In this month’s edition of our definition series, we will be exploring the confusing and often frustrating topic of business travel transaction fees. We’ll define the term, as well as understand its history and additional tips businesses should understand about transaction fees before signing on with a travel management company (TMC).
What are business travel company transaction fees?
On top of the client’s travel costs, these are additional fees to be paid by the client. Transaction, or service fees, are typical in both business travel and leisure travel agencies. They typically cover the travel agency’s time to research, plan and secure the travel itinerary for their client.
No one enjoys paying additional service fees. And what makes these transaction fees feel more unfair from the client’s perspective, is that they are a somewhat recent addition to the process. Originally, vendors like hotels, car services, airlines, etc., would pay a commission to the TMC if they booked their services. Unfortunately everything changed with the advent of the internet. As it became increasingly popular to book travel through online travel sites, these commissions for TMCs were dropped. Now, most travel management companies require an additional transaction fee for their services to generate needed revenue. In fact, many TMCs were forced to close their doors due to this change in the industry.
So why should companies pay for transaction fees?
The most frequently overlooked reason? Your time is valuable. Consider all of the hoops that come with traveling for business: How long does it usually take to communicate your travel itinerary with colleagues, travel managers or coworkers? Do you need approval from different departments? Is it the same process with hotels and car rentals? What about compliance during and after your trip?
Secondly, most online travel sites actually have service fees! They are just often hidden within the price or saved until the end of the checkout process (under the “taxes and fees” section). Though their sites are free to browse and research, you are often accruing a fee for their services in the end, while also missing out on the additional benefits that come with TMCs; like travel risk management and dedicated after-hours support.
What else should I know?
When looking for a TMC, it’s a no-brainer to discuss transaction fees. But, often overlooked is asking about additional perks or considerations. For example, at Christopherson we often receive perks from our vendor partners. It is our company policy to pass these to our clients. Also, our different divisions, such as our Humanitarian Travel and our Meetings and Events divisions, do not require transaction fees for some of the services offered. Even though the industry itself has changed over the years, most travel agencies still work hard to provide top of the line services, with the lowest overall costs to their clients.
Taking a holistic approach
Overall, it’s important to understand transaction fees within your agreement. But take the time to look at your travel from a holistic standpoint. By utilizing their services and automated processes, even with transaction fees, companies actually enjoy significant ROI in the long run. And more often than not, discover the additional time management benefits that come with streamlined account management, automated travel policy procedures, and 24-hour support.
Have questions about other travel management terms? Check out our posts defining the GDS and corporate travel policies. Contact us to learn more about Christopherson’s view on corporate travel management and how we save our clients time and money, while delivering peace of mind.