THE DEBATE
Should hBAs Be pAid more thAn tmCs?
Tom Stone Director, SIRIUS (Travel sourcing specialists)
Sirius founder Tom Stone has specialised in corporate travel since the mid-1980s. After starting as a business travel agent, he switched to a career in travel management procurement for Sony Music Entertainment, followed by SmithKline Beecham, Seagram and Universal Music International. In 2003, he set up Sirius, providing fi xed contract outsourced travel management and project based consultancy for all areas of the travel category, including change management. Tom is a past chairman of the Institute of Travel & Meetings and has served two terms on the executive board of governors of the Association of Corporate Travel Executives.
Hotel booking agents claim they provide buyers with greater value than travel management companies, so should they be remunerated better? Read on for three varying views on whether this idea has any merit
THE BUYER TOM STONE
As both TMCs and HBAs are providing fulfilment on the same commodity – albeit in slightly different ways and with differing benefits – then the remuneration should be similar. People cut their own deals and if they negotiate
Andrew Phillips Senior Account Manager, The Giles Group
Andrew Phillips has worked for 23 years across the business travel industry. Since 2008 he has been fulfi lling the role of Senior Account Manager at The Giles Group in Amersham, managing a portfolio of corporate clients across various industry sectors with the remit to ensure client retention, profi tability and satisfaction. Prior to this he held roles in sales at a GDS, a global TMC and a travel technology supplier. His career started with a global airline group in airport services, ticketing and sales/account management.
with people who know what they are doing the reward should generally be commensurate with the effort or intellectual capital. I do think that we should strive for a reward
system that is based on performance and that this is challenging to achieve. Some clients have done this successfully but it would be good to have an industry standard as a template. The solution is to pay by volume – possibly with a
savings target that generates an additional bonus (risk and reward). The challenge then, as it often is, is to agree on the definition of a saving. The HBAs argument for being paid more is based
Nick Foot Managing Director, Hotelscene
Nick joined Hotelscene in 2004 and was appointed managing director in 2007. Previously he had worked for 15 years in the travel management arena where he co-owned a mid-size corporate travel company before selling it in an MBO. Nick went to the University of Denver and also attended the Business Growth Programme at Cranfi eld School of Management. He has a wealth of general management experience which he has applied in both expanding and contracting markets.
on a strong linkage between remuneration/reward and performance. If HBAs’ clients saved more accommo- dation costs than TMCs’ clients then, they argue, HBAs should be rewarded more handsomely for booking lower hotel rates than the TMCs. It’s an interesting idea and
possibly why some TMCs are acquiring HBAs and/or developing their own white label versions. Savings metrics will vary by
selected for in the first place seems unnecessary. As a corporate it is increasingly up to both TMCs
and HBAs to demonstrate relevance and value in this sector and it may be that HBAs become increasingly challenged by leading TMCs as they seek to move into their space. It’s interesting that HBAs don’t have the same profile in, say, the US as they do here in the UK.
THE TMC ANDREW PHILLIPS
It certainly is a crowded market with TMCs of all kinds – small, large, independent, global – vying with UK-based HBAs for the prestigious travel accounts of corporate clients. The corporate will always be at the heart of the
"People cut their
own deals and if they negotiate with people who know what they are doing the reward should generally be
company but I agree that ideally there would be a strong linkage between reward and performance. Remuneration is for performing the function one is contracted to do – reward is for exceeding that function. Another reason why corporates use HBAs is for their access to hotels and inventory that traditional TMCs struggle to access easily – and servicing that business at a lower cost is the raison d’etre – so paying more to an HBA for executing the task they have been
commensurate with the effort or intellectual capital"
relationship with some preferring to use a sole TMC for all travel and others also using an HBA to service the hotel requirements. Fees and charges – whatever you want to call the financial arrange- ments – will always be contentious and generate a lot of 'heat' between client and travel suppliers. To address this interesting concept of remunerating HBAs better than TMCs, let’s take a look at the marketplace. TMCs have traditionally offered a 'one-stop-shop' to their clients, with HBAs coming much later on the scene to focus on hotels and the MICE business. Just like budget airlines, HBAs came in with a business model that allowed them to invest heavily in technology and source rates through various channels. Their model worked on operating high-cost call- centre operations with the service offered for free against retention of hotel commissions and overrides. Effectively, the HBA was
working for the client, but the supplier was paying for it. Services traditionally offered by TMCs, such as reporting, online booking tools, traveller
tracking, invoicing, payment solutions (including billbacks), technology solutions, account manage- ment and business continuity, to mention a few, were also adopted and bolted on by leading HBAs. The HBAs have traditionally been better positioned
to service large clients, with a considerable travel spend and with diverse geographical requirements. Other businesses, such as SMEs, have found it
22 THE BUSINESS TRAVEL MAGAZINE
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