contract trivia who got their contract homework to me first? shaun – travel times what is the...
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Contract Trivia
Who got their contract homework to me first?Shaun – Travel Times
What is the average length of all the CBTG contracts received for this exercise?
6 pages
Who submitted the longest written contract?
Chambers – 25 pages
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Contract Commonalities
• Appears we all have them
• 2-3 year agreements
• Mostly 3-tier pricing
• “Agreement” vs. Contract
• Various contracts
• Large• Small• Email confirmation• Letter of intent / agreement
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Common contract components
• Definitions• Term and Termination• Pricing and Payment• Liability• Agency / Customer Requirements• Confidentiality• Disclaimer• Indemnification• Assignment• Notices• Governing Law• Force Majeure• Relationship of the Parties
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Less Common Contract Components - Considerations
• Annual renewal clause• Clause for material or industry change• Illegal booking practice liability• Data protection• Audit or inspection of records• Staffing requirements• Guarantees• Public statements / logo / name usage• Non-solicitation• Confirm contracted supplier agreements with agency first• Low-fare Guarantee• Pricing Assumptions
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Contracting and re-contracting process
Who is involved?
Formal PNL process pre-sale or re-contracting?
Who does most of the talking?
Who gets involved with legal on both sides?
Typical turn around time?
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Transaction Definition
“Transaction” shall be defined as a ticket issued, which is any airline or rail ticket generated by Agency for Client using any means.”
A “transaction” is defined as an airline or train ticket issues, refunded or exchanged.
An invoiced transaction for air, rail, car or hotel travel component. If and when two or more travel components exist in one unique Passenger Name Record (PNR), only one transaction fee will be charged. (i.e. One PNR containing air, car and hotel components is one transaction fee; One PNR containing a hotel component only is one transaction fee.) Transaction fee exceptions are defined as below…”
A “Transaction” is defined as an actual ticket or invoice issued or exchange processed, inclusive of motor vehicle and/or hotel, by ALTOUR and reporting to ARC (Airline Reporting Corporation) or directly to an airline (i.e. JetBlue, Southwest, etc.). In the event that two or more tickets are required to be issued in accordance with the terms of the contract ALTOUR maintains with a supplier or airline ticketing rules, then multiple Transaction Fees will apply.
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Transaction Definition cont.
What other transactional fees need to be defined?
• Non-GDS transactions (hotel bookings, airline, etc.)• Direct connect surcharges• Hotel/car only• Afterhours call fee and/or transaction• International – simple vs. complex• VIP transaction• Rail• Bus• Visa/passport• Ancillary fees• Non-commissionable airline and hotel contracted transactions• Direct bill (hotel)• Administrative support (itinerary copies for expense report, cc research,
etc.)• Other??
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Service Level Agreements
Typical• Phone speed to answer• Abandon call ratio• Email response time• Agent error ratio• Report accuracy and delivery• Quality contract performance• Usage of contracted suppliers• Low Fare Guarantee• Service disruption response time• Survey satisfaction results• Regular management reviews• Regular meeting schedule
Not so typical• Experience level of employees supporting account• Insurance requirements• Direct bill assistance• Other????
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Service Level Agreements cont.
Internal discussion so all team members aware?
Financially tied….reciprocal?
How often do you formally review performance?
Formal matrix and back-up?
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Participation
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How do you handle changes to the contract mid-term?
Formal Addendum
Verbal Agreement
Other
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Do you clearly define online vs. agent assist vs. full service transaction fees?
YES NoNot Sure or
Doesn’t Apply
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Do you include a Non-solicitation clause in your agreement?
YES NoNot Sure or
Doesn’t Apply
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What is your typical contract term for a $1m+ account
1-2 years
3-4 years
5+years or Evergreen
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Contract renegotiation Trending:Increase or decrease in overall revenue
to agency
Fee Reductions
or decreased revenue Other
Fee Increases or
increased revenue
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Are you experiencing more bundling or unbundling of fees in contracting?
Bundling
Other
Unbundling
Afterhours FeesInternational Rate Desk
ReportingAccount Management
Free ticket managementEtc.
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Who is allowed to sign a contract on the agency side?
Officer OwnerC Level
Sales / Account
Management / Other
Senior / Director
Mgmt level
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Who’s responsibility is it to resign existing business?
Account Manager
Other
Sales
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When you have industry change that affects contract pricing, how do you handle with
contracted customers and evergreen or non-contracted customers?
• Formal announcement 30-day written notice Add to contract? Addendum?
• Itinerary note• Email signature• Other?
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What do you do with all your signed agreements?
• Store centrally Electronically Original paper copies
• What department holds these• Allowing for electronic signatures• Who prompts for renewals and when• Other?
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What trend are you seeing on signing or soft $ inclusive on contracts?
Including more signing
/ soft $ bonuses Other
Don’t see more signing
/ soft $ bonuses
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VIP Services
• Do you clearly define VIP services• Do you charge extra for this• Do you have a dedicated agent or team• Limousine bookings
inclusive or additional fee Contracted commission suppliers
• Day-before trip confirmation• Specialize phone# - priority answering – caller ID?• Other?
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Normal Business vs. Afterhours (fees)
Agency Location
Time ZoneOther
Company Headquarter
LocationTime Zone
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Do you charge a processing or administrative fee on top of cost for Visa/Passport processing?
Yes
Other
No
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Do you include illegal booking clause/terms in your agreements?
Yes
Other
No
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What % of business under $500,000 is contracted and signed?
80 -100%
Less than half
51-79%
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What % of business over $500,000 is contracted and signed?
80 -100%
Less than half
51-79%
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As a standard, do you charge a GDS fee (ex. $2) on top of the transaction fee?
Yes
Tried and failed
No
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Do you charge an extra fee on top of transaction fee for Online Direct Connect
transactions?
Yes
Considering
No
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Do you have an annual renewal clause that will automatically renew for another 12
months if no action from either?
Yes
Considering
No
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Group Air Bookings
• Different Tran Fee• What is included in Tran Fee
Flight manifests Change FOP Special reporting elements
• Consider staffing on group movement dates• Upgrades / seat assignments• Email confirmations / Call outs / Approvals• Profiled vs. Nonprofiled challenges• Airline contracting
Up-front discounts Block Charter
• Other?
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Anything else?