Categories: Special ReportManaged Travel ROITravel Management CompaniesManaging Travel Programs

Whither TMCs?

How travel management companies came to be part of travel programs and where they go from here
Unlike GDS, NDC, OBT and most airport codes, ROI is one of the few 3-letter acronyms used in the travel industry that is everybody seems to understand. The challenge with Return On Investment is that it is so commonly used, that inserting those three letters into a travel discussion or presentation does not inspire new thoughts or resonate beyond the standard definition.

This is still true despite how much the industry has changed in the two decades that I’ve been on the consulting side. In the early stages before transaction fees, the decision on which travel management company to choose was largely based on the size of the rebate offered (and back then they were called travel agencies).

Once commissions disappeared and were replaced by transaction or management fees, the title of Travel Management Company (TMC) replaced travel agency to acknowledge (or presume) that TMC’s worked for their clients, not the suppliers. (That would be a separate article in [ital] BTE [end ital] for another day).

In the heyday of rebating, there really was no focus on ROI, because selecting a travel agency (aka TMC) was influenced by the size of the rebate offered; therefore, there was no “investment” on the part of the client. As the industry transitioned to transaction fees, the decision on selecting a travel management company shifted to which TMC offered the lowest fees, but not holistically based on ROI as much as TCO (Total Cost of Ownership).

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