As RFP Volume Rebounds, Will Service Outshine Price?

Despite consolidation across the travel management company landscape in recent years, it remains a competitive industry, with a significant percentage of buyers embarking on the bidding process.

“We expected the [request-for-proposals] volume to dip as we got into the pandemic, but that wasn’t the case,” CWT EVP and chief commercial officer Nick Vournakis said. “While travelers might not have been traveling, the travel programs were still being run, so it was a great time for corporates to go out and assess what’s going on.”

More than a quarter of buyers in BTN’s survey said their most recent RFP process for TMC services took place since 2020. About 7 percent said their most recent RFP was in 2020, 10 percent last conducted their TMC RFP in 2021 and 9 percent did so last year. 

Still, a majority, 55 percent, said they have not conducted a TMC RFP since 2019, and several TMCs said they have seen a pickup in RFP activity as of late. 

Covid-19 'Grace Period' Nears End

Fox World Travel VP of business travel George Kalka said he currently is seeing more RFPs relative to what he was seeing in 2018 and 2019. He noted that while travel buyers generally were patient with TMCs—many facing staffing issues after the pandemic forced layoffs—during the early days of the recovery, that patience now is wearing thin.

“There was a lot of loyalty, but there’s now less patience,” he said. “TMCs no longer have a hall pass for some of the investment areas, such as new technology for customer processes, that perhaps the TMC couldn’t do because of Covid volume reductions.”

FCM VP of sales for the Americas Alexandra de Vaux said that while the multitude of changes within the industry have driven buyers to go out to bid, the biggest trigger she is seeing on RFPs is service issues, particularly among smaller programs.

“TMCs are still struggling to restaff and appropriate resources across the management of a contract,” she said. “Some TMCs are worse off than others and are having to prioritize certain customers over others, so we’re seeing more midmarket multinationals going out to bid.”

The TMCs themselves are driving some of the activity as well, sensing the opportunities among dissatisfied buyers and eager to demonstrate their own capabilities built in recent years. Mark Douglas, travel manager for Lifeplus, said that while he is not currently engaged in TMC negotiations himself, he has noticed more contact from TMCs interested in his business lately.

“The TMCs seem more active in trying to drum up business,” he said. “Everyone is keen to talk to us.”

Managing the Volume

Even with the flurry of RFP activity, and some TMCs still reporting staffing levels lower than pre-pandemic levels, TMCs in general do not seem to be overwhelmed by the current volume of RFPs. Just over 78 percent of TMCs in BTN’s survey said their current capability to respond to RFPs matches the number of RFPs they are receiving, and an additional 6 percent said their capabilities exceed current RFP volume. Only 16 percent said they do not have the capability to respond adequately to their current RFP volume.

Kalka, who said he has not heard of any customers having issues with RFP response time, said he’s also noticed buyers are being “a little more reasonable” with RFP deadlines. Previously, some would ask for a response in less than a week, which is a “really quick turnaround,” he said. De Vaux said she’s also seen more buyers moving away from sending lengthy RFPs in favor of engaging in a discovery process leading up to the RFP, which results in “the formation of strategic partnerships.”

At the same time, TMCs are getting more selective in which RFPs merit a response. 

“Just because there’s interest, they could be simply testing the market and don’t have a high intendancy to change,” Kalka said. “We’re looking for where we fit really well and where we can help them through customization.”

De Vaux reported a similar approach.

“We’ve opted out of a number of RFPs, if there’s not a relationship there or no engagement there or if the customer has reasons we would say it is not a good fit,” she said. “In the past, we had an abundance of resources, but now we have to be very strategic around what makes sense for our business and apply our resources to that.”

Of course, the time required to conduct an RFP along with the cost and time that goes along with changing a TMC remain a barrier in the process. TMCs continue to work through the annual churn—with typical contracts lasting three to five years, meaning about 20 percent of clients are up for renewal for any given year—with an eye on retention, said Vournakis, who also noted current RFP volumes for CWT are running about in the typical volume.

“To what degree we can preempt a formal RFP is in every TMC’s best interest,” he said.

The change in circumstances following the pandemic is working both ways, however. One buyer, who asked to remain anonymous because she is in the midst of renegotiating her current TMC contract, said she currently is “largely very satisfied” with her relationship, which has endured for a long time, and has “no appetite to change.”

The challenge for her now is being able to maintain the terms negotiated in softer times for her TMC.

“It was right at the beginning of Covid, so we’d like to sustain all of the significant advantages we negotiated in the last review,” she said. “We’ve worked fiercely to be a very good client, so we are hoping we are able to retain what we have.”

Big Jumps in Sustainability, DEI 

TMCs report some areas of focus are popping up more frequently in RFPs, though they say the nuts and bolts of buyers’ needs has not changed drastically.

The most dramatic increase has been in sustainability, with 84 percent of TMCs in BTN’s survey saying they have been fielding more questions on the topic. 

“There’s not a single RFP we’re answering these days that aren’t asking specifically about the ability to display carbon emissions and to track carbon emissions,” Vournakis said. “Building a carbon budget is not so much in an RFP per se, but nine times out of 10, they’re going to have some requirement around the ability and visibility at point of sale of carbon emissions.”

As has long been the case with sustainability, what’s in an RFP does not always translate into action, however.

“They ask about it, and we tell them everything we’re doing around it, but still, especially because of inflation rates, everything comes down to costs,” FCM’s de Vaux said. “While the interest is out there, we’re not seeing a lot of people fully implementing where we’re making recommendations.”

Diversity, equity and inclusion is appearing more frequently in TMC RFPs as well, with nearly 60 percent of TMCs reporting a rise. Kalka said similar to what Fox is seeing with sustainability, with the questions more about what the TMC is doing than what the TMC can do to help the company, though “we’ve done some work around accessibility, physical and neurodiversity in business travel, thinking about how to make a travel policy more approachable.”

Service Moves to Forefront

Other changes to the RFP include more focus on service, with 53 percent of TMCs reporting increases in global service requests, 44 percent reporting an increase in 24/7 service requests and 46 percent reporting increases in service level agreements.

David Reimer, American Express Global Business Travel EVP of global clients and general manager for the Americas, said he’s now seeing service capabilities outpace pricing in terms of importance to buyers. In particular, he is seeing an increase focus on globalization. 

“It’s not that global RFPs are anything new, but what I’m seeing is customers more committed to a global program,” Reimer said. “Customers are more focused on how to bring in every single market, and there’s a bigger push to do a truly global program.”

That in turn has brought increasingly complex questions into the RFP process around data and data security for global programs, TMCs said.

The changing laws around the world surrounding data privacy have made it an “enormous deal and undertaking,” and TMCs have had to make costly investments in order to be prepared to handle those questions, said Mark Walton, who recently launched a new TMC, Solutions Travel, that is partnering with Spotnana to use its travel-as-a-service platform as its core infrastructure.

Reimer said he has seen an increase in RFP requests around help with bringing meeting and transient travel programs together, providing a more holistic view of a travel program, as well.

While New Distribution Capability has been on the horizon for more than a decade now, TMCs said the potential for increased fragmentation in what airline content is available to TMCs has brought that to the center of the discussion as well. (For more on NDC strategy in 2023, see page 14)

“It’s causing confusion in the marketplace, with all the rhetoric out there about who’s ready or who’s not,” Walton said. “Companies are looking at what they need to be doing with in a three- to five-year future strategy.”

Lifeplus’ Douglas said that has been one of his challenges, particularly in ensuring travelers get content with Lufthansa that matches what they could get booking direct with Lufthansa when the journey originates outside of Europe. “You’ve got to make sure the [TMC] technology is giving the whole gamut of airfares, NDC content as well as GDSs and low-cost carriers,” Douglas said.