Distribution - a few dominating actors are setting the terms

Dominating agencies serve dominating clients

There is a large number of travel agents on the market - that is supposed to mean there is an efficient  market with fierce competition. However, small independent agencies can nourish on local markets, on small and medium sized clients without competing with the large travel agencies and TMC's (travel management companies).

The big accounts with large volumes, international travel patterns and complex travel are bound to a very small range of suppliers - or groups of suppliers..

This is not surprising - large scale international travel requires international experience, access to compatible services throughout the client's organisation and the leverage ability in all regions where the organisation operates. It goes without saying that a global agency or TMC can offer very obvious benefits for a global client organisation, not least the most efficient consolidation of management information.

On the other hand, it is the biggest, most international clients that have the largest potential to utilize their consolidated business volumes to negotiate their own deals with matching national and international suppliers. Like I have said before, it is indeed possible and often recommendable to use an experienced TMC or consultant to provide their expertise in tenders and negotiations without loosing control but it is important that contracts are made between supplier and buyer. However, when the buyer is subscribing to deals made between agencies and suppliers or accepting other than total transparency of the applied terms I believe a grey zone is allowed to emerge - a grey zone that may become wider.

Every client initiative may constitute a healthy challenge to the established order.

One way to seize control and also to stimulate a healthy competition may be to appoint two or more agencies to look after different organisations or different regions. By doing so it would be possible for the client organisation to compare how they perform, given the same policy and the same set of agreements to implement. A tough task will probably be to make different agencies deliver statistics and other management information in one and the same format, measuring savings,  policy compliance and policy deviations in the terms specified and required by the client.

One factor that may have a major influence on results is the impact of the agency's own supplier preferences. A small or medium sized agency can be flexible as concerns travel suppliers - if the client organisation is more important for the supplier than the agency. A large agency or TMC, handling several large accounts,  may be more important for a large international  supplier than each of the agency's clients.

Competing agencies often work in different GDS territories. The GDS's may reward agencies for the use of their services just as suppliers may reward agencies for the business volumes they get. Kick-backs and bonuses are common-place and the access to the most favourable rates and fares in the GDS's is often restricted by yield management actions.

In order to optimize the results achieved through an authorized travel agent or TMC (bee it one or several) it is absolutely necessary to make sure the travel manager is conducting management, not just contracting someone else to do it.