Business travel agents urge radical changes to fees structure

The Business Travel Association, whose TMC members book the vast majority of managed travel in the UK, has launched a consultation on how relationships with corporate customers are structured.

The BTA said: “Pricing models developed over a quarter of a century ago remain in use today, with the need to develop a new approach to TMC pricing evident for some time.

“The consultation, originally planned by the BTA for 2021, is now being accelerated given the devastating impact of Covid-19 on the business travel sector.”

An eight-week consultation period has now begun following the publication of a discussion paper with industry consultants Nina & Pinta.

BTA chief executive Clive Wratten said: “In recent years, there have been growing calls for evolution in the way TMCs price their services. The impact of Covid-19 on our industry has made that need more vital than ever and the BTA is committed to leading the industry with this catalyst for positive change.”

Three options are being put forward. The first, transaction fees, is unpopular with many TMCs because of the amount of behind the scenes work needed to secure a booking and lack of remuneration if the booking is cancelled.

The BTA said: “There is also no clear definition or standard on what a transaction fee includes.” However, an advantage is instant revenue, which increases if clients have underestimated transaction volume.

The second proposal, subscription fees, is “essentially a monthly retainer for services”.

The BTA said this helped TMCs manage cash flow, but there were issues around what was included. “As with transaction fees, an industry standard should be deployed,” it said.

The third option, management fees, with “cost plus”, is described as “the most transparent of all the pricing models”. It involves a fee with an additional profit percentage contribution and is typically used by larger TMC customers.

The BTA said it welcomed more views from TMCs and buyers in the weeks ahead.

“We will also be working with them to develop new industry standards that will help ensure any new approach to pricing is rolled out effectively and with best practice,” it added.