Hidden Fees - What you don’t know can hurt you

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Hidden Fees - What you don’t know can hurt you

Whoever said, “What you don’t know can’t hurt you,” obviously never booked travel for their company.

For years Travel Management Companies (TMCs) have effectively buried hidden margins in the corporate travel triumvirate: flights, hotels, ground transportation. And for the most part you would have to be Indiana Jones to unearth them. We aren’t talking about straight forward transaction fees. After all, everyone should be paid for the services they provide, which in the case of a reputable Travel Management Company is the ability to smoothly orchestrate the movement of sometimes hundreds of employees around the globe. But that transaction fee, albeit warranted, should always be spelled out clearly.

Unfortunately, many of those in our industry have continued the art of levying hidden charges / margins on their corporate clients. A half-dozen executives flying round trip from Boston to London can easily cost a company hundreds, even thousands of dollars in hidden mark-ups.

It’s also not uncommon for some TMCs to push a company’s travel itinerary to an airline that best suits their own monetary agenda. A travel company which relies on hidden commissions / margins is always likely to be drawn to higher value tickets as it provides the best returns for them. 

It means the customer does not know that the transatlantic business class ticket costing £4,000 would really have cost £3,500 with £500 going to the TMC. A company sending 50 employees from Boston to San Francisco for a conference, with flights, hotel and ground transportation, could have expenses in the vicinity of £35,000-£40,000. But what many TMCs will then do is tack on enough hidden charges to inflate the cost by an additional 25-30%, or just over £11,000. And the larger the company the more unlikely those fees will ever be found, where they are often buried in the company’s labyrinth-like accounting system. 

So now that we know there’s a problem, what are the suggestions to combat it?

  1. Know your costs upfront. When working with a TMC make sure you are just working on cost plus transaction fee not cost, plus commission & hidden mark-ups & charges plus fees.
  2. Lumps on your plastic. If your TMC asks for a company credit card and lumps charges together “to make things easier for the billing,” your radar should go up. You don’t want to see one big charge at the end on your credit card. You need to see each line item spelled out so you know you are getting what you paid for.
  3. Ask for an audit. Don’t be afraid to ask for an audit breakdown of all costs. If your TMC refuses, question what they have to hide. The overall hidden fee problem leaves corporate travel departments with incomplete data to prove they have met airline contractual obligations and to effectively negotiate new agreements; this can lead to higher fares being paid by the company.
  4. They work for you. TMCs are notorious for signing and plugging you into a cookie cutter program. They sell you on personalization then set you up to be the same as everyone else. If they don’t have the personalization you need, then they may not be the TMC for you. Personal service. Will your concerns be routed to a call center in India or to someone at the main office? Will your hold times be measured in minutes, hours, or by a calendar? Only work with a TMC that will be prompt and give you the service you expect.  As the CEO of a Travel Management Company I am acutely aware that our industry must change how we service our clients, less we all be painted with a broad brush. The key is total transparency… know your costs upfront. If those costs come back disproportional to what was agreed upon at the outset, then immediately request an audit. And if the TMC you are working with refuses to comply, then maybe it’s time they hit the road.