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How to negotiate your travel management contract with your business travel agent

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Once you’ve selected your preferred Travel Management Company (TMC), 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 to be provided by the TMC and all associated terms and conditions such as the contract duration, payment terms and transaction fees. Before signing any contract with your business travel agent, 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 TMCs is 14 days as this is in line with the terms TMCs have with airlines. If you need extended payment terms, speak to your TMC 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 TMC will provide to you are in the contract. This is the basis of you choosing your TMC 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 TMC 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 TMCs will increase their fees based on the Retail Price Index (RPI), but if you’ve negotiated fixed fees for the term of your contract, 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 TMC merges or is acquired by another TMC. 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 James Plumb

James is one of our experienced Business Development Managers and loves nothing more than helping his clients obtain the latest solutions to help make business travel easier.
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