Q: ASTA has urged travel agencies to buy their own PCs to use for
CRS service and to consider three-year, rather than standard
five-year, CRS contracts in order for agencies to take control of
their businesses. Does procuring my own computers or signing a
three-year contract make economic sense?
A: With some exceptions, it doesn't pay for a highly productive
agency to either buy its own computers or to sign a three-year
deal.
By "highly productive," I mean Sabre and Apollo agencies with
monthly bookings per CRT over about 280, Worldspan agencies with
over about 250 and Amadeus agencies over about 225.
To determine whether it pays to acquire your own PCs, you should
solicit offers both with vendor-provided PCs and without.
Then you should carefully compare the bonuses provided under the
two offers. If the additional bonuses under the no-PC offer will
total at least $2,000 per PC over the course of the five-year
contract (to cover the cost of purchasing PCs from a third party
and maintenance of a five-year term), then it will probably pay to
take the no-PC offer.
Unfortunately, the spread between the two offers is rarely as
much as $2,000 per PC.
Indeed, from at least one vendor, Worldspan, it is difficult to
get any offer for a PC-less configuration. Generally, the other
three vendors will make the offer only if you request it.
To determine whether you should take a three-year contract, you
should solicit a five-year and a three-year offer. Under DOT rules,
vendors are required to make a three-year offer whenever they make
a five-year offer, but this rule is neither observed by the vendors
nor policed by DOT.
If the bonuses under the three-year offer are at least
three-fifths as good as under the five-year offer, then go with the
three-year offer if you think (as I do not) that the offer will
still be good three years from now.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He moderates TW Crossroads' Legal Issues bulletin board.