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BUSINESS TRAVEL BUYER’S HANDBOOK 2016 TMC

Selecting a Travel Management Company


H. Consider running workshops with four
or five TMCs, including incumbents,
and invite the advisory committee.
I. Assess whether you wish to do this
in-house or outsource part of the
selection process. Consider hiring a
consulting firm, but check for con-
flicts of interest.
J. Communicate with the incumbent
TMC a year in advance of any plans
to rebid. Be aware of cancellation
clauses in your current contract,
such as those that prevent early so-
licitation; never agree to such terms.
Make sure you have contractual
language that addresses a three-to-
four-month transitional service obli-
gation, should the incumbent not
win the bid.
K. Understand your internal approval
process and the levels of approval
required to award the bid, especially
THERE ARE FEW CLOSER ALLIES IN THE SUCCESS OF A MANAGED TRAVEL if the incumbent does not win.
program than a travel management company. Not only does a good TMC provide
fundamental operational and tactical support for planning trips, making reservations, II. GATHER DATA
reporting data and tracking travelers, but your agency partner also lends strategic Engage internal departments, incumbent
reinforcement and guidance. They can consult, negotiate and drive compliance. TMCs, charge card providers, suppliers
They can give clarity to benchmarking, traveler engagement, supplier relationships, and your data consolidator to collect
technology deployment and policy. Corporate clients can outsource as little or as available data by country and location.
much as they like to a TMC, leaving a lot to consider when enacting a relationship. Observe the 80/20 rule. Seek maximum
The aim is not simply about finding the right partner at the right price with the right data for the highest-volume countries
terms but also about striking the appropriate configuration and service levels. and locations and generally estimate
data for the smallest locations if not
I. LAY THE GROUNDWORK readily available.
A. Understand your company’s vision and overall objectives: cost versus service; A. Collect granular transactional data,
regional, national or multinational structure; autonomy versus consolidation; which helps TMCs develop opera-
automated or manual support; a traveler-empowered versus a mandated program tional plans and pricing propos-
or something in between; opportunities for earliest implementation. als. Break down international and
B. Survey travelers and budget heads about their perceptions and experiences; engage domestic gross and net air transac-
your internal travel council, if one exists. Consider establishing performance tions and sales. If available, also
benchmarks in key locations using different TMCs. provide a breakout of international
C. Well before embarking on a TMC sourcing project, consider an audit of your travel into regional and interconti-
existing service provider and a technology assessment, and develop one-, two- and nental travel. Include rail, auto and
five-year travel operations plans. Coordinate with your legal and risk departments ferry figures where available.
on the best approach regarding traveler safety issues. B. Provide total transactions for the most
D. Does or will your company contract directly with an online booking tool provider recent year plus the two preceding
or is that tool part of the TMC’s offerings? Consider parallel bids for both scenarios. years. Group these into unassisted and
E. U.S. companies that get an Airlines Reporting Corp. Corporate Travel Depart- assisted; telephone and online; and
ment designation can collect data, commissions and overrides and select whether domestic, regional and crossborder.
to handle travel management functions in-house or to outsource them. Provide the numbers of hotel- and
F. Document any requirements for mobile apps. car-only bookings if possible. Make a
G. Obtain senior management authority. Set up an advisory committee of travel reasonable estimate of the first year’s
arrangers, frequent travelers and managers from finance, procurement, informa- volume after implementation, espe-
tion technology, human resources, physical security and legal. Consider a smaller cially if there are likely fluctuations
selection subcommittee to evaluate proposals. Determine decision governance. Continued on page 30

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BUSINESS TRAVEL BUYER’S HANDBOOK 2016 TMC
Continued from page 27 average hold time and abandonment ance. Review their HR policies, train-
that will affect service needs. This will rates. Include agent productivity ing and turnover rates, especially for
impact staffing and total costs. statistics, such as average number frontline counselors.
C. Break down spending and transactions of transactions per year, assuming a D. Evaluate the TMCs’ automated tools
by division, location and cost center. normal number of calls per transac- and their ability to integrate with
1. Define gross transactions by the tion. Identify at-home agents and any other corporate systems.
number of passenger name records differences in productivity compared E. Determine which TMCs best
and/or air or rail tickets issued, to call centers. support the use of technology,
plus refunds, voids and exchanges. I. Provide nonguaranteed projections possibly including:
2. Ticket transactions may be defined for corporate growth plans. Review 1. Online self-booking.
as the number of air and/or rail likely volume increases or decreases 2. Automated expense reporting.
tickets issued. for the largest corporate locations, 3. Pre- and post-trip reporting.
3. Net transactions may be defined which could impact staffing. 4. Traveler tracking and other risk
as the number of air and/or rail J. Percentage of bookings made by management tools.
tickets issued minus refunds, voids phone, online and email. Determine 5. Payment system integration.
and exchanges. the percentage of online transac- 6. Tracking/refunding unused tickets.
D. Break down air, hotel, car rental, rail tions that require human interven- 7. Custom portals with profiles, policy,
and ground transportation spending tion. A high touchless transaction security and destination information.
by country. List principal suppliers percentage can reduce costs. Con- 8. Mobile apps for travel.
by volumes and cities, and, without sider asking the TMC for a single 9. Systems for measuring CO2 emis-
disclosing the discounts, identify online fulfillment fee inclusive of sions and offsets.
suppliers with discount contracts in touchless and touched reservations. 10. Tools for non-GDS content access.
effect. Provide additional informa- K. Share of total hotel room nights and F. Consider the TMC’s role in account
tion for miscellaneous activity, such car rental days booked through the management, negotiation services,
as after-hours service calls, use of current TMC and the percentage of policy consultation, process in-
international rate desks, navigational hotels that pay TMC commissions. novation, e-commerce integration,
support and non-global-distribution L. Payment process, including billing meetings and incentive management,
system bookings. Include transac- and payment configuration. and any related fees. Will you require
tion-related support services, such as M.Gather baseline data on fees paid for or encourage bidders to offer meeting
point-of-sale billing, relocation, car collateral services (e.g., nonrefundable services and separate pricing?
hire and limos, credit card reconcili- ticket tracking, pre-trip notifications, 1. Ask the TMC about its suppliers,
ation, integration with a crisis man- consulting services, carbon dioxide including GDSs, and seek alignment
agement tool, meetings management emissions reporting, custom report- of incentives for supplier support.
and supplier sourcing. ing, meetings/events support). 2. Determine who will obtain hard-
E. Define the benefits and shortcomings or soft-dollar benefits and fund
of the current service and staffing III. NARROW THE FIELD agent incentive programs.
configuration, including the num- A. Prequalify bidders based on company 3. Determine TMC involvement
ber of your offices where the TMC procurement guidance, internal need in online booking systems and
locates staff on-site, staff by job cat- analysis and client profiles of bid- fulfillment of online transactions.
egory and unique or special services ders’ customers. Small or midsize Ensure that a TMC can deliver
provided. For on-site agents, make accounts considering a mega TMC on any specific preferences or
note of available telephone systems should investigate services the TMC expectations. Seek detailed refer-
and other equipment that the TMC typically offers customers of that size ence checks, including noncited
need not provide, and how telecom and ensure that the services meet references and lost accounts.
will be configured. Decide whether your needs. Anyone involved in the 4. Investigate how the TMC handles
you will charge the TMC for office process should sign nondisclosure refunds, an area of potentially
space, a charge that the TMC likely agreements. Consider pre-request-for- significant negative cash flow.
will add to the cost they charge back proposal sessions for understanding 5. Ask TMCs to send templates of
to your organization. potential bidders and educating your master service agreements and
F. Number of travelers who carry cor- decision-making team. local/regional addenda so your
porate cards. B. Ask buyers who have similar budgets legal department can review and
G. Identify travel patterns, including the and/or are from the same industry identify roadblocks.
number of VIP travelers, indepen- about their experiences with the 6. Understand TMCs’ ownership struc-
dent contractors and frequent travel- bidders. Speak with TMC representa- ture, board membership and board
ers, as well as seasonal fluctuations. tives before the RFP is issued and the level decision-making authority.
H. Number of calls to the TMC per process is underway. 7. Given the frequency of industry
transaction, average call length, C. Consider how the bidders balance acquisitions, understand how your
percentage answered in 20 seconds, and measure service and cost avoid- business would fit into a TMC’s

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TMC BUSINESS TRAVEL BUYER’S HANDBOOK 2016

portfolio in the event it is pur- fect service offerings, the winning 1. Expect service delivery to be dif-
chased by another TMC. There TMC will have to observe them. ferent in every country. The best
is leverage for TMC clients to C. Ask for information on the TMCs’ service available in each market
enhance commercial and service- ownership, offices and call centers, might not be available from the
level terms. operating hours and after-hours same brand of TMC.
service and support, years in 2. Bring local travel managers into
IV. PREPARE & SEND RFPS operation, headcounts, agents’ av- the process as early as possible.
If you do not conduct workshops, a erage years of industry experience Decide early if the local man-
prequalification process or an RFI and length of time with the TMCs, agers will be on the selection
that narrows your bidders list, require preferred GDSs, online booking committee or advised of the
TMCs to meet minimum criteria to adoption rates, consortia mem- decision; buy-in can help later
receive the RFP. Otherwise, you may berships and negotiated pricing with implementation.
be obligated to evaluate responses that programs. Assess: 3. Not all agencies carrying the
are not appropriate for your business. 1. Audited financial statements. same name or brand are owned
Customize any generic RFP template. 2. Number and size of other com- or controlled by the same entity.
Allow TMCs at least one month to mercial accounts. No global TMC owns all its
respond or six weeks for a multinational 3. References from customers offices. Check each company’s
proposal and slate at least four to six with accounts of similar size, ability to deliver seamless service
weeks to evaluate responses. Also in similar industries and with across its network. Questions
allow enough time to negotiate with a recent implementations, as well may include:
shortlisted or winning bidder. Schedules as those recently lost for reasons a. How are partners in the vari-
often underestimate the time required. other than consolidation. ous countries contractually
Include the following in the RFP: 4. Number of staff to be dedicated committed? Ask to see the
A. Bidding rules and information to your account and the experi- service-level agreement to
about weighted criteria, informa- ence of those agents; transac- which all local TMCs have
tion security and data privacy tions, calls or dollars each agent committed. Find out what
requirements, standard terms and is expected to handle per day; happens if one leaves the net-
conditions, whether you’ll require and agent incentives for booking work or gets sold.
an in-person presentation and a preferred vendors. b. Do the various TMCs have
timetable for the process. Consider 5. Call-overflow procedures and the same technology across
two phases, the first to eliminate whether backup will be provided in the globe?
weaker bidders and the second for case of emergencies and absences. c. How will the data be delivered?
best and final offers. Live presenta- 6. Account manager roles and time d. Will the account management
tions, if carefully orchestrated, can allotted to your account versus be central or local? Insist on
reduce time for final negotiations other accounts. a central global account man-
and often show major differences 7. Agent training procedures. ager, as well as local support,
in the finalists’ commitment to 8. Complaint resolution procedures. so everything comes together
and interest in your business. Ask 9. Access to and reporting on non- in one place.
for senior TMC officials to attend, GDS content. e. How will the TMC solve
and in exchange, be ready to have 10. Quality-control processes. local complaints?
your senior people there. 11. Whether traveler profile systems f. Will a local office or a central
B. Your organization’s mission, are stored in GDSs, accessible call center serve you?
growth plans, travel policies, to travelers online, synchro- g. If considering a regional call
objectives, requirements, data, nized with the online booking center, understand how and
current service configuration, product, accessible for meetings where ticket fulfillment will
service expectations, current pre- management and customized be managed; understand
ferred suppliers, reservations and to accept U.S. Transportation any currency, tax and lan-
payment methods, and projected Security Administration- guage implications for central-
changes in volume. Tell the bid- required data. ized fulfillment.
ders about your company, its line 12. Emergency services; call rout- h. Ask for references from
of business, its culture and other ing; reservation changes; inter- global accounts.
key factors. Include descriptions national services like passport, E. Meetings services. Is there
from websites and public docu- visa, legal and medical referral; dedicated meeting planning staff ?
ments and show how your com- security alerts; communica- What types of meetings manage-
pany is successful by geography tion resources; meet-and-greet ment technology are available? Are
and product or service. Include all services; ticket tracking; mobile incentive travel management ser-
global and local travel policies or tools and low-fare search. vices and destination information
at least summaries. These will af- D. Multinational services. available? If you use a non-TMC

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BUSINESS TRAVEL BUYER’S HANDBOOK 2016 TMC

meetings company, will the TMC a common currency for bid-by- labor and other direct oper-
book the air travel components bid comparisons. Consider fully ating expenses, TMC profit
of meetings, and how is this loaded and management fees or and overhead.
configured and managed? Include transaction fees with breakouts. ii. Provide an area in your
service standards for transient Fully loaded fees place risk on spreadsheet for bidders to
and meetings travel or ask for the TMC where costs escalate, list categories of expenses,
minimums from the bidders to and they are less complex to including salaries and ben-
compare and negotiate in the final manage but less transparent efits and other direct costs
contract for selection. than cost-plus, in which all costs like technology, telephone
F. Reporting. are identified and a separate fee and delivery fees.
1. What types of reports do the for profit and overhead is stated. iii. Fees to cover overhead and
TMCs deliver? Are graphical 2. Determine a preferred TMC profit should be expressed as
summary and pre-trip audit financial configuration. a flat amount per transaction,
reports available online? Who will a. Transaction fee: Agree upon rather than a percentage of
run pre-trip audit reports? a definition depending on air volume, to ensure there is
2. Is there an online reporting tool such criteria as online or no incentive for the TMC to
that lets you review your own offline; domestic, regional charge higher ticket prices.
data? Does the online reporting and international; bundled or iv. Determine if and how the
tool allow you to query the data- unbundled; assisted, unas- TMC measures, divides and
base or only produce standard re- sisted and touchless. Typically, distributes override money
ports? Are tablet- or smartphone- transaction fees are defined received from airlines and
optimized reports available? as charges for airline ticket other suppliers.
3. How often will reports be purchases, although some v. Require a breakout of any
provided, and how soon after arrangements also include services for which additional
the end of a reporting period? separate charges for hotel- and fees will be charged. TMCs
What is the primary data source car-only reservations and for often differ in defining
for pre- and post-trip reports? refunds and cancellations. direct and overhead expens-
How is data quality ensured, and i. For calculations of a trans- es, but they should provide
how is information matched and action fee, determine if comparable numbers for
cross-referenced when consoli- revenue should be retained profit and overhead.
dated from multiple sources? by the TMC or returned to vi. Determine if fees are to be
4. Can reports present detail by the company. All revenue paid at ticket issuance or
department and down to the should be segregated per are due quarterly, monthly,
traveler level? client and location and weekly or at the point of sale.
5. Are global reports available? accounted for as a set-off Will these be paid locally per
How—and how effectively—is or fee reduction. This may office, per country, or, less
data gathered from foreign loca- be impossible for centrally common, by global payment
tions? What is the time line for paid overrides, but these from headquarters?
receiving global reports, and how can be estimated for credits. vii. Determine how hotel
often are they updated? Are de- Different models may work commissions are recovered
livery and accuracy guaranteed? better in some countries and managed.
6. How can travel and payment than in others. It is vital viii. Create a service-level agree-
data be consolidated? that each office knows what ment with, at the client’s
G. Financial and billing information. it is paying for and receiv- option, a financial incen-
1. Provide a spreadsheet in the ing. Distrust can arise if tive to the TMC for meeting
RFP for TMCs to complete, so revenue is not broken out. specified key performance
proposals are returned in the ii. Require details of optional indicators and a penalty for
same format. Separate TMC rev- value-added services and underperformance. TMCs
enue into base airline commis- costs. If the TMC is pro- may propose a KPI that also
sions, overrides, hotel and car viding the online booking generates a payment for
commissions, GDS incentives system, find out when a overperformance. Measure
and other. If applicable to the booking becomes a transac- performance each quarter,
financial model requested, break tion chargeable with a fee. and adjust fees accordingly.
down TMC expenses, including b. Management fee. Ask the TMC to list methods
overhead and profit, labor costs, i. The TMC returns all com- of measuring each KPI. Ask
salaries and benefits and other mission revenue to the each bidder for its model with
direct costs like technology, client, which pays the an upward and downward
telephone and delivery fees. Use TMC for the cost of direct scale. The increments should

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be fair so that real improve- matic rollovers, but rather document changes to them.
ments are rewarded and only that you’ll evaluate the relationship I. Reduce the field to two or three finalists.
bad performance penalized. and whether to continue at least every
c. Depending on the size of the three years. VI. NEGOTIATE
account, there are opportuni- C. Put financial implications in the A. Depending on the finalists’ best and
ties to involve the TMC in context of the services provided. final offers, determine whether you
some type of agreement to Base the decision on more than the need to negotiate with all finalists or
provide cost savings to the proposal alone, including cost of only the leading bidder. Determine
client in the form of savings change and risk, the quality and the appropriate fees and other terms
on air, hotel and car spend- experience of the key people you will accept.
ing. These agreements can be assigned and the cultural fit. B. Require a solid rationale for any
complex but offer potential D. Get bidders to answer and clarify requested changes.
differentiation among the any questions your organization C. Contracts should contain definitions
TMCs. Such an agreement may have. of key business phrases, plus sections
may include a financial incen- E. Invite the bidders to present and for, financial, service-level agreement
tive and/or penalty. take questions on their proposals and data privacy and security.
while sticking to an agenda. En- D. Review your company’s balance-of-
V. EVALUATE THE PROPOSALS sure the TMC brings people who trade guidelines.
Develop an evaluation structure can answer operational and tech- E. Include the contingency emergency
ensuring reviews are as objective nical questions. Consider separate support plan in writing as part of
as possible. Quantify the areas of Web conferences for demonstra- the implementation package. Engage
evaluation by some sort of point tions of technology. your company’s internal risk man-
system and weight areas that are most F. Visit TMC sites that reflect the agement and security departments
important to the company. configuration you desire. Meet the to review the TMC’s security plans
A. Separate the technical propos- operations managers who would and technology.
als from the financial proposals. be assigned to your account and
Evaluate the technical proposal and see how the TMCs would handle VII. SIGN A CONTRACT
score prior to giving the evaluation changes or emergencies. A. Do not use only a standard TMC
committee sight of the financial G. Call TMC references, including contract, though you can adapt a
proposals. Evaluating both simulta- recently implemented or lost accounts. template to fit your needs. Al-
neously may color the judgment of Call clients not included on the refer- ternatively, use a form that your
the technical committee. ence list. Be prepared to share results procurement department or general
B. Have your organization’s legal depart- with the TMC. Consider giving the counsel requires.
ment review requested changes to references a survey. 1. Formulate a document that
your terms and conditions. Make sure H. Compare the financial offers and reflects your legal, service and
bidders agree to provide transitional staffing proposals on spreadsheets. financial considerations. Con-
services if you exercise without-cause Have financial managers review sider providing this early in the
termination. Do not agree to auto- proposed fee structures or any RFP process, asking bidders to
review the legal language and
return redlined copies. Alter-
Global Distribution Systems natively, provide a bulleted list
of requirements for the TMC
Most corporate travel bookings are made on global distribution systems. The to incorporate into its contract.
best GDS differs per country, in part because of the supplier content available on Either approach will speed up
each one. Don’t defer your choice to your travel management company, as GDSs contracting with the finalist and
incentivize TMCs to reach contracted volume thresholds. ensure the winning TMC won’t
I. GDSs provide real-time data about flight schedules, airfares and seat availabil- claim surprise about standard
ity and process airline reservations. They also provide availability and booking terms during final negotiations.
support for hotels, rental cars, trains, limousines and ancillary travel services. 2. Do not award the business until
II. They store travelers’ booked itineraries as passenger name records and pass after you have both agreed to all
booking information to agency accounting systems. the contract terms and conditions.
III. They store passenger and corporate profile information so they can transfer it B. Contracts should contain specific
into reservation records automatically. requirements, including service-
IV. TMCs lead most GDS implementations, but they may consider alternatives as level agreements, and should define
some suppliers seek ways to work around GDSs. expectations and financial incen-
V. Online booking tools connect with GDSs to obtain inventory and allow tives and penalties.
for pricing and reservations. 1. Consider positive financial incentives
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TMC BUSINESS TRAVEL BUYER’S HANDBOOK 2016

Continued from page 33 and limitations in working with not be servicing your account, as
for high performance. your suppliers. business changes they may be able to
2. Include criteria for an overall rating K. Understand claw backs and service you in the future.
on meeting program objectives. contingencies linked to any sign-
3. Build in savings and service met- on bonus or upfront incentives. VIII. IMPLEMENT THE ACCOUNT
rics but leave the TMC latitude to L. The TMC may seek to include A. If the incumbent does not win
develop its vision for servicing the clauses that require you to: the bid, start work quickly on the
account. Criteria might include: 1. Pay for all airline tickets using transition. Discuss the process
a. Phone response and callback time. a credit card or ghost card with all divisional travel managers
b. Ticket, invoice and manage- system and appoint the TMC as and TMC account managers.
ment information accuracy. authorized signer on all credit- B. Develop a schedule that clearly
c. Surveyed traveler satisfaction. charge forms. defines implementation steps and
d. Use of negotiated rates and 2. Indemnify the TMC against all responsibilities. Consider introduc-
preferred suppliers. airline debit memos arising from ing the program throughout the
e. Online booking adoption allegedly unauthorized credit company, especially if it is global.
ratios and/or unassisted card transactions illegal reserva- C. Solicit the TMC’s help with mate-
online booking ratios. tions made or required by the rials for travelers and arrangers.
4. If the TMC will fulfill online traveler, such as hidden-city Consider a phased approach at
bookings, the service-level trips, and against claims asserted one site, country or region and
agreement should detail ser- by the outgoing travel agency. allow feedback before proceeding.
vice expectations for ticketing, 3. Provide copies of your travel poli- D. Host a meeting between the outgo-
changes, refunds and support. cies and all existing air, hotel and ing and the incoming TMCs to
C. If the winner’s proposal contained car discount contracts, as well as make certain all parties agree to the
useful, measurable promises of all profiles and unticketed reserva- transition timeline and other profes-
performance, incorporate all or tions, if possible. sional courtesies.
part of the proposal into the con- 4. Refrain from using any other E. Include field offices in the implemen-
tract or as an addendum. travel agency. tation. If the TMC will have onsite
D. Consider obtaining the TMC’s 5. Not hire away any of the offices at remote locations, ask if it
consent to retain a third-party TMC’s employees during the will allow local staff to choose the
auditing service to verify savings agreement and for at least six TMC-employed manager and agents.
and contract compliance. months afterward. F. Communicate savings and service
E. Determine for how long pricing 6. Pay for tickets and deficits accrued goals to the TMC and conduct
will be fixed and whether to allow before termination. monthly and quarterly reviews.
for a pricing adjustment during 7. Acknowledge a disclaimer that Evaluate infrastructure costs up front
the contract term. However, when the TMC is not responsible for and document start-up costs.
inflation is low, it is not common supplier errors or losses beyond G. With the marketing or commu-
to provide for price adjustments. your control. nications department, develop an
F. Require quarterly and annual M. Bidders have made a considerable employee communications plan.
reviews and options for an addi- effort to put together a proposal and Prepared by Jay Boehmer with assistance
tional year or two. to respond to your RFP. They deserve from industry lawyer Mark Pestronk
G. Consider requiring the TMC to honest, general feedback. Treat them and Corporate Travel Buyer Resources
rebate some or all commissions with respect; although they may principal Donald Swartz.
or overrides attributable to your
volume, but recognize that such
revenue may be quite small. TMC Mid-Office Quality Control
H. Contracts commonly last three to
five years, but they often allow either The filters and policy management embedded in your online booking tool should
party to terminate for breach with manage most of your policy requirements. Travel management companies use
30 days’ written notice and with programs that review reservations to be sure the booking reflects the best available
opportunity to cure the breach. Con- price and that the arrangements are correct. Such programs cover:
tracts sometimes also allow you to I. Quality control: Review passenger name records for data consistency and
terminate without cause with 90 days’ required information like charge card details.
written notice at any time. II. Fare checking: Repeatedly scan global distribution systems for cheaper seats.
I. Make sure your firm owns all III. Trip improvements: Enable wait-list clearance, seat checking and automated
profiles and reservation records so frequent-flyer upgrades, and scan GDSs for preferable bookings.
you can transfer them to another IV. Data collection and reporting: Gather data from GDSs and transmit it to data
TMC at the contract’s end. intelligence platforms or other applications.
J. Specify the TMC’s responsibilities

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