You cannot look at price alone when evaluating a travel management company (TMC). The value a TMC delivers can’t be strictly measured in dollars or by how much the company saved. Weighing the type of technology, service, and experience a TMC offers as well as intangibles like traveler satisfaction is a critical part of the selection process.
But even if you did look at price alone, it isn’t necessarily an apples-to-apples comparison since TMC A may offer a different pricing model than TMC B, and one type may be a better fit for your organization than the other.
When reviewing different pricing models, recognize that one isn’t better than the other. The advantages and disadvantages depend largely on your company’s travel patterns, booking behavior, and travel policy. Overall, it’s more important to determine the total cost of program, which provides a realistic view of cost and savings.
In the end, the deciding factor should be how the cost of program aligns with your needs. Look for a TMC that can help you spot savings opportunities and help you achieve savings targets by managing booking methods. Changing travel needs is another key factor so having a TMC that offers the flexibility to switch pricing models can be beneficial.
To help you determine which model is more appropriate for your company, we’ve outlined below and in our Getting the Most From Your Travel Program white paper the three most common kinds in the industry.
Typically, this means one flat fee is charged per booked trip, whether it’s booked online or offline. Keep in mind, the flat fee can be the same whether you book a complex itinerary or a hotel-only trip. Let’s say a traveler books an itinerary that includes a flight, hotel, and car service and another traveler only books an overnight stay at a hotel. Both may be charged the same flat fee. In this case, it may make sense to go with a flat-fee model if more employees are taking international trips with multiple bookings rather than overnighters within driving distance.
In this model, your TMC charges a fee for each transaction based on the method of booking. It’s a pay-as-you-use approach. In most cases, a company is charged a transaction fee for an airline ticket purchase. An online transaction usually costs less than an agent-assisted transaction offline. Although, some TMCs may also charge a fee for reserving just a hotel or a car. that can work for companies that don’t have a central budget for travel management services
This approach lets you subscribe to a set of services for a monthly, quarterly, or annual fee. It’s usually based on the number of users at any given time. Generally speaking, the more a traveler utilizes the TMC’s services, the more value you get out of this pricing model. It can work for smaller companies with limited travelers but may no longer be optimal over time as more employees travel and needs become more complex.