMC, you instantly know who to contact to help you locate and communicate with your travellers, make alterations to travel plans and recoup any monies due in the event of occurrences such as the Icelandic ash cloud, strike action, failure to board a flight, flight cancellations, travel disruption due to natural disaster, political unrest etc.

Selecting a TMC that offers additional risk management tools can deliver real peace of mind. A TMC’s client base travels to many risky destinations. To help these organisations protect their travelling employees and meet their Duty of Care obligations they have developed a bespoke suite of traveller wellbeing products. The suite equips organisations with the tools to make adequate proactive checks before a trip, monitor risks in real time, and provides instant reactive communication channels in the event of an incident, allowing for internal contingency plans to be rapidly carried out.

So is a TMC a luxury or a necessity…?

The answer to this question lies in the needs of the individual organisation, which can be anything from missionary fares to travel risk management. But if cost reduction, maximisation of resources and duty of care feature on the organisations agenda, it’s hard to ignore the value and relevance of such a service.

About Sumana Poul

Sumana Poul is experienced blogger, live in the heart of Minnesota. Currently works as the Social Media consultant at IdeaFry.

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