Mark Pestronk
Q: Our agency has landed many new corporate accounts lately, and they all seem to have one thing in common: Despite our contract's requirement that the company book all travel exclusively through us, many travelers book using the online travel agency (OTA) of their choice or supplier websites. Do you see this as a recent, widespread problem? What can be done about it?
A: Several of my clients have expressed similar concerns lately. Some corporate travelers appear to be booking anywhere they wish, and sometimes entire divisions or subsidiaries ignore corporate mandates to book through the chosen travel management company (TMC).
The problem is already widespread and undoubtedly increasing, as younger businesspeople, who grew up booking at any website they chose, become seasoned business travelers. The phenomenon even has a name, "Managed Travel 2.0," which refers to managing travel by letting employees book anywhere as long as their travel data is captured by data collection technology.
Although some consultants see this kind of activity as beneficial to the corporation, it is a major headache for many TMCs. Most TMCs depend on transaction fees for the majority of their revenue, and the lost transaction-fee revenue probably outweighs whatever the TMC can earn by collecting data.
Putting an exclusivity requirement in a travel-management contract used to be enough to ensure that the TMC received all or nearly all of the business. A good exclusivity clause would state that the corporation will not: (a) use any other travel agency (including any OTA) or travel management company for employee business travel, or (b) book on supplier websites.
Nowadays, however, an exclusivity clause seems to be honored more in the breach than in the observance. Since it is probably unrealistic and usually counterproductive to sue a client or ex-client for breach of contract, you need to find other solutions.
I recommend that you consider both a stick and a carrot. Make it expensive for the client to book elsewhere and offer a reward for booking through you.
To make this risk-and-reward approach work, you need to have a good idea of the client's total annual travel volume. Ideally, the client can tell you its approximate number of airline transactions, even if all you can get is a rough estimate.
Let's assume that the client has 2,000 annual airline transactions, which would be about average for $1 million annual airline tickets. You could charge an implementation fee of, say $2,000, and then provide in the contract that you will waive or refund the fee if the account has at least 1,600 airline transactions (i.e., 80% of its estimated total) going through you during the first year of the contract.
To sweeten the deal, you could further offer a discount during the second year on your full-service and/or online booking fee if the account has, say, at least 2,000 airline transactions during the first year.
You may also want to consider offering some reward to the travelers themselves to get them to start using you, such as waiving your fee for handling frequent flyer ticketing for vacations for employees and their families.
Although it may seem unfair to have to offer rewards just for fulfilling legal obligations, there may be no other way to achieve your goal of having all the business go through you.