ACCORDING TO AMON AMON COHEN
A recent court case highlights the need for transparency on both sides of the business travel equation
IF IT LOOKS TOO GOOD TO BE TRUE…
T
here are two hard-to- spot issues buyers need to dig deep for when hiring a
travel management company (TMC). The first is whether any hidden fees are buried within the contract. For example, which services are within scope and which, such as management information, are not?
The second, and even
trickier, is the money flow around travel purchases. Is the TMC charging a mark-up on what it sells you or earning a supplier kickback? If so, are you happy for it to keep this money, or do you want that cash to come to you? And, if the latter, have you framed the contract to leave no wiggle-room for the TMC to withhold some of what it earns?
POTENTIAL FRAUD I have used this column to hammer home such points before, but they have become very relevant once more after news broke a few weeks ago that Dutch anti-fraud police, the Fiscal Information and Investigation Service (FIOD), had raided the Schiphol offices of ATPI (aka ATP Business Travel). FIOD suspects ATPI of defrauding the Dutch Ministry
34 BBT JULY/AUGUST 2016
of Security and Justice of “millions of euros” while contracted to handle the ministry’s travel bookings between 2010 and 2012. FIOD said that, in return for a fixed fee, ATPI was obliged to offer the most economical booking options and pass on all savings to the client. “The presumption is that this has not happened,” said a statement from FIOD. The raid followed a civil action brought by the ministry against ATPI in 2014. A court found in the ministry’s favour in June 2015, and auditing is under way to determine how much ATPI must pay back. Whether criminal charges will be brought against ATPI remains to be seen. But the civil case suggests that, taking what both sides have said at face value, there has, at the very least, been
I think hiring some independent expert scrutiny for TMC contracts is money well spent
a difference of opinion on what mark-ups the TMC could or could not legitimately hold on to. The day after the FIOD raid, ATPI released a statement which said: “The long-term dispute with the Department involves the interpretation of contractual terms with regards to the provision of airline tickets... According to the court, ATP omitted reporting certain discounts to the Department. ATP has always taken the view that these are savings which fall outside the contract, but obviously respects the ruling of the court.”
FURTHER ISSUES Actually, there’s another issue to consider in addition to price and money flow: are you paying your TMC enough? According to the Dutch business travel publication Zakenreis, which led the reporting on this case, ATPI’s fee to the ministry was only Ð0.01 per transaction. TMCs have to make a living. We don’t yet know enough about this particular case but, in general, if the fee you pay doesn’t allow your TMC a profit in its own right, think hard about why your TMC agreed to take you on, and whether your total cost
of travel may ultimately be lower if you pay your TMC a decent whack. Unfortunately, if anything, the marketplace is going the other way. HRG complained at least three times in its recent results announcement that its revenue was hit by “aggressive competitive pricing”. If you are offered a gift-horse of a fee, inspect it inside and out before accepting. If you conclude the fee being offered is too low, you can always ask the TMC to spell out how it intends to make the account a sustainable one.
RED FLAG
A low transaction fee bid should also raise a red flag to go back and check your own figures. Did the information you presented in your request for proposal (RFP) document unintentionally mislead the TMC into getting its maths wrong? Or was there an error in your figures: quoting number of hotel room nights booked instead of number of hotel stays booked, for example. There is no getting
round the fact that truly understanding the total cost of purchasing through a TMC is extremely difficult. That’s why I think hiring some independent expert scrutiny for TMC contracts is money well spent – and so, too, is regular independent auditing of what you are paying. Getting it right up front is a lot better than sorting it out in court afterwards.
Amon Cohen is a specialist business travel writer, conference moderator and media trainer.
BUYINGBUSINESSTRAVEL.COM
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100
