There’s a disturbing trend occurring in the travel industry and I wonder how many travel buyers are aware of it. A lack of transparency is plaguing travel agencies and leaving scores of scorned clients in its wake.
As vice president of a global travel management company, I see the trend and the collateral damage it’s causing. It doesn’t have to be this way. Transparency can lead to better outcomes for businesses, travel buyers and travel management companies (TMCs).
Practice Transparent Pricing
If you’re a travel buyer, you should expect your TMC to walk through its revenue streams with you. If income is returned to you, make sure they define exactly what “income” means.
While all businesses depend on revenue, the lack of transparency in the travel industry is fostering distrust between TMCs and their clients.
Part of this distrust is owed to the fact that the industry has shifted from travel departments as centers of profit to centers of cost. Current pricing models can be created to return revenues or commissions to clients or keep them in exchange for reduced rates.
Many TMCs claim to return 100 percent of their commissions to clients when in reality they get around it by changing the terminology in their contracts from “commissions” to “marketing fund” or “soft dollars.” By simply changing the definition, they are able to keep income that the client is expecting to be returned.
If you’ve been in the unpleasant position of expecting revenue back but then don’t receive it and are offered no explanation, you’d be understandably upset and distrustful of TMCs overall.
When we create pricing models at Travel and Transport, we are very transparent about where we get our income. We specify exactly what we are going to return. We allow our clients to audit our commissions so they know how we’re making money and where their return is coming from.
For example, if you are a travel buyer with $9 million in hotel spend and 50 percent of that is negotiated net of commissions, you actually have $4.5 million to spend and should have approximately $450,000 coming back to you. If not, your travel agency may not be chasing down the commissions you’re owed tenaciously enough.
It’s your money and your contract in both theory and practice, and it should reflect that fact.
If you don’t have this kind of experience negotiating contracts with your current TMC, you need to ask for it. Transparency creates trust, which enhances the value of the relationship and the effectiveness of the travel services an agency provides.
Define What Success Looks Like for Your Business
I’ve found that every organization defines success differently. One of the first things we ask potential clients to do is to define what success looks like in a travel program for them.
While many travel agencies impose industry best practices on clients, the better approach is to build best practices around what a particular client is trying to achieve.
For example, a large private equity organization with many dealmakers who must travel frequently for business relies on administrative assistants to handle their travel arrangements.
Perhaps you can relate to this scenario.
We have found that administrative professionals prefer to communicate by email rather than over the phone because it allows them to multitask.
While email is less convenient for us because it takes longer, success for this kind of organization means keeping their administrative staff happy. Instead of imposing the industry best practice of booking by phone, we will tailor a program around email.
In general, we seek to learn our clients’ behavior so that we can build a program to meet their needs.
Where cost-deficient behaviors exist, we will recommend changes, but we will not force a client to make life convenient for us. Instead, we will look for ways to make life convenient for them.
Getting people to change their behavior requires trust. If you don’t trust your travel management company, have a frank conversation about the matter and see how they respond. If they don’t work to earn your trust with a transparent attitude and practices tailored to your preferences, you may be right to proceed with caution.
Expect Transparency to Fuel Growth
As it does with so many industries, the Internet revolution is shaking up travel. In the chaos, many players are reverting to hoarding whatever piece of the profit pie they can hang on to. Such a stance naturally creates distrust and questionable behavior.
Transparency is a much better way to fuel growth. Here’s why.
When you’re transparent, you don’t have to waste time hiding, playing games or changing the rules. You can discover what success looks like and work together to achieve it.
Travel management companies won’t need to change the language to generate profit. They can confidently make a case for the value they create for clients and be paid for it. Clients, in turn, can feel comfortable with the service they receive because they recognize the benefits that come with it.
We can work separately, each trying to secure our own best interest, or we can work together. When travel agencies and travel buyers are on the same page and each understands the value and rights of the other, a mutually beneficial relationship develops, satisfaction ensues and more profits are enjoyed overall.
Is this the kind of relationship you enjoy with your travel agency? If not, don’t settle for the status quo. Demand change. Demand transparency.
Penny Watermeier, CTC, GLP, is Vice President and Officer, Corporate Sales and Marketing for
Travel and Transport, the fifth largest travel management company in the United States, serving clients throughout the country and around the world.