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

Inside TMC Economics Jan. 12, 2017 • 12 pm EST www.thecompanydime.com

Questions? Click the chat icon at right or email us: team@thecompanydime.com

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

Attendees 21% 3% 48% 4% 11% 11% TMC Buyer Consultant GDS Airline Other

Speakers Jeff Klee 
 AmTrav Corporate Travel Management CEO, Co-Founder David LeCompte Jack Reynaert 
 Short's Travel Meritor Management Financial Shared Services, Manager, Global Travel & Meetings CEO Paul Tilstone 
 Don Swartz Festive Road Corporate Travel Managing Partner Buyer Resources Managing Director

Agenda News 
 Fresh U.S. government info on airline commissions Feature Inside TMC economics Pitch Using the ARC Corporate Travel Department model

NEWS

FEATURE: 
 Inside TMC Economics Jeff Klee 
 AmTrav Corporate Travel Management CEO, Co-Founder David LeCompte Jack Reynaert 
 Short's Travel Meritor Management Financial Shared Services, Manager, Global Travel & Meetings CEO Paul Tilstone 
 Don Swartz Festive Road Corporate Travel Managing Partner Buyer Resources Managing Director

TMC Revenue Sources Short's AmTrav 1% 6% client fees 16% 8% hotel commission 3% 31% 2% air comms/overrides 7% car/ground comms 22% GDS incentives 63% 10% other 30%

Airline commissions are higher than GDS incentives by a factor of two or three to one. Mike Qualantone SVP / GM Global Supplier Relations, Marketing and Partner Network American Express Global Business Travel May 2013 deposition in US Airways v. Sabre

PITCH Using an ARC CTD Jack Reynaert 
 Meritor Financial Shared Services Manager, Global Travel & Meetings jack.reynaert@meritor.com

Show%Me%the%Money! $5m$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& %2booked2 for&profiled&travelers) $1,895,689 $255.59 per2stay/pre;tax 98% thru2agency 7417 Rental$Car $276,232 2416 $114.33 per2Rental/pre;tax ENTER$ANTICIPATED$ANNUAL$PNR$Count$$ Avg.&Employee&Trips&per& (PNR=Passenger&Name&Record) 2 8700 725 Month $ Blended$ $Off0Line$ On0Line Chg.$ Net$Fee Per$PNR$Fee$Charged $20.002 $4.002 $0.01 $0.002 %$of$bookings$off0line$(direct$with$agents$via$phone$or$e0mail) 20% Revenue Annual$$$ 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 ($0.70) %2CCP 80% GDS2Conversion2Bonus2 (e.g.&switch&from&Sabre&to&Apollo) 2for232years2/2 per2yr.2($.50/seg.) $10,354 $1.19 Applies $0.502 Yes After2Hours2Call2;2revenue2$13/call2($302Expense2Charged2less2$172act.2 Cost) $1,928 $0.22 Corporate2Credit2Program2(Select:2All2T&E,2Air2Ghost,2None2&2Enter2%2 $222222222222222222222222222 <<%2of2spend2 of2spend) ;222 $2222222222222222222;222 None <<Rebate on2Card 1.6% 180% Service/Ticket2Fee2(collected2per2trip,2traveler2expense,2allocated2100%2 back2to2actual2cost) $34,800 $4.00 Sub0TOTAL$Revenue $167,919 $19.30

Direct%Expenses Expenses Annual Per PNR Cost Per Agent Sal/benefits @ $20/hr. Direct Agent Labor Cost $34,800 $4.00 $20.00 Avg. time per PNR 1 hr. Indicate cost / PNR or if direct On-Line Booking Tool Cost $ - $ - $0.00 contract with Concur Concur Expense + $.75/report = "After Hours Support" @ 2% of Trips Taken - $30 Rate per Call $4,450 $0.51 Yes 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 $25,783 Agency Performance Incentive (not to exceed % of Air) $25,783 $2.96 1.0% Sub-TOTAL Expenses $133,207 $15.31 Net cost/(profit) of management program $ (34,712)

Other%“Indirect”%Revenue%Sources ∗ 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”%Costs ∗ 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

Bottom%Line ∗ 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

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