< PrevNext > 2021 Business Travel Buyer's Handbook Selecting a Travel Management Company Amid consolidation wave, buyers navigate uncharted waters. By Adam Perrotta / June 17, 2021 / Contact Reporter Share Download ChapterThe spring of 2021 featured a spate of merger and acquisition activity in the business travel industry. Major deals during that period included American Express Global Business Travel announcing plans to acquire Egencia in a megadeal uniting two of the top five largest global TMCs, along with Frosch International Travel purchasing Valerie Wilson Travel and TripActions taking over Reed & Mackay. Those deals continued strong TMC consolidation momentum from 2020, and some observers suggest further M&A during the next year-plus is possible as travel resumes. It’s a dynamic that will have a major effect on TMC sourcing for travel buyers. While the industry consolidation partially stems from the financial headwinds many TMCs faced amid the shutdown of travel activity during Covid-19, the trend toward M&A predates the pandemic. TMCs in recent years have faced a seismic shift in client demand for services beyond the scope of traditional functions, such as booking. Some TMCs may not be willing or able to making the required investments in platforms and technology to serve those new needs, opting instead to sell to deeper-pocketed buyers. And with big-name legacy TMCs and venture-funded market entrants scrambling for ever-more market share, there’s no shortage of willing buyers. For corporate travel departments looking to source TMC services, the consolidation trend could prove a double-edged sword. Fewer providers likely will reduce negotiating leverage for buyers. Similarly, a potential surge in sourcing demand as companies whose prior contracts have expired resume travel post-Covid could further contribute to the rise of a seller’s market in the near term. On the other hand, those TMCs that remain standing throughout the consolidation likely will be able to offer clients a fuller range of services, including features and capabilities obtained via the acquisition of smaller TMCs and tech specialists. Meanwhile, TMCs that have grown larger will wield enhanced negotiating power with end-suppliers, leading to potentially significant saving for clients. The question of commercial models will be on the minds of both buyers and sellers as partnerships are renewed or established for the first time. TMCs long have taken on the risk of the transaction-fee model, which did not serve them well when business evaporated overnight during the pandemic. Industry conversation has been abundant around the idea of modifying that transaction-fee model, whether with a more stabilized management fee structure or a subscription-style model. Some TMCs will be ready for these conversations, but some buyers report that model change may have to happen over the medium term as travel returns. Amid the continued competitive consolidation and revamped service models in the TMC sector, it’s perhaps more vital than ever for buyers to approach travel management sourcing with a careful strategy and a clear idea of their own particular needs as their programs get up and running again.