In competitive TMC tenders, the pressure to secure the lowest possible transaction fee is intense. Procurement teams are evaluated on measurable reductions. Benchmark comparisons circulate internally. Fee compression becomes a visible success metric.
Yet the most aggressively optimised TMC contracts often introduce risks that are not immediately apparent.
The issue is not price itself. It is imbalance.
When transaction fees are reduced beyond sustainable service economics, compensation models shift. Revenue is recovered through ancillary charges, service exceptions, consulting fees, and contractual interpretation. The headline number remains attractive. The operational experience becomes fragmented.
In our advisory work supporting multi-market TMC sourcing exercises, we consistently observe that contract structure determines programme behaviour.
If service scope is loosely defined, exceptions multiply.
If governance mechanisms are vague, accountability diffuses.
If data access rights are under-specified, transparency declines.
The contract may be commercially lean, but operationally unstable.
Another common challenge is the assumption that automation can replace service design. Digital adoption is essential, but complex travel environments still require structured support. Senior executives, multi-leg itineraries, visa coordination, emergency rebooking — these scenarios expose the limits of overly simplified service models.
An optimised contract should not aim for minimal cost. It should aim for aligned incentives.
Effective TMC agreements clarify:
- What services are included vs billable
- How service levels are measured
- How escalation is handled
- How performance reviews are structured
- How technology integration supports policy
Without this clarity, both parties operate defensively.
Airline and hotel negotiations present similar risks. Rebates and discounts are often negotiated based on projected volume that is poorly stress-tested. When demand shifts — through restructuring, remote work adoption, or geopolitical change — commitments become misaligned. Compliance falls. Financial returns deteriorate.
Procurement excellence in travel is less about pressure and more about modelling.
It requires understanding how service design, pricing mechanics, traveller behaviour, and governance interact over time.
A well-structured contract balances economics with sustainability. It ensures the provider can invest in account management, analytics, and continuous improvement. It makes expectations explicit. It defines review cadence and performance thresholds.
The objective is not to “win” the negotiation.
It is to create a stable operational relationship that delivers predictable value.
When contracts are engineered with structural discipline rather than headline optimisation, performance improves — quietly but consistently.
In travel procurement, resilience outperforms compression.
