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How to negotiate your travel management contract

How to negociate your travel management contract

Once you’ve selected your preferred Travel Management Company, you need to get over the final hurdle, and that’s negotiating the contract. Rather than leave it until the last minute, if possible, include your preferred terms and conditions at the beginning of the tender process, this way you can avoid surprises at the end. If you don’t have a contract to include within your ITT, ask suppliers to send you their contract with their tender response. This gives you a chance to review the terms and run it past your legal team and then clarify any issues during the supplier negotiation and clarification stages.

The business travel contract should outline the services, the benefits and the ROI to be provided by the business travel agency and all associated terms and conditions such as the contract duration, payment terms and transaction fees. Before signing any contract with your Travel Management Company, review it carefully to make sure everything in there is what has been negotiated. Here are a few areas to watch out for:

#1 Fees

All the fees should have been presented to you during the tender process. However, it’s also worth double checking no additional charges have found their way into the contract. Make sure all fees are as agreed and look out for fees that may be additional to the transaction fees such as implementation costs, charges for management information reports or traveller tracking for example.

#2 Payment Terms

Make sure the payment terms are as agreed. The industry standard for Business Travel Agencies is 14 days as this is in line with the terms they have with airlines. If you need extended payment terms, speak to your travel management company about alternative payment solutions such as credit cards and lodge cards which offer longer periods of credit.

#3 Service Description

Don’t forget to make sure the description of the services your corporate travel agency will provide to you are in the contract. This is the basis of you choosing your Travel Management Company over and above their competitors, and it’s important that the service they’ve promised to deliver is detailed in the legally binding agreement between your two companies.

#4 Service Level Agreement (SLA)

The SLA is another important part of the contract that can sometimes be forgotten. You’ve taken the time to negotiate the service levels you require, so it’s crucial that the business travel agency is held accountable to deliver them. Do make sure they find their way into the contract.

#5 Price Increase Clauses

Watch out for any price increase terms that you haven’t already agreed to. Lots of Travel Management Companies will increase their fees based on the Retail Price Index (RPI), or due to changes in distribution costs, so make sure you agree what works for both parties. If you’ve negotiated fixed fees for the term of your contract, then this clause shouldn’t be in there.

#6 Termination

Of course, we all hope our supplier relationships are going to be perfect, but unfortunately, it isn’t always the reality. For this reason, you need to know how you can terminate the contract if things go wrong.

#7 Change in ownership clause

Acquisitions and mergers frequently happen in the travel management industry, and for this reason, it’s wise to include a clause in the contract which gives you the right to terminate if your Travel Management Company merges or is acquired by another travel management company. Of course, any new owner could bring many benefits, but if you’re not happy with the change, you’ll want to know you can move your business to a different supplier without any hassle.

The SME's Guide to Procuring Travel Management Services

About Kevin Harrison

Kevin is our managing director and business travel veteran! Kevin has worked within the industry for over 30 years and spent 20 of those at one of the UK’s largest travel management companies. Kevin leads a dedicated and passionate team who strive to make a difference to our customers’ businesses by improving their approach to corporate travel.
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