Andy Menkes on correcting the knowledge imbalance in TMC’s offerings


Andy Menkes has spent a career working with travel management companies – as a buyer, director of TMC, and industry consultant. As companies assess their needs for travel management services, he describes what he sees as an issue of fairness in TMC’s offerings and offers a solution to address it.

We are starting to see an increase in activity in terms of organizations submitting programs for travel management company services. The reasons behind this may include price increases or customer concerns about the stability of the incumbent. It might just be time to bid competitively after a long time with the same vendor.

A high percentage of large companies who stay with their incumbents after a tender. There are many reasons why this has been the case, and I would like to focus on one of them: the knowledge imbalance.

Those taking a product-based approach to RFP might feel like they’ve provided enough information to bidders if they share high-level data i.e. total spent on tickets d (domestic and international), number of transactions (online and offline), total hotel expenses and total car rental expenses.

Andy Menkes, Founder and CEO of Partnership Travel Consulting

With the exception of the incumbent who has a lot more data, this is not enough.

The challenge is that TMCs derive more than half of their revenues from vendors, and limited data blurs the picture. This forces TMCs to blind bid or guess the financial offer. They will put in a small price note like “Subject to further review of spending data”.

They might as well say, “Some assembly is required”.

The holder, meanwhile, also knows:

  • Airline spending broken down by carrier, cabin class, average ticket price and percentage of tickets booked out of net fares
  • Which airlines pay waivers and how much
  • Hotel spending by chain, broken down by net rates versus commission rates (including percentage of non-preferred bookings and percentage of bookings unrelated to an airline booking)
  • Calls per transaction ratio
  • Percentage of PNRs touched multiple times
  • Call patterns by day of the week and time of day (including out of hours call patterns)
  • Customer contacts broken down by emails, phone calls and chats
  • Other sources of income (from airline and hotel procurement support, soft-dollar funds and supplier marketing funds, incentives from global distribution network managers, etc.)
  • Labor costs to serve the customer

What is the recommendation to resolve the imbalance?

Simply create a database of all relevant spending activities and make it available to each bidder through a secure server in the same format. The more data bidders have that maps out what the incumbent already knows, the more competitive their bids will be.

With no meaningful data that all bidders can interpret and calculate, at best, you end up with a free competitive offer based on abstract quotes and more caveats than an auto warranty.

It is time to make the tendering process more transparent and balanced. There’s a lot to sort out another day, but it starts with equal data access.

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