more advantageous to work with a sole TMC provider for all their travel services. There are of course situations where HBAs
collaborate closely with TMCs and we at The Giles Group partner with an HBA for a large retail client. This not withstanding, it would be very difficult to justify HBAs being remunerated better than TMCs. The overall picture is that TMCs have invested
heavily in new and cutting-edge technologies, built solid supplier relations and created additional industry expertise to deal effectively with a hotel programme and the ever-expanding MICE business. A one-stop-shop remains the best corporate solution for managing a full travel management programme and ensuring that all spend is effectively captured through one source and is fully integrated. My parting shot would be to suggest that with Capita Business Travel buying BSI at the end of 2010 and further sector consolidation in the industry feasible, the longevity and expertise of the TMC community is assured.
THE HBA
NICK FOOT Clients should be prepared to reward the agent with the best performance, with remuneration linked with that performance. Hotelscene’s deep analytics consistently shows stronger hotel rate attainment performance on overall hotel spend compared to a TMC but, when selecting, procurers obsess about transaction fees as a ‘level playing field’ which is rather missing the point. The remuneration model for HBAs has remained
largely the same for several years. This is perhaps because the commission system paid by hotels and venues has remained pretty much unchanged. But with airline and rail commissions reduced to
zero or close to zero, hotel bookings remain the last of the major travel categories to have any form of revenue generation that can in part, or in whole, be passed back to the corporate client in the form of a rebate. Some clients then use this rebate to ensure a cost
neutral service across all their travel suppliers and, because their jobs sometimes depend on it, they pay a disproportionate amount of time focusing on this one issue. Instead they should be spending more time
reducing their average cost per stay which has a much higher cost reduction impact for their business. A percentage saving, after all, on an average rate will be much higher than the same percentage reduction on a supplier’s fee. HBAs deliver time and time again because their specialism ensures the savings can be quantified in a real and measurable way. This is delivered through highly customised processes, unique technology and experienced people. If you don’t believe me ask your TMC to tell you
how many times they have booked a hotel for your company at or below the negotiated client rate? Or ask them to measure the precise savings year on
year after normalising rates for room types, meal plans, tax and other valued added services? They will be very reluctant to provide this information probably because they don’t have the management information systems to provide this data. HBAs, through their specialisation, are different
and what drives savings for clients is booking performance. Nearly all TMCs use the GDS to make hotel bookings and, if the rate or the room is unavailable, they simply book at the next highest rate. But HBAs know that hotels have sophisticated yield management systems that close out availability on the GDS despite a hotel room being available. So we have developed processes to counter these measures and reporting tools that can analyse booking performance. From this information we can actively manage hotels in or out of a client's preferred programme depending on performance. Many of our clients book the same hotels through
both their TMC and ourselves. From this, we know that even when the same client rate is used, the actual booking performance is up to 30 per cent in our favour. When we have benchmarked suppliers from the large global TMCs to smaller ones the results are always similar. So, procurement managers should be asking themselves whether or not they are being given every opportunity to identify, understand and exploit all the top-line saving opportunities that exist for their hotel expenditure. If the answer is no, then just how much is their current booking model costing them?
“Many of our clients book the same hotels through both their TMC and ourselves. From this, we know that even when the same client rate is used, the actual booking performance is up to 30 per cent in our favour”
THE BUSINESS TRAVEL MAGAZINE 23
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