A travel management company (TMC) is a business that books and services corporate travel on behalf of an employer, usually under a contract that sets fees, reporting and service levels. Choosing one is a procurement decision: define the program's requirements, issue a request for proposal (RFP, a structured document that asks suppliers to answer the same questions), compare total cost rather than headline fees, and verify claims with references. The same method applies to growing companies buying a first TMC and to larger companies testing an existing one.

This guide is independent. The site takes no supplier commission, so a recommendation to change TMC carries the same weight as a recommendation to stay.

Start with requirements, not with suppliers

Most failed selections begin with a supplier list and no written requirements. Suppliers then define the scope, and the comparison becomes a comparison of sales presentations. A requirements document should be finished before any TMC is contacted.

It should record the following:

  • Volume and profile. Annual air, hotel and rail transactions, the split between domestic and international travel, and the number of regular travelers.
  • Geography. Where travelers depart from and where they go. A TMC strong in one region may subcontract in another, and the subcontracting is where service tends to weaken.
  • Policy and approvals. Who may book what, who approves exceptions, and which rules the booking tool must enforce.
  • Duty of care. This is the employer's legal and moral obligation to protect traveling staff. In practice it means knowing where travelers are during a disruption and being able to reach them.
  • Data and reporting. Which figures finance, procurement and the travel manager need, how often, and in what format.
  • Support hours. Whether travelers need a human at 02:00 local time, or whether next business day is acceptable.

Companies without a dedicated travel manager should name an internal owner for the program before selection starts. Someone must answer the TMC's questions, and that person is often an assistant or office manager who has inherited the task. The difference between a travel agency and a travel coordinator is worth settling first, because it determines which tasks stay inside the company.

Run a proper RFP

An RFP for a small program can be five or six pages. For a large program it may run to several hundred questions. In both cases, three practices keep the result usable.

  • Send identical documents to every bidder, with the same deadline and the same pricing template.
  • Ask for answers in a fixed format, with yes, no or partial, followed by an explanation. Free text alone cannot be scored.
  • Weight the criteria before the responses arrive. A typical split gives service and technology the largest share, then commercial terms, then reporting and implementation.

Three to five bidders is a workable number. More than that produces effort without better information. An incumbent TMC should be invited to bid on the same terms as everyone else, even if the intention is to retain it.

Questions that separate suppliers

Generic questions get generic answers. The following tend to show real differences.

  • Which booking tool is proposed, and is it the TMC's own or a third party's? An online booking tool (OBT) is the web or mobile system travelers use to book. Ask what share of existing clients' bookings are made online, because this is the figure that drives cost.
  • Which content sources are connected? A global distribution system (GDS) is the reservation network that holds most airline, hotel and car inventory. The explanation of Travelport as a GDS shows what that connection does and does not include. Ask also about direct airline connections and hotel content outside the GDS.
  • How are negotiated hotel rates loaded and displayed? A last room availability (LRA) rate guarantees the corporate price even when the hotel is nearly full. Rate types are covered in this guide to negotiated, dynamic and LRA hotel rates.
  • What is the service level agreement (SLA)? Ask for the contractual response time for urgent changes, not the average achieved.
  • Who will actually handle the account? Ask for named roles, the staff turnover rate in the account team, and whether the traveler speaks to a dedicated team or a shared pool.
  • What happens during a disruption? Ask for the process, the staffing and a recent example.
  • Who owns the data, and what is returned at contract end?

How TMC fees work

Fee structures differ enough that two bids can look similar and cost very different amounts. The main models are these.

  • Transaction fee. A fixed charge per booking, usually lower online than offline. This is the most common model and the easiest to compare.
  • Management fee. A fixed monthly or annual charge, sometimes with a lower or zero transaction fee. It suits larger programs with predictable volume.
  • Cost plus. The TMC passes through its costs and adds a margin. It needs open books and an audit right to be meaningful.
  • Supplier income. Airlines, hotels and GDSs pay TMCs incentives and override commissions. These should be disclosed, because they can influence which options are shown first.

Ask every bidder to price the same sample year of transactions. Then add the items that fall outside the headline fee: implementation charges, ticketing fees, after hours service, reporting, changes and cancellations, and any charge for integrating with expense or HR systems. The comparison figure is the total annual cost, not the fee per booking.

What to check in references

References are supplied by the bidder and will be favorable. They still reveal useful detail if the questions are specific.

  • Request clients of similar size, travel profile and region, not the bidder's best-known account.
  • Ask what went wrong during implementation, and how quickly it was fixed.
  • Ask whether the account team has changed since the contract was signed.
  • Ask whether reported savings and adoption figures match the reference's own internal numbers.
  • Ask if they would choose the same TMC again, and what they would negotiate differently.

A TMC that has recently lost clients should be asked why. The answer is informative whether or not it is flattering.

Contract and onboarding

The contract should state fees, SLAs with remedies, reporting obligations, data ownership, a termination clause without penalty for sustained service failure, and a defined exit process. Terms of three years are common. A shorter term with renewal options gives the employer more leverage and costs little at the start.

Onboarding, also called implementation, usually takes between eight and sixteen weeks for a mid-sized program, depending on integrations. A plan should name an owner on each side, dates for profile loading, tool configuration, policy rules, hotel rate loading and traveler communication. Pilot with a small group before the full launch. Review performance against the SLAs after 90 days, then quarterly.

Employers reviewing an existing TMC can apply the same checklist to the current contract. Missing data, unexplained fees and unreviewed SLAs are common findings. Companies that want an outside assessment can look at travel management consulting for companies, which covers requirements, tender and contract review without supplier commission.

Some employers decide that an in-house travel coordinator, supported by a lighter TMC arrangement, suits their size better than a full outsourced model. The complete guide to travel coordination describes that role and where it fits.