TMC Bidding Frenzied This Year - Business Travel News

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TMC Bidding Frenzied This Year

July 22, 2009 - 03:52 PM ET

By Jay Campbell

Nearly half of 159 travel buyers polled this month said they had or would issue a travel management company request for proposals in 2009. The survey of subscribers to ProMedia.travel publications coincides with consultant and TMC reports that they are extremely busy.

"Bid activity is unprecedented, especially in the multinational sector for global agency bids," said Mark Walton of Consulting Strategies. "It will be interesting to see how that all gets ferreted out."

Also part of the ProMedia.travel poll, 75 percent of 100 travel buyers said they had or would send RFPs to such "mega" agencies as American Express, BCD Travel, Carlson Wagonlit Travel and Hogg Robinson Group. Forty percent said they would include such "Internet" agencies as Egencia, Orbitz for Business and Travelocity Business, while 47 percent said they would solicit other agencies. Multiple answers were allowed.

"There is a hell of a lot going on," said HRG commercial director Chris Fry. "To put it into two categories: One is extending their contracts because the buyers are doing this on other parts of their business in their travel programs--particularly around air, hotel and self-booking tools. The other situation is that the contract is expired, and they are going to bid because it is a requirement."

Some TMCs have become more selective in deciding whether to bid on certain business. In the United Kingdom, travel management professionals have been debating whether clients are seeking bids merely to benchmark against existing providers.

"They need to be clear that they have a firm intention of being able to change," argued Fry, decrying situations where "the bid is more of a benchmark than a proper bid. An RFP can take six to nine months, on average. We are receiving more bids this year. We are, like our competitors, being more selective. We would prefer to know the company before they bid. Everyone says the RFP is 'business as usual' but that doesn't always happen, because you are busy on the RFP and not the business as usual."

Deltek Inc. travel manager Karoline Mayr is busy with a TMC RFP process she began in March. Intended to cover four countries, the bid would result in a switch in January, according to Mayr.

"The overall goal of the RFP is to reduce travel spend," she noted. "In order to do this, we need a better grasp on data. This has been a real challenge with our current TMC." Mayr is seeking to improve savings, service and compliance and wants a consolidated global agency setup with better global reporting. "We would like a local account manager with a global focus and the resources to drive savings," she added.

The company is planning to sign a three-year deal, which is typical. Despite recent comments by officials at big TMCsindicating companies--especially global firms--were seeking to extend TMC contract terms, the ProMedia.travel poll found that desired contract terms were essentially unchanged, with one-fifth of buyers seeking one-year terms, another one-fifth seeking two-year contracts, about 39 percent seeking three-year contracts and about 15 percent targeting five-year deals. More than 130 buyers answered the questions about contract length.

~ Lauren Darson contributed to this report

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