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The TMC Model Is There A Smarter Way?. CBTG Boston – August 4, 2011. Good Morning. Objective & Process Today Antitrust Ground Rules Relevant Background Value Proposition Exercise. Travel Manager & TMC Feedback.
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The TMC Model Is There A Smarter Way? CBTG Boston – August 4, 2011
Good Morning • Objective & Process Today • Antitrust Ground Rules • Relevant Background • Value Proposition Exercise
Travel Manager & TMC Feedback What are the must-have deliverables today to corporate travel programs from TMCs? TRAVEL MANAGER TMC EXECUTIVE • Traveler tracking • Full content • Global relationships • Timely, accurate reporting • Good self-booking tool • Mobility platform • Proficient agents • Single source customer service • Analysis & savings ideas • Traveler tracking • Full content • Global capabilities • Accurate reporting • Multiple GDS capability • Consulting services • Personalized service • After hours reservations center • Ticket tracking (unused, non-refundables)
Travel Manager & TMC Feedback What are the key benefits of the current TMC model for your organization? What’s really working well; worth preserving? TRAVEL MANAGER TMC EXECUTIVE • GDS incentives working well • Professional counselors • Vendor liaison • Client advocate • Crisis management services • GDS • Customer service • Booking tool • Social networking tools • Industry knowledge • Central data repository • Travel policy administration
Travel Manager & TMC Feedback Where does the TMC add the greatest value today? TRAVEL MANAGER TMC EXECUTIVE • Policy control • Risk management • Negotiated savings • Capturing data centrally • Efficient travel operations • Cost savings ideas • Experienced people • Technology • Supporting policy compliance • Locating travelers in time of crisis • Supplier negotiations* • Data management & reporting • Transparency in spend • Superior customer service • One-stop shopping • Ally with suppliers
Travel Manager & TMC Feedback Where could a TMC add greater or totally new value? TRAVEL MANAGER TMC EXECUTIVE • Mobile systems • Better global reporting • Better support of online booking systems • Address existing flawed pricing model • Ability to book all products through the GDS • Offerings however the traveler wants them • Better global support • Better data • Better customer relationships • More consultant than agent
Travel Manager & TMC Feedback What are the key deficiencies of the current TMC model for your organization? What’s really broken, in your view? TRAVEL MANAGER TMC EXECUTIVE • Financial transparency • Traveler access to expertise • Too GDS dependent • Securing real-time global data • Pricing model • Constant unbundling
Travel Manager & TMC Feedback Does the TMC transaction fee, as a central component of the current model, remain useful? Is there a smarter approach to TMC compensation? TRAVEL MANAGER TMC EXECUTIVE • Monthly management fee a better model • Yes, easy to allocate costs • Annual management fee would be better • Transaction fee works if there is transparency in costs to provide services • Cost plus model better • Transaction fee does not capture efforts where no transaction takes place
Travel Manager & TMC Feedback Are there TMC revenue opportunities worth exploring that could help sustain the model and benefit both TMCs and corporate clients? TRAVEL MANAGER TMC EXECUTIVE • Consult on mobile • Consolidate traveler servicing to one expert group • Figure out how to collect a higher percentage of hotel commissions • More consultative assistance with supplier contracting • Help with meetings management • Diversify portfolio to include peripheral solutions to include solutions for global traveler • Manage more information and products • Sell airline ancillary services • Lower transaction fees and unbundle work products
Travel Manager & TMC Feedback What overall changes would you recommend to the current TMC model, if any at all? TRAVEL MANAGER TMC EXECUTIVE • Secure all content • Work as data management company rather than as a travel fulfillment vehicle • Reduce GDS dependence • Focus on mobile • Expand services • Greater TMC / client collaboration Vis harmful supplier policies • Work toward multi-sourcing systems
Travel Manager & TMC Feedback Are there whole new models worth exploring that you have considered? TRAVEL MANAGER TMC EXECUTIVE • Would reconsider old fashioned rent-a-plate or CTD • Direct connections with vendors • Multi-sourcing environment • Yes, but the marketplace is not ready for them
Travel Manager & TMC Feedback Are there other thoughts and ideas that you would like to add? TRAVEL MANAGER TMC EXECUTIVE • Greater flexibility and speed to make program changes • Clients need to help TMCs develop new products and services • Corporate procurement has caused a shift in focus to the 2% transaction cost away from the 98% total cost
The TMC Model • What Could A New Model Look Like?
Must Deliver • Full content • Traveler tracking • Booking tool • Data & reporting • Analysis & cost-savings ideas • Mobile platform • Global capabilities
Barriers To Change • Travel / procurement manager performance measurement • Cost allocation to business units • Compelling business case • control of program • cost savings • new value • quantifying program success • risk mitigation
Financial Options • Status quo transaction fee model; improve value proposition communications Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online • Other? Benefits Drawbacks Variations
Financial Options • Status quo transaction fee model; improve value proposition communications • Cost plus • Management fee • Lower transaction fee; unbundle services • Zero transaction fee for online • Other? Benefits Drawbacks Variations
Immediate Next Steps • Flesh out models • BTC analysis to the industry • Broad travel manager survey • Regroup with you • Expand BTC Kitchen Cabinet