Ms. Brokowski

Sales & Marketing

Maximizing Customer Supplier Relationships with Travel Management Companies

By Donna Brokowski, General Manager Partner Solutions Group, Travel and Transport

The relationship between business travel buyers (the customer), the travel management company (TMC), and hotels has evolved since the beginning of travel management into one of interdependency. The hotelier must understand the TMC/customer relationship in order for hotels to work more effectively with TMCs to establish, build, and maintain their relationships with the customer.

Hotel companies invest large sums of money to create a direct bond with each traveler, travel manager, and decision maker in a corporation; however, many hoteliers may not realize that the managed travel ecosystem relies on a key entity that is sometimes overlooked or undervalued-the TMC.

The TMC's role has evolved drastically from service offerings that were commonplace 20 years ago-when agent-assisted transactions comprised over 80% of business travel, hotel content came primarily came from the global distribution system (GDS) or directly from the hotel, and the RFP process came by way of paper documents via facsimile or the mail. Today TMC online adoption is over 50%; content is multi-sourced and includes intermediaries such as wholesalers, online booking tools (OBT), brand web sites, and direct connect options; and the proliferation of the electronic RFP process, while efficient, can be cumbersome, complex, and time consuming.

Today's customers find value in partnering with TMCs for a variety of reasons: the movement to adopt strategic procurement practices to drive down travel costs; risk management and duty of care; trip continuity in the event of supplier cancelations or unforeseen geopolitical events; an effort to mitigate rising travel pricing; and the need to manage increasingly complex travel requirements of the business traveler. Today's TMC business model is far more complex than serving as an intermediary to the traditional travel agent. Managed travel has developed into sophisticated, consultative businesses offering an array of services and technology solutions to help customers solve everyday issues related to travel. TMCs help businesses successfully develop, implement, and manage their travel programs with a high level of customization. These services are critical components to the make up of the travel ecosystem and directly influence hotel purchase, stay, and traveler satisfaction.

At the same time, hotels' approach to customers has also changed. Two distinct approaches have emerged: revenue management practices that yield the best rate and the strategic targeting of specific customer segments via channel management.

In today's travel purchasing environment hotels need to understand that channel management does not equal market segmentation. It is a poor substitute for the market-driven segmentation needed to attract the best mix of business, leisure, group, local, and affinity guests that will achieve maximum occupancy and yield. Technology has made purchasing channels transparent to both the travel buyer and the travelers themselves. TMCs are contractually bound to book lowest available rates. TMCs will often be charged for booking online travel agency (OTA) rates, wholesale rates, and the recent proliferation of online-only or member-only hotel rates. This can quickly diminish savings, turning a lower-cost, touchless transaction into an assisted transaction that requires intervention and manual processing. The net effect is a loss in trust between customers and hotels. In order to be effective in meeting the needs of our common customers, true channel transparency is vitally needed. If hotels fully understand the role of the TMC and the TMC's relationship with the customer, they will be able to better position themselves to achieve the best results for all parties.

TMCs responsibility of managing the traveler experience begins long before the traveler becomes a hotel guest. The TMC provides technology services to improve the end-to-end traveler experience, such as proactive traveler monitoring to ensure duty of care, turnkey company travel portals, selection, management and service of OBTs, and mobile solutions. TMC technology specifically can directly impact the way in which a hotel is displayed at the time of booking. Whether the hotel is promoted or suppressed influences the customer's purchase decision. TMCs ensure that required security certifications are met to manage and protect traveler data, and dynamic reporting tools provide maximum efficiencies and to yield the optimal return on investment from travel spend. Customers depend on these technological tools for ongoing analysis so they may quickly adjust to changes in their travel patterns and other market variables that have an impact on their travel spending.

Before a guest checks into a hotel, the TMC has already provided a host of services essential for the success of a company's managed travel program. Some of those services include: research on travel options and suppliers, coordination of schedules, booking itineraries, contract compliance, quality control and purchase authorization, pre-trip reporting, and servicing reservations in the case of modifications, special requests, and cancellations.

After check-in, the TMC continues to play a critical role, managing route changes, post-trip reporting, and service issue resolution and ensuring a seamless hand off to the travelers' travel and expense (T&E) process. These service processes are all at the transaction level. For most companies, the engagement of their TMC goes far beyond the individual transaction. They are likely to be involved in strategic sourcing, travel policy and program development, supplier selection and overall issue resolution specific to the client's vertical.

TMCs are also a driving force behind travel spend consolidation, which helps suppliers obtain and retain customers' potential business. They are often the resource companies use to better understand the benefits and savings of a holistic, managed travel program. From sourcing travel to providing case studies and benchmarks to quantify expected savings, a TMC is often engaged with the customer for more than a year before being awarded their travel business. Supplier consulting service is a crucial component of a TMC's offering. Used correctly, the consulting engagement between customers and their TMC can be the tie that binds all three stakeholders together. Customers look to the TMC to be subject matter experts in each travel category. TMCs help identify potential travel program strategies and savings through consultative services, analytics, supplier relationships, rate negotiations and contract reviews, groups and meetings management, traveler compliance strategies, policy recommendation, and analytics.

Once hoteliers understand and embrace the role the TMC plays for a specific account, they can be more effective in identifying the best approach for customer engagement and success. Effective communication is highly dependent upon the relationship between the three stakeholder groups: travel supplier, TMC, and customer. The variations in the way these stakeholders may be engaged can have enormous impact on hotels' bottom lines. When hotels partner with both the customer and their TMC there is potential to grow the hotels' share of business with the right customers at the right price. Suppliers can maximize their opportunity for greater engagement through reflection and clear assessment to determine the type of relationship the three stakeholders enjoy in each account they service.

The most common relationship is when the TMC enjoys a sound relationship with both the supplier and customer; yet there remains an underdeveloped relationship between the supplier and the customer. This environment enables a high probability for TMC influence in decision-making and provides limited opportunity for the hotel sales team to get buyer information and feedback directly from the customer. To overcome the inherent lost opportunities in this model, collaboration is key. Hoteliers should engage the TMC early on (prior to RFP season) to identify opportunities. The next type of relationship we often see is where the supplier and the TMC each have a strong relationship with the customer, yet the supplier-TMC relationship is underdeveloped. Many times these are "destiny accounts" for local hotels and/or multi-national strategic accounts for national/global sales. Hoteliers should understand that there is a multi-layered sourcing process for both the buyer and supplier. This may include a complex RFP process, exhaustive analysis (many times outsourced to the TMC), and large multi-national decision groups that are frequently managed by the TMC. The optimal solution in this environment is communication. Build a business plan including account engagement, networking, contracting strategy, negotiation strategy, and servicing strategy. Then communicate this strategy to all constituents in the process.

The last and most problematic relationship is when neither the TMC nor the customer has a relationship with the hotel. In this environment, suppliers may not even be aware of lost opportunities. This situation can provide the best opportunity for hotel sales to gain access to new accounts. In the current hotel environment, where staffing is well scrutinized by global sales brands, these fall into areas they cannot directly service unless they deploy a "Small Accounts Desk" or if global sellers are given multiple accounts with minimal production. Cooperation is key in this environment. Hotel companies can explore and develop relationships by investing in TMC preferred programs. Reach out to the TMC of record. Position your TMC rate/value-adds in a unique way that gives value to the TMC-hotel relationship and enhances the guest experience.

Ultimately, the most successful hotel suppliers take the time to truly understand the customer/TMC relationships and use this knowledge to identify and manage collaboration, communication, and cooperation strategies to produce quantifiable results. It's a great opportunity to gain business, solve the cost containment pressures of the business travel buyer, and support the TMC's role of binding the three stakeholders together for our respective benefit.

Donna Brokowski, General Manager of Travel and Transport’s Partner Solutions Group is a travel mixologist always striving to find the perfect supplier – buyer balance. Ms. Brokowski is responsible for leading the company’s overall global strategic direction in corporate consulting services, supplier relations, and procurement analytics. Ms. Brokowski has an extensive background encompassing over 25 years in travel consulting and sales leadership. Prior to joining Travel and Transport in 2010, Ms. Brokowski led various sales teams with hotel groups, Ms. Brokowski has delivered keynote presentations to the Silicon Valley BTA and Wisconsin BTA, and has presented to various BTA organizations. Ms. Brokowski can be contacted at 402-399-4695 or dbrokowski@tandt.com Please visit http://www.travelandtransport.com for more information. Extended Bio...

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