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

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

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

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

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?

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.

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??

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????

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?

Participation

How do you handle changes to the contract mid-term?

Formal Addendum

Verbal Agreement

Other

Do you clearly define online vs. agent assist vs. full service transaction fees?

YES NoNot Sure or

Doesn’t Apply

Do you include a Non-solicitation clause in your agreement?

YES NoNot Sure or

Doesn’t Apply

What is your typical contract term for a $1m+ account

1-2 years

3-4 years

5+years or Evergreen

Contract renegotiation Trending:Increase or decrease in overall revenue

to agency

Fee Reductions

or decreased revenue Other

Fee Increases or

increased revenue

Are you experiencing more bundling or unbundling of fees in contracting?

Bundling

Other

Unbundling

Afterhours FeesInternational Rate Desk

ReportingAccount Management

Free ticket managementEtc.

Who is allowed to sign a contract on the agency side?

Officer OwnerC Level

Sales / Account

Management / Other

Senior / Director

Mgmt level

Who’s responsibility is it to resign existing business?

Account Manager

Other

Sales

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?

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?

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

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?

Normal Business vs. Afterhours (fees)

Agency Location

Time ZoneOther

Company Headquarter

LocationTime Zone

Do you charge a processing or administrative fee on top of cost for Visa/Passport processing?

Yes

Other

No

Do you include illegal booking clause/terms in your agreements?

Yes

Other

No

What % of business under $500,000 is contracted and signed?

80 -100%

Less than half

51-79%

What % of business over $500,000 is contracted and signed?

80 -100%

Less than half

51-79%

As a standard, do you charge a GDS fee (ex. $2) on top of the transaction fee?

Yes

Tried and failed

No

Do you charge an extra fee on top of transaction fee for Online Direct Connect

transactions?

Yes

Considering

No

Do you have an annual renewal clause that will automatically renew for another 12

months if no action from either?

Yes

Considering

No

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?

Anything else?