Part 5. TRAVEL MANAGEMENT COMPANY RELATIONSHIPS AND... REVOLUTION?

The Data Story: TMC Service Levels Questioned, Wait-and-See Persists

BTN’s State of the Industry survey responses ranked travel management companies as last among key supplier categories to deliver service levels desired for travelers. None of the categories in the response set stood out for especially excellent or poor service levels, but TMCs at 3.4 on a scale of 1 to 5 brought up the rear in a head-to-head ranking. 

The drivers are multifold but center around one word: Technology. At issue for many TMCs is how technology reacts in the traveler space with TMCs’ mission around service.  

Travel management companies struggled during the pandemic to keep agents on staff. After the pandemic, they struggled to attract talent. Just when travel volumes and a more promising growth outlook were inspiring TMCs to return attention toward innovation with artificial intelligence and other critical technologies (as they already had been doing in the lead-up to the global travel shutdown) distribution disruption diverted them to new priorities. How would they book and then service NDC bookings? That process came with intensive resource demands and associated costs to the customer. Avoiding that process came with loss of content, and loss of relevance.

On the flip side of that coin, some tech-first TMCs that may be brilliant with self-serve technologies for simple itineraries and even NDC bookings may still fall short of the mark when called to apply deeper travel and servicing experience. Buyers report such TMCs have deployed technology solutions beyond their actual capabilities and not resourced properly—or perhaps have not priced properly—to be able to shift those more complicated service needs to experienced agents. 

Aside from agent know-how, buyers also report that account management and other traditional TMC support is in short supply at some so-called “next-generation” TMC players at least at the entry-level agreement. Upgrading to VIP servicing, however, upsets certain commercial agreements underpinning the relationship and pushes the client to higher fees. 

Have these service and technology issues resulted in the corporate set changing their TMC relationships en masse? Overall, the answer is no—at least that was the answer in January and February, when BTN fielded the State of the Industry survey. Recent reports from the consulting sector offer an evolving view on the notion that corporates are entrenched with their current TMC partners. The status has turned at least somewhat on fatigue surrounding the merger of American Express Global Business Travel and fellow mega-TMC CWT, which has undergone lengthy anti-trust review and has invoked a 'failing firm' defense in reference to CWT. 

Additionally, the market has become intrigued with a tranche of new and growing TMC players that claim to solve for some of the NDC-driven and manual service-versus-technology issues that are responsible for lower client satisfaction levels. They are also playing with commercial models, both those they offer to their customers but also commercial models that have long been the foundation of supplier and GDS relationships. Innovation is a tricky business, however, and not all corporate clients want to be first movers as next-generation TMCs work out new technologies and financials. 

More traditional TMCs have seen the writing on the wall and are investing millions in technology efforts that will drive better efficiencies and service levels, too. As a result, corporates could be rewarded with a less disruptive pathway but it will take longer.

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The Intelligence Report

Current buyer sentiment toward TMCs broadly can be summed up by one of Yogi Berra's oft-quoted "Yogi-isms": "Nobody goes there anymore; it's too crowded." 

In their rankings of service deliveries of different supplier categories in BTN's survey, TMCs averaged 3.4 on a 5-point scale, lower than airlines, hotels and cars—albeit not dramatically so. While about half of buyers rated their TMC's service a 4 or 5, that was a smaller percentage than other categories—and buyers were more likely to rate TMC service a 1 or 2 compared with other categories.

At the same time, buyers don't appear to be in a huge rush to switch TMC partners. More than 60 percent of buyers in the survey said they have not changed TMCs over the past three years, and an additional 9 percent said they had conducted an RFP but ultimately elected to stay with their same TMC. Twenty-eight percent, however, said they have either switched TMCs within the past three years or have started the process that could lead to a TMC change. 

Both internal and external data for BTN tell a similar story. BTN's CT100 list generally has shown little movement between TMCs over the past few years, and BTN's research last year surveying small and midmarket buyers showed 75 percent had not recently changed TMCs. Publicly owned TMCs, meanwhile, have been boasting retention rates in the high 90s in recent earnings calls. Their reported SME growth often is heavily weighted toward previously unmanaged programs.

Going out to bid for TMC service, and ultimately switching services, is a complex process, often lasting years and requiring a heavy lift of collaboration and change management across an organization. As such, the relatively low buyer movement among TMCs even when satisfaction levels are not sky-high is not surprising. 

Even so, the clock could be ticking on this current level of stability. For one, several buyers have anecdotally said they are in wait-and-see mode with a pending merger, facing a legal challenge by the U.S. Department of Justice, of two of the largest suppliers in the TMC space, American Express Global Business Travel and CWT. With a trial set for September, buyers have been opting for short contract extensions rather than going out for bids as they wait to see how that shakes out. There could be a flurry of activity once the merger's fate is clear.

As TMCs have limited resources to respond to bids, more activity means it could be more likely that buyers could face no-bids in the process. It's important that they begin building relationships before the process to improve their odds of participation.

"I've gone through multiple RFPs where big TMCs decline to bid if they don't know you," one buyer said. "Buyers need to be more focused on building and establishing a relationship outside of their preferred supplier relationship, so in the event you have to make changes, you have levers to pull."

RFPs are not the only harbingers of change. Bold buyers are willing to break off segments of their programs to work with emerging players, deglobalizing their programs to test the benefits of working with new entrants. Among the most notable moves, PwC and more recently Deloitte have moved portions of their programs—including their U.S. programs, both of which are among the largest in the country—to the emergent Blockskye/Kayak TMC and booking platform, signaling a move to acceptance of new industry models.

"If that's not the shot heard around the world, I don't know what is," one buyer said. "That says, 'Guess what, TMCs? You need to get woke and take this seriously.'"

Buyers who aren't inclined to be early adopters also are possibly delaying TMC decisions to watch how such moves work out, along with newer platforms such as Spotnana. They will want to be sure such set-ups are "ready for primetime," one buyer said.

"Most companies cannot handle being an early adopter of innovation," the buyer said. "It doesn't come with perfection; you have to be more tolerant of things."

A Buyer's Market, or a "False Positive?"

When it comes to negotiating with TMCs, buyers feel they have a stronger advantage compared with other categories, according to BTN's research. Forty-five percent of buyers surveyed said their negotiating position had improved with TMCs since their previous talks, about double the percent of the air and lodging categories. 

What marks a successful negotiation, however? One buyer suggested that price-focused buyers might be counting driving down transaction values as success, regardless of the impact on service and other aspects of their program, which could be creating a "false positive."

"Buyers are strictly putting a buyer hat on and not considering the broader impact of what you do to a program if you force your TMC into crazy transaction prices that are not reasonable for [the TMC] to run a business," the buyer said. "Ultimately, the buyers will give up discounts in other ways."

In the wake of the Covid-19 pandemic—when TMCs saw transactions, and hence revenues, dry up to near zero—some analysts predicted a big shift in TMC revenue models to guard against similar disruptions in the future. That is yet to happen on a widescale, with 71 percent of respondents in BTN's survey saying they use the transaction fee model with their TMC.  

Still, a quarter of respondents said their commercial structure with their primary TMC has changed over the past three years, indicating the willingness to shift is out there. Per-trip fees and management fees were the most common non-transaction-fee structures among respondents, collectively representing 16 percent of total respondents.

One TMC executive said his business had seen a "slight increase" in interest from corporate customers in centralizing fees rather than applying them at the point of sale, both from existing clients and new clients via RFPs.

"We show a higher Net Promoter Score on accounts that have fees paid centrally," the executive said. "We've seen happier travelers when it comes to that because they don't understand that we might be aggregating 10 different reporting fields for them behind the scenes and don't understand why there is a fee associated with a ticket [under a transaction fee model.]”

The common wisdom is that TMCs earn more revenue from suppliers than they do from clients, which buyers said goes to the heart of those total satisfaction levels. Some buyers questioned whether TMCs push decisions that are best for travelers or best for their own revenues, and that concern likely will be exacerbated as airlines strike deals with global distribution systems that give higher revenues to certain kinds of bookings. 

As such, the call for transparency remains one of the key points for buyers with their TMCs.

"The TMC is the backbone of the travel program, and as long as we don't have proper clarity, it's an imbalance," another buyer said. "They need to see all of your volume and details, so they want transparency, but they won't give you transparency in return, which is frustrating."

Rising Distribution and Technology Challenges

Airline content strategies and New Distribution Capability have presented a new challenge in buyer/TMC relations in recent years. While TMCs are making progress in integrating NDC content, a recent report by advisory services firm Garner estimates that NDC represented about 6 percent of total TMC bookings in 2024.

Meanwhile, the overall content and pricing gaps between EDIFACT and NDC channels continue. Depending on fare classes, airlines and routes, industry sources like AmTrav and Emburse have reported differentials can be as high as 30 percent, while other times they are as low as 5 percent—or nothing at all. Without full access to NDC content the options remain opaque in the TMC channel. 

So far, buyers are showing patience with the situation, according to BTN's survey. More than 60 percent of buyers said airline distribution strategies have had no impact on their TMC relationship and they continue to turn to TMCs as their main technology platform and data partners. 

Fifty-four percent of buyers in BTN's survey said they get their booking tool through their TMC, as opposed to 40 percent who get it directly from a technology supplier. Profile management technology sits largely with the TMC as well. Buyers rely on TMCs more for reshopping tools and mobile apps than going supplier-direct. Expense management platforms, however, were overwhelmingly preferred as supplier-direct in the survey. [For more on these practices, see Part 6. Technology & Innovation]

The large TMCs are still treading the line of acquiring and developing their own technology offerings while pledging to work with third party suppliers as their clients demand it. In their self-reported trendlines, they are seeing success in moving clients to proprietary technology, which makes it less of a heavy lift for clients as far as installation and interoperability—but the more technology a client sources from a TMC, the more complicated it becomes should they need to change.

Continued Consolidation

As the industry awaits a final decision in the Amex GBT-CWT "merger of giants," many buyers remain in limbo—some with very large, very progressive programs. A few had thrown in with CWT’s pilot program on Spotnana’s technology platform, but a couple of program administrators have told BTN they are loath to move forward fully with certain initiatives and investments until they know the disposition of technology options should the merger go through.  

One large CWT account told BTN it had taken control of all its data and revamped its program from the ground up so that changing TMCs—and generally being more agile with partners whenever the need might arise—would be a much easier process. 

Such independence may become the new hallmark of a fully evolved travel management program. Independence aside, a merger that removes a mega player from the market could leave slim choices for large multinational enterprises in terms of where they are able to place their business. 

The litigation of the GBT-CWT merger has centered around what exactly is the supplier universe capable of providing TMC services to the largest corporate travel customers. With the broad expectation that a business-friendly environment under the Trump Administration will clear the GBT-CWT merger to move forward, both large and midsize TMCs are getting ready to step up to the task of bidding for any business that defects. One consultant BTN talked to intimated that has already started to happen, as companies tire of the protracted and “uncertain” merger that seems to materially weaken CWT’s position the longer it drags on. 

One-stop-shop travel and expense players like Navan and TravelPerk have deep funding pockets and high valuations. In addition to investing in their own technology stacks content sources, they’ve pursued travel expertise and geographic growth via acquisition. Barcelona-based TravelPerk acquired NexTravel and AmTrav in the U.S. along with ClickTravel in the UK. Navan (then still TripActions) acquired Reed & Mackay and, more recently, a number of smaller European TMCs. These players continue to position themselves as entities capable of chasing bigger fish. Navan, additionally, has been preparing for an initial public offering.

Madrona Venture’s big-swing investment of Direct Travel has tied together a cast of next-generation travel technologies already in the Madrona portfolio: Spotnana, Troop and Center (the latter was recently acquired by American Express). This is Concur co-founder Steve Singh’s latest venture, and he has publicly said the industry should expect more acquisitions under the Direct Travel aegis as the company re-platforms. 

Then there’s Kayak BTX/Blockskye—a booking tool/TMC product constructed to the specifications of big-four consulting firm PwC. Annually one of the largest corporate travel programs in Business Travel News’ Corporate Travel 100, PwC’s drive to create a more intuitive digital experience for its business travelers operates on a blockchain foundation that links the agency, the booking tool and, now, a number of suppliers. It is one of a vanishing few innovations in the past five years that has successfully brought distributed ledger technology to bear on the corporate travel industry. Another big-four firm Deloitte has adopted the platform, but it is limited in geographical scope. Both PwC and Deloitte launched their U.S. programs with Kayak BTX/Blockskye, while their other regional firms remain on traditional service models.  

These TMCs are the ones on the leading edge of innovation, but they aren’t the only players capable of serving global clients. A number of other agencies—both large and midsize—are making big investments in re-platforming and/or bringing on artificial intelligence-powered technologies to bear on their workflows and processes, with the idea that AI will help them personalize service. At the same time deploying human resources on the most complex tasks.

Buyers believe some TMCs will not survive, particularly those not adapting to new technologies and supplier strategies. "They're in denial of the market dynamics, the evolving requirements of their customer base and the evolving expectations of senior management from their customers," one buyer said. 

Even as the market changes, TMCs are confident in their capabilities and the continued need to provide value via service.

"We're starting to see the pendulum swing; it's going to swing where 'everything can be automated,' where maybe things haven't been automated enough," one TMC executive said. "But it's going to level somewhere in the middle, when people realize automation can't solve for everything. There are things [TMC teams] are doing and value they are adding that no amount of AI will be able to solve for. There has to be some level of customer service that comes with that."