Choosing CRS contract options

We will begin our CRS renewal or conversion negotiations in the near future. We're not sure if we should get a three-year or a five-year contract.

We also are wondering if it is better to buy our own PCs from a third party or to get them from the CRS vendor.

What do you recommend?

A: There is no single correct answer for every travel agency.

It depends on two basic sets of factors: those that deal with your own business and those that deal with what the vendors are offering at any given time.

In this column, we will discuss the factors that pertain to your business.

In next week's column, we will cover what each of the four vendors is offering these days.

Every travel agency faces four strategic options:

If your primary goal is to get the best bonus plan, then the four choices presented above go from worst to best.

A five-year contract using your own PCs usually offers the best signing, annual and segment bonuses.

If you are interested in good bonuses but do not have the expertise to install and fix your own computers, or if you cannot afford any downtime while various parties point fingers at each other, then the third is best for you.

Most of my clients have chosen this option, which is, of course, the traditional configuration in the CRS game.

If your primary goal is to avoid the pain of shortfall bills, and if you see your CRS bookings declining as you shift to nonairline business, then you are best off with option two (three years with your own PCs).

Although your quota probably will be higher than that of a five-year deal, you only have 36 months of risk.

If you are very risk-averse (i.e., you don't want to risk either five years of shortfalls or equipment problems causing downtime), then you are best suited for option one, where you will get vendor CRTs under a 36-month contract.

Let me conclude with some unconventional advice.

If you are reasonably productive, then the reward of the five-year deal is probably worth the extra two-year risk, as CRS deals will not be as good three years from now as they are today.

Therefore, it is probably desirable to lock in those extra bonuses now.

Mark Pestronk is a Fairfax, Va.-based attorney specializing in travel law. He answers your questions in the Crossroads Legal Issues forum. To contact Mark directly, e-mail him at [email protected].