Meetings & Conventions - Charge Accounts - April
Profit taker: Under the direction of Sherley Mertz, CMP,
Nationwide Insurance's meetings and travel department made $4.5
million in 1999.Charge accounts
How some planners are turning their corporate meetings
departments into profit centers
By Cheryl-Anne Sturken
hirley Mertz, CMP, is not one to shy away
from a challenge. Last year, when her employer, Columbus,
Ohio-based Nationwide Insurance, merged its meetings and
conferences unit with its corporate travel department, the veteran
meeting services manager was handed the challenge of her
professional life running the new unit as a profit center. In prior
years, the meetings department operated as a shared-services unit,
with departments allocating a portion of their budgets for meeting
Profit margin results for 1999 were an impressive $4.5 million,
based on fees charged to internal clients as well as preferred
vendor savings and other negotiations. It was by all accounts a
solid first-year performance. But Mertz has more ambitious plans
for her department. “We didn’t reach our revenue objective. We can
do better,” she insists. “Last year was our first year, and we
probably didn’t establish our rate structure properly. This year’s
rates are much more accurate.”
Running a meetings department as an internal profit center is
certainly not a new concept. At the Atlanta-based conference
planning department of MCI WorldCom, the telecommunications
monolith headquartered in Clinton, Miss., the practice is working
well. But for others that experimented with the idea in the early
1990s, such as Ford Motor Co., AT&T and The Travelers Insurance
Co., it was less successful; all have since scrapped their
Still, for every meetings department that steps up to the
profit-making challenge and ends up walking away, there is another
willing to give it a shot. Currently, Chicago-based insurance giant
Conseco and BellSouth Wireless Data in Woodbridge, N.J., are among
the firms pursuing plans to reposition their departments as profit
Meetings departments, like accounting or marketing, traditionally
are cost centers. Why go for profit? For many planners, including
Mertz, the move begins as a demand by upper management looking to
justify meeting costs. “The objective of our department is to be a
zero-based department in essence, to pay for ourselves, with a
small profit,” says Mertz, who also is president of the North
Vancouver, British Columbia-based Insurance Conference Planners
Other planners have been proactive in planning for profit,
justifying their existence and much more. Last year, Sharon
Shively, CMP, manager of trade shows and events at BellSouth
Wireless Data, turned the company’s premium merchandise program
into a solid money-maker. By locking in contracts with quality
merchandise vendors, for items such as baseball caps, golf shirts,
cups and bags, and aggressively marketing the program’s services
over the company’s intranet to all departments, Shively managed to
pull in enough business to realize a 15 percent profit. Meanwhile,
the company got quality merchandise at competitive prices. This
year, Shively hopes to work the same magic for the meetings
department, which now handles 150 events annually.
“What I see as a money-making department is one that saves the
company money and at the same time delivers a good product at a
good price,” says Shively.
Not everyone agrees. “How can a meetings department possibly
operate as a profit center? All you are doing is moving money
around the company,” insists Sheryl Richert, manager of 3M Co.’s
St. Paul, Minn.-based corporate meetings management department.
Richert speaks from experience. Several years ago, the 3M meetings
department tried charging back for its planning services (the
department’s staff of 14 handles some 600 events a year) but
eventually pulled the plug. “It was just too much paperwork,” says
Martha Fetter, manager and senior meeting planner of conference
services at Hartford, Conn.-based The Travelers Insurance Co.,
agrees. “I am a corporate meeting planner, not a profit center. I’m
saving the company money through my negotiation skills.” Travelers
disbanded its profit center structure in the early 1990s, citing it
as too cumbersome to operate.
The way Richert sees it, any well-run meetings department can
prove its salt by tracking expenses and savings against standard
rates. Says Richert, “The savings we bring in for the company
through our preferred vendor contracts more than pays for our
For John Hulka, group manager of hospitality services at Hoffman
Estates, Ill.-based Sears Roebuck & Co., breaking even is a
sweet enough deal. Several years ago, Hulka caught management’s ear
when he proposed keeping all off-site meetings business some
several million dollars worth in-house. At the time, that business
was outsourced. “Show us it won’t cost the company any money,” was
management’s response. Hulka did.
To figure out what he needed to charge, Hulka put Sears’
off-site meetings business out to bid at eight meeting planning
companies. When proposals with fees of 8 to 22 percent rolled in,
Hulka had the ammunition he needed. He proposed bringing that
business in-house and charging a 4 percent fee on all land-based
functions. “I showed management that I could hire two planners at
$40,000 a year, give them benefits, and by charging half of what
the nearest competitor was charging still save the company a lot of
money,” says Hulka.
Last year, his department handled 120 off-site events, totaling
$6 million in meetings business. The 4 percent he earns on that,
says Hulka, gives his department a solid break-even performance. “I
am very comfortable breaking even. I don’t need to make money to
prove my worth,” he says.
In 1996, Pamela Varnon, manager of meetings and travel at San
Antonio-based Kinetic Concepts Inc., a national medical
equipment-rentals corporation, took a hard look at the profit
concept but decided against it. At the time, KCI did not have an
internal meetings department. “If you start charging people for
something you get a rebate on, you come under a lot of scrutiny.
And then you have to ask, would it really be in anyone’s best
interest if you became a profit center?” she says.
Instead, Varnon sold her bosses on the idea of creating a strong
meetings department and marrying it to the company’s contracted
travel department, Rosenbluth Travel, which had been handling
meeting requests. Some meetings were outsourced to other companies,
even Rosenbluth subsidiaries.
The way Varnon saw it, the company stood to save a tremendous
amount of money if it held on to its meetings-generated commissions
while leveraging buying power. “If you have 300 people going
somewhere for four days, that’s a lot of hotel, car and air
commissions,” says Varnon. “I told them, ‘You are spending money
and losing what you could be gaining back.’”
Today, Varnon’s staff of three works closely with three on-site
Rosenbluth travel agents handling 300-plus events a year.
Departments are charged back the actual cost of the meeting, and
the meetings department’s costs are allocated to departmental
budgets. Savings, says Varnon, are “well over $100,000 year.”
Words from the wise
Creating a profit-generating meetings department isn’t easy. Those
who have done it share the following advice.
Name a price. Running a profit center means
bringing in hard dollars dollars that more than offset expenses.
Knowing what to charge one’s customers is crucial. Keep in mind
that the meeting planning charge is above and beyond a meeting’s
actual line-item expenses, such as hotel, airfare and speakers.
Specifically, it puts a price tag on a planner’s professional
Mertz designed a rate structure based on the various meeting
planning services her department provides. For example,
full-implementation meetings from initial site research to complete
on-site handling command a higher rate than finding a speaker or
providing only contractual help. Likewise, rush meetings are
charged at a higher rate than those with a three-month lead time.
Every rate structure includes a minimum of five hours of built-in
Some corporations prefer to charge a flat fee. During the 1990s,
when Evelyn Laxgang, CMP, headed up the global events division for
Schaumburg, Ill.-based Motorola, that department charged 15 percent
of the meeting bill, whether it was a one-day seminar or a turnkey
international meeting. Laxgang now is director of the company’s
strategic programs and events. (Motorola’s current global events
team declined to be interviewed.)
Market yourself. Mertz’s main tool: the company
intranet. “It’s free, and everyone reads it,” she says. The
meetings department’s site includes a roundup of services offered
and expertise available, and touts the preferred vendor programs.
“The company has not mandated that [departments] use our services.
If they did, we wouldn’t have to worry about promoting ourselves,”
Poor marketing, says Martha Fetter, created a handicap for
Travelers’ meetings department when it operated as a profit center.
“The divisions and the departments within the company didn’t even
know we were offering our service. We had to be our own publicity
center, and that alone was a full-time job,” says Fetter.
BellSouth’s Shively developed a separate Meetings Express site
on her company’s intranet that assistants can access for help with
planning smaller meetings. “[Meetings Express] offers guidelines
and advice, but the ultimate objective is to advertise our
resources and get them to come to us for their needs,” says
It also is critical for planners to stay on top of company news.
Every time Nationwide snaps up a company, Mertz, marketing kit in
hand, calls on the newcomers. “I introduce myself, tell them what
services we can provide for them and how they stand to save money
using our buying power,” she says.
Know your competition. At Nationwide,
outsourcing is prohibited. If a department does not use Mertz’s
services, its only option is to have a secretary do the
“We want to stay close to the secretaries,” says Mertz. “They
are a powerful group of people. We want them on our side.” Mertz
makes sure her department gets invited to secretarial functions so
planners will have the chance to tout their services and expertise
to the competition directly.
Laxgang’s competition at Motorola was independent planners.
“Imagine I’m making a proposal to a division, and they are looking
at my proposal and seeing that it is priced higher than an outside
firm that gets a commission from the hotel,” recalls Laxgang.
“Those numbers are green dollars to management. They don’t see them
as staying in-house.”
Expect resistance. The toughest challenge in
operating a meetings department as a profit center, says Mary
Wiseman, CMP, is convincing employees to pay for a service they
once used for free. “They feel that because you are internal, they
shouldn’t be charged for using you as resource,” says Wiseman, a
meeting and event coordinator with The Saint Paul Cos., an
insurance and financial services company in St. Paul, Minn.
Several years ago, The Saint Paul Cos. tried running its
meetings department as a profit center, but then switched to a
system that offered a combination of internal planning and
Get it in writing. When the request for
meetings assistance comes in, Mertz recommends planners assess the
seriousness of the requesting department to commit meetings
Begin by having the requesting department fill out an official
meeting request form, with information such as number of attendees,
location, and food and beverage requirements. Respond with a
general dollar estimate in writing, and have a decision-maker from
that department sign the estimate.
“Obviously, the estimate can be adjusted,” says Mertz. “You are
trying to give them a basic idea of what the program is going to
cost. If they still are interested, set up a meeting time to really
delve into specifics.”
This cuts down on idle meetings requests and discourages the
department from fishing for resources and ideas, only to walk away
and have an assistant handle the project.
Optimize record-keeping. At the end of the
year, a department’s ability to document total savings is a
tremendous credibility tool with management.
Operating as an internal meetings department also offers a great
opportunity to create a top-notch meetings history database, which
pays dividends both internally and externally. According to Mertz,
“We show the vendors our buying power, which in turn translates
into great contracts, and we show the departments that those deals
are passed along to them.”HOW TO DO
Turning a cost center into an internal profit
center is no small feat. David Springsteen, CPA, partner at Withum,
Smith & Brown, an international accounting and management
consulting firm based in Princeton, N.J., answers some critical
Should I do it? Selling your services to other
departments can be a nightmare. You have to balance the
administrative cost with the money you expect to make. Selling your
services to the company’s clients, however, would be one way to
How should I get started? First, develop a
budget and a forecast. Ask department heads what they budgeted in
the past for meetings, and convert that into a revenue stream.
What skills does my staff need?They must be
entrepreneurial willing to sell, collect and provide a great
How should I charge? Charging a percentage of
the cost of the event can be dangerous; there’s no incentive to
save. A fee for services might make more sense.
Can I overcome internal resistance? The best
way to win people over is to let them negotiate. If using the
meetings department is mandated, employees might become frustrated,
especially if they feel they are being overcharged.
How will I know if it’s working? In 12 to 18
months, you should be at least breaking even.
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