Buyers in the UK and Ireland are paying higher Travel Management Company (TMC) fees than the majority of their European counterparts, according to a new survey of European travel buyers published by Business Travel iQ.
The survey found that the average fees paid to TMCs by buyers using service centres located in the UK or Ireland are the highest in Europe for online and offline bookings. Buyers whose headquarters are located in the UK also pay the highest online booking fees and the third highest offline fees.
The same buyers also pay the highest TMC fees for touchless online bookings, while those in Finland pay the highest for touched online bookings and French buyers pay the highest for offline bookings. Buyers who use service centres based in Spain pay the lowest offline fees and buyers with service centres in France pay the lowest touched and touchless online TMC fees.
UK buyers are also paying the highest online air booking fees for long-haul and low-cost carriers. French buyers, however, pay significantly higher offline fees for long-haul and buyers in the Netherlands pay the highest offline fees for low-cost carriers.
More than half (54 per cent) of the European buyers who responded to the survey claimed their TMC fees represent 4 per cent or less of travel spend. For 21 per cent this figure is between 4 and 6 per cent, and for 7 per cent it’s higher than 6 per cent. Almost one fifth (18 per cent), however, simply didn’t know how what percentage of travel spend is allocated to TMC fees.
“There are many reasons why TMCs charge such wildly inconsistent fees in different European territories: labour costs, different business models, whether they are wholly owned or franchise offices, which tools they use, their level of local knowledge and whether clients in that territory are more predisposed to using OBTs as is the case in northern Europe,” commented Marijke Poppink, EMEA travel manager, Global Procurement, RELX Group in the Netherlands.
“Lack of competition can also allow TMCs to charge higher prices. Some TMCs will also inflate fees in different territories simply because they think they can and that’s when buyers need to flex their muscles and negotiate harder.”
Pascal Struyve, Global Travel, Fleet & Meeting Services director in Belgium, added: “How much a TMC charges in each territory is not my main concern as there are justifiable reasons for these differences. What is important to me is the ratio between the quality of service and customer satisfaction versus the TMC charge, and that the overall TMC cost percentage of the programme compared to total travel expenditure remains in line with our goals.”