Inside TMC Economics Jan. 12, 2017 12 pm EST - - PowerPoint PPT Presentation

Inside TMC Economics

• Jan. 12, 2017 • 12 pm EST

www.thecompanydime.com

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Jay Campbell The Company Dime Journalist, Co-Founder David Jonas The Company Dime Journalist, Co-Founder

Hosts

21% 3% 4% 11% 11% 48%

TMC Buyer Consultant GDS Airline Other

Attendees

Speakers

David LeCompte

Short's Travel Management

CEO

Jack Reynaert 


Meritor

Financial Shared Services,

Manager, Global Travel & Meetings

Don Swartz

Corporate Travel Buyer Resources

Managing Director

Paul Tilstone 


Festive Road

Managing Partner

Jeff Klee 


AmTrav Corporate Travel Management

CEO, Co-Founder

News 


Fresh U.S. government info on airline commissions

Feature

Inside TMC economics

Pitch

Using the ARC Corporate Travel Department model

Agenda

NEWS

David LeCompte

Short's Travel Management

CEO

Jack Reynaert 


Meritor

Financial Shared Services,

Manager, Global Travel & Meetings

Don Swartz

Corporate Travel Buyer Resources

Managing Director

Paul Tilstone 


Festive Road

Managing Partner

Jeff Klee 


AmTrav Corporate Travel Management

CEO, Co-Founder

FEATURE: 


Inside TMC Economics

6% 8% 3% 22% 30% 31%

client fees hotel commission air comms/overrides car/ground comms GDS incentives

• ther

TMC Revenue Sources

AmTrav Short's

1% 16% 2% 7% 10% 63%

Mike Qualantone

SVP / GM Global Supplier Relations, Marketing and Partner Network American Express Global Business Travel May 2013 deposition in US Airways v. Sabre

Airline commissions are higher than GDS incentives by a factor of two or three to one.

PITCH

Using an ARC CTD

Jack Reynaert 
 Meritor Financial Shared Services

Manager, Global Travel & Meetings

jack.reynaert@meritor.com

$5m$Air/Car/Hotel$$0$Spend$$0$EXAMPLE$PROGRAM$P&L Annual$Spend Transactions Avg Airfare $2,757,819 4350 $633.98 Ticket2Price Hotel$(upon&request,&no&PNR&fee&is&charged&for&off7line&hotel&bookings& for&profiled&travelers) $1,895,689 7417 $255.59 per2stay/pre;tax 98% %2booked2 thru2agency Rental$Car $276,232 2416 $114.33 per2Rental/pre;tax ENTER$ANTICIPATED$ANNUAL$PNR$Count$$ (PNR=Passenger&Name&Record) 2 8700 725 Avg.&Employee&Trips&per& Month $Off0Line$ On0Line $ Blended$ Chg.$ Net$Fee Per$PNR$Fee$Charged $20.002 $0.002 $4.002 $0.01 %$of$bookings$off0line$(direct$with$agents$via$phone$or$e0mail) 20% Revenue Annual$$$ Per$$PNR avg.$per Airline2Commissions/Overrides2(yes&airlines&still&pay&commission&/& incentives) $2,758 $0.32 0.10% Hotel2Commissions2Recovered2(2%&to&7%&avg.&depending&on&%&net7 non) $74,311 $8.54 4.00% Car2Commissions2Recovered2(usually&very&small) $829 $0.10 0.30% GDS2Revenues2applied2(range&avg.&from&$1.50&to&$2.90/segment) $48,664 $5.59 $2.352 15707 GDS2Airline2Content2Fee2Applied2(for2web;fares2on2major2carriers2Avg.2 (;.602to2;.80/seg) ;$5,725 ;$0.66 ($0.70) 80% %2CCP GDS2Conversion2Bonus2(e.g.&switch&from&Sabre&to&Apollo)2for232years2/2 per2yr.2($.50/seg.) $10,354 $1.19 $0.502 Yes Applies After2Hours2Call2;2revenue2$13/call2($302Expense2Charged2less2$172act.2 Cost) $1,928 $0.22 Corporate2Credit2Program2(Select:2All2T&E,2Air2Ghost,2None2&2Enter2%2

• f2spend)

$222222222222222222222222222 ;222 $2222222222222222222;222 None 1.6% <<Rebate 180% <<%2of2spend2

• n2Card

Service/Ticket2Fee2(collected2per2trip,2traveler2expense,2allocated2100%2 back2to2actual2cost) $34,800 $4.00 Sub0TOTAL$Revenue $167,919 $19.30

Show%Me%the%Money!

Direct%Expenses

Expenses Annual Per PNR Cost Per Direct Agent Labor Cost $34,800 $4.00 $20.00 Agent Sal/benefits @ $20/hr.

• Avg. time per PNR 1 hr.

On-Line Booking Tool Cost $ - $ - $0.00 Indicate cost / PNR or if direct contract with Concur "After Hours Support" @ 2% of Trips Taken - $30 Rate per Call $4,450 $0.51 Yes Concur Expense + $.75/report = Booking fee @ $0.00 Direct Expenses (Ticket Issue Cost/GDS Emulation) IQCX $2,175 $0.25 IT/Support - Reporting & Debit Memo Research, Ticket Tracking, Profile etc. $2,068 $0.24 GDS Refund Tool Fees per Refund + Help Desk + WN + Other $1,379 $0.16 Office Expense, Dedicated ARC Fees, etc. $500 $0.06 Agency Management Fee $6,895 $0.79 Agency Profit as a % of Air $55,156 $6.34 2.0% 0.025 Agency Performance Incentive (not to exceed % of Air) $25,783 $2.96 1.0% $25,783 Sub-TOTAL Expenses $133,207 $15.31 Net cost/(profit) of management program $ (34,712)

∗ GDS%“Double%Dip”%Incentive%(direct%contract%between% Corporation%&%GDS)%typically%requires%at%least%$10m%Air/ Car/Hotel.%

∗ If%with%Mega%TMC%–%GDS%Financial%model%may%impact% corporate%direct%revenue%model%

∗ Corporate%Credit%Card%Rebate%%

∗ Multiple%factors%to%optimize%revenue%recovery%

∗ Dinova%–%Restaurant%Rebates% ∗ Other%revenue%sources

Other%“Indirect”%Revenue%Sources

∗ Corporate%Travel%Manager%Salary%(usually%low%☹)%

∗ Dues%/%Subscriptions%/%Training%/%Travel%Exp.%etc.%%

∗ Corporate%Staff%–%to%Manage%ARC%/%CTD%Operation% ∗ Expense%Management%Tool%

∗ Implementation%/%Help%Desk%Support%Staff%/%Interface%Adjustments%

∗ Custom%Reporting%/%Technology%Upgrades% ∗ Access%to%Hotel%Consortium%(may%apply%to%CTD)% ∗ Other%unforeseen%costs

Other%“Indirect”%Costs

∗ Each%program%/%configuration%is%unique%% ∗ Many%factors%impact%this%model%

∗ Program%Compliance%/%Adoption% ∗ Senior%Leadership%Support% ∗ Volume%Spend% ∗ Travel%Patterns%/%Dom%vs.%Intl%

∗ Amount%of%TMC%support%for%RentYaYPlate%

∗ Account%for%all%costs%and%expenses% ∗ Determine%a%reasonable%profit%for%the%TMC% ∗ Determine%with%is%the%right%fit,%RentYaYPlate%or%CTD%

∗ Track%Costs%Monthly%–%Establish%KPIs%–%Identify%&%Close%GAPS

Bottom%Line

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