AmTrav president Craig Fichtelberg submitted the following guest column on travel management company servicing and pricing models. The TMC offers its own traveler-facing booking system and other homegrown tech, and already has offered the subscription-style pricing model that Fichtelberg advocates.
There has been lots of discussion around the relevance of the TMC model post‐pandemic and whether the model should change. Change has been needed for a long time, and hopefully Covid-19 will be the accelerant. But the discussion needs to revolve less around what the TMC should be and more around what companies will need.
Different companies will demand different solutions based on their travel program's changing size and needs. Companies should be able to choose from more than just two extremes in travel management: do-it-yourself ("DIY") or TMC-managed ("Managed").
On the one extreme, DIY companies manage travel themselves. There is no central booking tool or travel management company, and travelers have the freedom to book where they want. On the other extreme, Managed companies exert strict control and outsource bookings, reporting, traveler tracking and support to a TMC. Many TMCs outsource those functions to third-party companies.
New company demands and the evolution of travel technology has made now the time to embrace a software-as-a-service model for business travel that could sit between these two extremes on the spectrum and provide a real alternative to the same old solutions.
Covid-19 is changing the needs of companies on each extreme. The DIY programs would benefit from centralization. If their travelers all booked in one place, those companies could assure their travelers are following safety protocols, track their travelers when they are on the road, have travelers receive quick and reliable support when traveling and better monitor their spend through real-time reporting dashboards.
The Managed program, meanwhile, is faced with dramatic downsizing post‐Covid. Videoconferencing is the perfect substitute for certain types of trips, and the need for travel policy controls and supplier contracts become less complicated as travel programs shrink. Managed programs need to better align the support they need with the costs they pay.
Technology also has evolved in the last decade. Companies have built all‐in‐one travel platforms that support bookings, reporting, safety and expense management without dependence on third-party solutions. These tools are easy for end users to use. Travel policy can be changed with the click of a mouse, users can effortlessly be added or subtracted, maps of where travelers are located can be retrieved and 24/7 support is just a chat away.
But today, the standard pricing model charges per transaction instead of one price for full access to the entire platform. The per-transaction-fee model has scared away the DIY companies and does not align well with Managed companies as it discourages users to use the TMC since every touch point results in additional fees.
Many other industries have gone to a SaaS/subscription-fee model, but travel companies have lagged. The combination of new company travel demands post‐Covid and today's modern travel technology platform has paved the way for a new travel solution that sits between the DIY and Managed models and that can benefit both the DIY looking for centralization and the Managed program facing a large downsizing.
This model, a "Company‐Managed" travel program, would give companies access to an all‐in‐one platform for one monthly price, bringing a SaaS model to business travel. At one monthly price, travelers will be incentivized to use the platform. The more they use it, the lower the average fee per transaction becomes. They will get the support they need on the road and not be penny‐pinched for transaction fees along the way.
Travel managers will be assured safety protocols are met, and unused tickets will be tracked and automatically applied to new bookings. They will have access to a central reporting dashboard to manage their spend, and they will be able to effortlessly adjust travel policy and add or remove users without having to ask someone else to do this for them. A Company‐Managed platform would benefit both DIY travel programs looking for centralization and downsizing Managed programs.
Times are changing before our eyes, and company options should be changing as well. Companies should not have to choose between one of two extremes in travel management. A Company‐Managed platform sits between DIY and Managed on the spectrum and serves as a new alternative for companies looking for the benefits of centralization at one all‐inclusive price.