A Request for Proposal or an RFP, is an integral part of a Multinational Company’s (MNC) process of choosing their Travel Management Company (TMC). Most MNCs will handle their choice through such a process. It may however be noted, from an agent’s point of view, if you are not part of a major international TMC Network, you may never get to see the RFP of such an organisation. They are usually only sent out to the top three in the Business.
It would not be right on my part to label the Request for Proposal process as one that is only applicable to MNCs. If your Corporate Travel and Entertainment (T&E) budget is over US Dollars 10 Million per annum, you could probably handle the choice of your Agency with a RFP. It will help you to review the contenders who want to handle your Corporate Travel business, on an even playing field. To use a hackneyed phrase, “you will be able to compare apples, with apples”. Undoubtedly, the process will facilitate a well researched final choice of your TMC.
Who should handle the setting up of the RFP?
Having decided to set up a Request for Proposal, who in your organisation should construct and run the RFP? Traditionally many companies, leave the job to a Procurement professional, or their own Travel Manager, if they have one. I personally, would not leave it to a Procurement Manager. Why, you may ask. The answer is: Corporate Travel is a complicated business. A lot more complicated than most travellers would agree it is. As I had mentioned in an earlier blog, it is not the same as buying tyres or furniture, where it is quite easy to compare quality and price. In buying Travel, one would have to go into intricate processes of ordering and fulfilment; of quality and control; technology and communication. Today, TMCs employ significant levels of technology, to provide clients with Travel services. It will take a person who is not familiar with the provision of travel services, a lot of reading and learning, just to understand processes involved. It can prove to be a colossal waste of a procurement professional’s time. If I was to make the decision as to who should handle the RFP from the Corporation’s side, I would either choose the Travel Manager on my staff payroll or, a professional external Travel Consultant. The person should be completely conversant with the booking process of airline seats, hotels and transportation. He or she should know the basics of what can, or cannot be handled by the Global Distribution System (GDS), employed by the TMCs and all related processes. The person should be able to look into to Accounting processes, including Card Payment solutions, Account Management and problem solving capabilities of the TMC. Finally, they should be able to look at pre and post trip reporting together with emergency handling capabilities.
What items should the Request for Proposal cover?
Really, anything related to business travel, can go into a Corporate Travel RFP. I have seen RFPs that are almost a hundred pages long; sometimes, more. It really depends on what level of detail you will want to go into. The RFP must cover the whole process. From start to finish. I would approach it in a logical manner, starting with the information on the Travel company, and the ordering process. Firstly, you could ask for some information on the TMC – ownership, years in business, size, volumes handled, etc. The response should give you an idea of the type of company you are dealing with, it’s pedigree, and overall capabilities. Then, you would need to decide, whether or not your travellers will work with an Online Booking Tool (OBT). Today, the major GDSs are able to offer customers, an OBT. You may ask why you would want to ask your travellers to make their own bookings. If your travellers can handle the simple (it is really simple), process of making a booking, you will be able to negotiate a lower transaction fee with your TMC. In this section, you will need to ask for the various OBTs the Travel company works with, and processes involved in training your key staff. They will need some basic training to handle travel bookings. Again, if you do not wish to take the process to fulfilment (issuing of the ticket), that part can become the job of the TMC. In other words, your staff make their own bookings; but the TMC will check the booking and issue the ticket. If you do not want to bother your staff with the OBT, the entire process of booking and fulfilment can be handed over to the TMC.
It would be prudent to go into the TMC’s telephony systems: Interactive Voice Response (IVR), established minimum call waiting times, rate of abandoned calls, average transaction times, call over-flow handling, etc. It is also important to check on their email management systems, it’s capabilities and establish turn around times, for both telephone and email transactions. Next, you can check on the TMC staff capabilities and qualifications (courses successfully completed), and look at the whole booking process including alternatives, and how many they would offer. You will need to decide on the number of alternatives the TMC has to come back with. It must be remembered that the more alternatives you ask your TMC for, the higher will be the transaction fee. Obviously for more work, you will pay more. Today, all tickets are electronically generated; so ticket delivery is not really an issue. You will need to go through pre-trip and post-trip reporting. Why is pre-trip reporting important? In the case of emergencies, you will need to know where your travellers are, at any given time. Pre-trip reporting can provide you with the information. Post trip reporting should not only just cover Itinerary and ticket costs; it should also cover information like city-pair reports, destination data, Airline spend etc. This will give you the information on how exactly your employees travel. That in turn, can give you the required data to negotiate special Airline deals, if applicable. Do include in the RFP, to enquire what Card Payment solutions are on offer with the TMC. If you already have an arrangement with a Credit Card Company, you need to clarify that the TMC is able to implement all aspects of the facility; both the Purchasing Card and a Corporate Card you may have for your travellers. If you do not use a Purchasing Card, you will also need to ask for information regarding invoicing and credit terms. This can include electronic invoicing, if applicable. Travel Insurance is another important item, as is VAT Recovery for corporate travel. Then will come the all important section on pricing. Today, most corporates go for a transaction fee. This will need to be quoted as per separate service, and also bundled services. For example, just the air ticket, or just the hotel booking, against both of them combined together. You could ask for a different Fee for short haul, from long haul flights. Some TMCs, may argue the case for different fees for Economy and Business Class Travel. You must also cover costs for the process of booking on Low-cost Carrier (LCCs), as these are usually done outside the GDS and involve more time. You will do well to go into other booking facilities: hotels, car-hire, conferences (whether they have a MICE division), Air Charters, meet and greet services, VIP handling, etc. Do ensure that you ask the TMC for what standard reports they will provide. If you need additional monthly or quarterly reports, ask for a pricing on such reports. Finally you can go into Account Management, Emergency and 24 hour services. You must not forget the management of refunds. Today with electronic ticketing, many corporates seem to forget about Refund management. I would also add into the RFP, items like Business Reviews, quality of the reviews and frequency. The final section could be left blank for any services the TMC may have, that were not included in your own specifications.
What should be the medium of communication?
Some corporations send out a Word document for travel companies to fill up and return by a deadline. The most popular method these days, is a Spreadsheet for the TMC to fill up. Some corporations even make the Spreadsheet available online, through their own websites for TMCs to complete.
You can see the setting up of a Request for Proposal is quite an involved exercise, and one never to be taken lightly. It can be a process that could even take up to three months to complete. Selecting the right TMC could save you a lot of expenses in the long run. It can save you money, and facilitate the ability of your T&E budget to cover everything it was budgeted to cover.
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© Mano Chandra Dhas