‘One-stop shop’ role of TMCs questioned

Travel Management Companies have come under fire for not providing the most efficient business travel solution.

The accusation came from hotel-meetings management and bookings company BSI, claiming that corporates could be unwittingly increasing their travel costs by opting for a ‘one-stop shop’ solution. 

BSI warned that it is a false premise to believe that by selecting just one supplier to deliver solutions for all travel needs the result will be improved efficiency and bigger savings. 

The old idea of achieving a simple and convenient service offered by a “catch all” TMC focused on air travel, with hotel spend seen as a mere add-on, is now obsolete, BSI claimed.

The company estimated that air travel “probably” no longer takes first place as a corporate’s main area of travel spend.

The impact of fierce competition between airlines has seen the estimated hotel accommodation expenditure in Europe at $140 billion a year – far greater than that of air travel. Hotel accommodation now accounts for at least half of a company’s overall travel spend, without considering the cost of events and meetings, according to BSI.

Corporates are likely to be missing out on savings of at least 15% on more than half of their travel budgets by opting either for a TMC or going direct rather than through an accommodation and meetings specialist, BSI estimated.

BSI business strategy director John MacOmish said: “The logistics around managing hotel spend are more sophisticated than the vast majority of TMCs can deal with. This is why they can only realistically offer clients a one-dimensional hotel booking service, as an add-on to their air travel management service. 

“The problem is that a TMC still relies on the GDS. The result is that clients are not getting best value or best practice because, in order to offer an effective cost-management programme that produces the highest level of savings, a supplier must be influential at the point of procurement – a principle that is the foundation of a specialist’s offer.

“While meetings’ costs are now coming under the scrutiny of procurement professionals, there is still the belief that air is the greater proportion of the travel budget than accommodation. This is sustained because travellers tend only to go to an appointed TMC to book hotels when needed with air travel – the vast majority of hotel-only bookings are still made direct or, increasingly, through the internet.”

MacOmish added: “It doesn’t pay to cut corners in this industry by opting for a one stop shop. As a specialist, time and time again BSI demonstrates that its service stands head and shoulders above anything similar that a TMC can offer. 

“BSI’s total procurement package ultimately means it costs less for a client to run a management programme and greater savings when purchasing accommodation and meetings space.  When managed effectively, this area of travel has the potential to generate huge savings for clients.”

Report by Phil Davies