Do You Need An Agent? 9-1-1998

Meetings & Conventions: Broadcast News - August 1998
August 1998
Do You Need An Agent?

Travel agencies are ready to step in and help plan your meetings. Here's what the major players can do...

By Carla Benini & Maria Lenhart

Every year Digital Equipment Corp. invites 1,500 of its corporate partners to a seminar. Most are CEOs and CFOs who make decisions about future financial dealings with Digital, the Littleton, Mass.-based computer company. Needless to say, Digital wants to keep them happy. Transportation has to be seamless, registration hassle-free and problems resolved immediately.

But these duties no longer concern Digital's meeting planning team. Three years ago, the event was handed over to an agency. Fifty employees from Philadelphia-based McGettigan Partners coordinate mailings, facilitate online registration, man phone lines, book flights and reserve hotel rooms. On site, they manage food and beverage, run a golf event and much more.

The program used to be handled in-house, says Sue Vezina, Digital's events and sponsorship manager. Then the company began downsizing. From 1992 through 1997, the planning staff went from eight to three. Vezina was forced to hire from the outside, but who could be trusted with such a high-profile meeting? "We needed outside people who didn't have to be educated on every little detail," she says.

Vezina joined a growing wave of planners who outsource meetings to travel agency meetings departments. Often the client/agency relationship is nurtured in the corporate travel department, where planners and employees go for air and hotel reservations. Then, as planning staffs shrink - and agencies grow their own meetings departments - the decision to hire agency help seems logical.

For some planners, the thought of a one-stop shop is a dangling carrot that promises to make their lives easier. Mega agencies like Maritz, BTI Americas and American Express say they will plan everything from board meetings to trade shows, and even motivate a sales team. They tout a global support system and negotiating clout with suppliers. And these companies are in a buying frenzy, reeling in smaller incentive companies and planning firms. "Our goal is to be as major a service provider as we can," says Bill DeRoze, vice president of St. Louis-based Maritz Travel.

To accomplish this, Maritz and other large agencies are building business by convincing existing corporate clients to let them fulfill more - or all - of their meetings-related needs. "The trend is for corporate customers to want all of their needs handled by a single source," says DeRoze. "With Ford Motors, we started with their incentive meetings, then went on to consolidate their meetings and travel operations. With Sun Microsystems, we first handled their corporate travel, then moved into meetings consolidation."

MEETINGS, Á LA CARTE
While a rainbow of services is offered, many clients outsource only certain tasks - registration, reservations, site selection or on-site management - and keep the job of program development in-house. Logistics for Indianapolis-based Eli Lilly and Company, for instance, are handled by the central meetings management department, entirely staffed by McGettigan. "If McGettigan can focus on logistics, Lilly can focus on content," says George Odom, Eli Lilly's manager of travel and corporate meeting services.

Some companies are more willing to relinquish meeting responsibilities, albeit slowly. At Diebold, Inc., a Canton, Ohio-based manufacturing firm, employees are still warming up to the new BTI Americas-staffed meeting planning department. Ultimately, the plan is to involve BTI in all aspects of corporate meetings. "The more comfortable people become using [the department], the more responsibility BTI will be given," says Jerry Bryan, Diebold's manager of marketing services.

And agencies don't mind waiting. "Sometimes we have to work with a client for a year before they give us their meetings business," says Jay Roseman, vice president, meetings and incentives with Mount Laurel, N.J.-based Travel One. "That's the comfort level we have to earn."

At 3Com Corporation, a computer network company in Santa Clara, Calif., the transition to having an on-site agency function as the entire meeting planning department is already complete. BTI Americas, which was first hired by 3Com in 1995 to serve as a meetings consultant, quickly expanded its role. The meetings department now consists of nine BTI employees who handle logistics, determine return on investment and set program content. "Other areas of the company may handle a few trade shows, but we are essentially the meeting planning staff," says Louise Hall Reider, senior director of meetings and incentive management for BTI Americas.

AN ANSWER TO DOWNSIZING
While such a scenario may appear to threaten the jobs of in-house corporate planners, Reider says it's not necessarily so. "In some cases, a company's internal planner switches from being an employee of the company to one of the agency," she says. Reider also maintains that hiring an in-house agency enables some companies to have a larger meeting planning staff than they could otherwise afford. "When companies have hiring freezes, this is often a way around it because they can hire on contract instead."

Both BTI and McGettigan were hired by Diebold and Eli Lilly, respectively, to engineer what could be the most lucrative job trend for agencies: meetings consolidation. Corporate America is waking up to the fact that planning activities are spread out over a number of departments and employees, some of whom have never negotiated a hotel rate or signed a contract. Without the manpower or expertise to track and centralize meetings themselves, companies are turning to travel agencies for help.

"We have seen a tremendous demand for this," says John Pino, president/CEO of McGettigan Partners, which reports 220 potential consolidation contracts in the pipeline. That's triple the amount of consolidation business the company had one year ago. Agencies have developed their own consolidation packages, including software, training programs for clients' employees and supplying new staff on site.

Small Agencies Carve a Niche Despite the powerful shadow cast by the mega travel companies, meeting and incentive services are rapidly expanding at small and mid-size travel agencies. And while the megas primarily service the Fortune 500, small agencies are carving a niche elsewhere, often in their own backyards.

In the wake of shrinking airline commissions, more agencies are looking at meetings and incentives as a new and potentially lucrative source of business. According to travel agency consultant Bruce Tepper, vice president of Joselyn, Tepper & Associates in San Francisco, the trend has intensified since round two of commission caps last year. "When the first round of caps hit a few years ago, some agencies began to view meetings as an interesting sideshow, but with the second round, they're getting serious."

To help smaller players better market their meetings services, Tepper's company recently founded the Guild of Meeting & Incentive Professionals for independent planners and planners with travel agency meeting and incentive departments. Guild meetings include seminars on business development, software and other topics.

Among the 25 companies represented in the guild is Adventure Travel, a small Tulsa, Okla.-based agency. While most group travel at the agency is non-meetings-related, the company views incentive travel as an important growth area. "We're starting to handle incentive business for some of our corporate clients that have travel accounts with us," says Terry Hartnett, president of Adventure's group travel division. "We've learned that we can't live on airline commissions alone."

Realizing incentive business requires a different set of skills, Hartnett attends both educational seminars on incentive topics and trade shows such as The Motivation Show. The next step will be to hire an experienced incentive planner who can set up motivational programs for clients. "Right now we're just handling the travel end of incentive programs, but we want to do entire programs," says Hartnett.

Undercutting the Megas
Thomson Travel in Tacoma, Wash., has focused on meetings for 18 years and, according to owner Patty Thomson, has managed to thrive as a minnow in a sea of whales. "Some of our clients are turned off by the large agencies because of their high costs," she says. "And those mega agencies don't want their business because it's not large enough."

Thomson says that while the mega agencies aren't interested in meetings that cost less than $400,000, she is only too happy to take a $40,000 piece of business. And, with lower overhead than her larger competitors, she sometimes wins the bigger meetings as well. "We can and do undercut the large agencies," she says.

Thomson, who handles meetings with another full-time planner on staff, says her clients include both large and small companies, many of them based outside the Pacific Northwest and brought to her by referral. While she offers a full range of meeting and incentive services, they do not include high-tech audiovisual capability. "If a client needs major media, we steer them to a specialist," she says.

While Thomson is not worried about the prospect of more competition from other small agencies, she says she is concerned that "agencies who jump into this without knowing what they're doing will hurt the business. Some agencies don't understand contracts or how to price themselves - there's a lot of misrepresentation going on."

Jeanne Thompson, vice president of Conference and Travel Services, a mid-size travel agency with eight offices in northeastern Indiana, also doesn't expect to feel a direct impact from increasing competition. "It takes a lot of time to build this business - we've been handling meetings for 15 years," says Thompson, co-founder of the agency and a former planner with an insurance company.

Much like the mega agencies, Conference and Travel Services has made a concentrated effort to position itself as a one-stop shop, in many cases handling travel, meetings and incentives for the same client. Also like the megas, the agency is increasingly asked to take on the role of an in-house planner.

"Fewer companies seem to have full-time, internal meeting planners these days," she says. "Often our main contact is a novice, and so we handle the whole package." n M.L.

CAN YOU AFFORD IT?
For now, the price tag on a consolidation or any major meetings contract primarily limits clients to Fortune 500 companies, although a growing number of regional agencies are contracting with local corporate clients for meetings business. "On the consolidated side, all our customers are big companies, where meetings figure into at least several million dollars a year," says BTI's Reider.

Licensing consolidation software can be quite costly, too. McGettigan's Core Discovery, for example, runs $40,000 to $90,000 for various software packages and agreements.

Pricing for meetings services varies widely, with most of the major agencies offering a variety of options that are negotiated on a case-by-case basis. Many charge by the hour or by the individual service. Others prefer a percentage of the overall meeting tab or charge a flat management fee.

No matter how the bill is tallied, it's likely to be higher than the in-house tab would be, says Jean Baier Swaffer, who runs Meeting/Event Management, a travel and meetings management consulting firm based in Half Moon Bay, Calif. "The agencies have learned how to price themselves on the work they're asked to do," she says. "Employers may be surprised at how much bang for the buck they're getting from an in-house planner."

The extra revenue comes at a convenient time for agencies, who are feeling the effects of shrinking commissions and alternate booking methods such as the Internet. "Their revenue stream is being diminished," says Swaffer. "They're looking for new ways to make money."

The question is, do these agencies know the meetings business? That's still under debate, say planners. "Their concept of a meeting is from a travel point of view," says a corporate planner who works with in-house agency employees. "They're very interested in moving people, but there's more to a meeting than getting attendees there and in a bed." The planner, who requested anonymity, called their service "mediocre." As the only corporate planner left at her location after a merger and restructuring, she often feels alone in her concern about program content. "When I bring up educational issues, they agree, but they don't ever think of it. It's like it's not in their repertoire."

For those considering agency meeting planning services, following is an overview of what the megas offer.

American Express
Group Travel Management Services
Norcross, Ga.

Overview: American Express, the world's largest travel company, concentrates all of its meetings services in a division headquartered near Atlanta in Norcross, Ga., called Group Travel Management Services. While GTMS has operated as a separate entity for about 10 years, recently American Express has trained its sales force to sell meetings services as part of a package with its corporate credit card, travel management services and other products. "We know that more customers want one company to handle all their travel needs, so group services are now tied to the whole portfolio," says GTMS vice president Susan Vail.

In another recent marketing move, American Express has segmented its target market into three categories that range from multinational companies to "middle market" companies with less than $3 million in annual sales. For large companies, GTMS primarily serves as a consultant on meetings management issues or handles travel logistics for large corporate events.

"Our larger clients tend to have their own in-house planners and usually rely on us for leverage in purchasing land and air," says Vail. "For smaller clients, many of whom don't have internal meetings departments, we're more likely to provide a full range of services."

Client base: A wide range of corporations, from mid-size to multinational

Types of meetings: Two major areas of concentration are small and mid-size corporate meetings and meetings management consulting services. Incentives are not a focus.

Number of full-time planners: GTMS has about 150 employees, including 22 meeting planners at the Norcross, Ga., headquarters and 26 based on site with corporate clients.

Meetings software: MeetingSight

Meetings volume: N/A

Air volume: $8.9 billion

Fee structure: Rather than a flat management fee, GTMS offers a menu of services that can be purchased Æ la carte.

Contact: Yvonne Long, director of group travel management services, (770) 368-5444

BTI Americas
Northbrook, Ill.
Overview: When two large corporate travel agencies, USTravel and IVI Travel, merged in 1995, the result was BTI Americas. While IVI was best known for serving large corporate customers who needed consolidated meetings management, USTravel had a full-service incentive house. Late last year BTI restructured its Meeting and Incentive Management Group to reflect these different focuses by creating two distinct divisions within the department: Consolidated Meetings Management and Customized Meetings and Incentives.

Based at the BTI headquarters in Northbrook, Ill., Consolidated Meetings Management offers full-service meetings management for corporations, with BTI planners on site at client locations. The division also offers consulting services to companies that have their own internal meetings departments but need advice on consolidation, cost management and other areas. Based in Dallas, Customized Meetings and Incentives handles individual meetings and incentive programs on a per-project basis. The division is a veritable full-service incentive house and meeting planning company that can handle as much or as little as the client requests. For the most part, the division serves different clients than Consolidated Meetings, including many that were incentive clients with USTravel long before the merger with IVI.

Client base: Most clients are U.S. Fortune 500 or Fortune 1,000 companies. Clients of Customized Meetings and Incentives include Goodyear. Clients of Consolidated Meetings include DuPont and 3Com Corporation.

Types of meetings: Most meetings and incentives handled by Customized Meetings and Incentives are large and complex, with group size ranging from several hundred to several thousand or more. Consolidated Meetings, which functions as an in-house meetings department for clients, handles a full range of corporate meetings.

Number of full-time planners: Sixty at Customized Meetings and Incentives; 40 at on-site locations

Meetings software: MeetingMax

Meetings volume: $215 million

Air volume: $1.7 billion

Fee structure: Pricing in both the Consolidated and Customized areas is usually a flat management fee, although pricing methods can be worked out according to client preference.

Contact: Louise Hall Reider, senior director of meetings and incentive management, (206) 224-7767

Carlson Marketing Group
Minneapolis, Minn.
Overview: Carlson Marketing Group is part of Carlson Companies, a travel/hospitality giant that began as a trading stamp business and grew to encompass hotels, cruise ships, restaurants, travel agencies and more. Carlson Marketing Group, which handles the bulk of meetings and incentive programs at Carlson Companies, has had some growth spurts of its own, including the acquisition of three incentive/event management companies within the past year: S&H Citadel, Aegis Marketing and Incentive Dimensions. Calling itself a "relationship management company," CMG handles meetings and incentives, as well as as direct marketing, consumer loyalty programs and corporate participation in major sports events.

To a far lesser extent, some meetings are also handled by sister company Carlson Wagonlit Travel, the nation's second-largest travel agency, for corporate travel clients at on-site locations. But, according to spokesperson Patrice Vic, meetings are not a focus of Carlson Wagonlit Travel and the company has no meetings management division.

Client base: Mostly U.S.-based Fortune 500 companies

Types of meetings: Carlson Marketing Group is primarily known for incentive programs, but also handles trade shows, conferences, and sales meetings, training sessions and new product launches.

Number of full-time planners: More than 3,000 in sales offices worldwide; about 600 directly involved with meetings and incentives at the Minneapolis headquarters

Meetings software: PASSAGE

Meetings volume: N/A

Air volume: N/A

Fee structure: No standard procedure; varies according to client preference

Contact: Doug Yahnke, senior director Ð travel planning and operations, (612) 550-4181

REGIONALS MUSCLE IN While small and mid-size agencies are finding a niche with meetings, large regional agencies are also getting a slice of the pie. In some cases, the regionals have been growing almost as fast as the megas, buying up dozens of small agencies and expanding their meeting and incentive divisions to impressive levels.

One such regional is Morris Travel, a fast-growing corporate agency that now has 70 offices in the Pacific Northwest and Rocky Mountain states. Also rapidly expanding is Morris Meetings & Incentives, a division of the company based at agency headquarters in Salt Lake City. Within the past few years, the division has grown from three employees to 20, including the hiring of five full-time planners within the past year. The company plans to hire three more by the end of this year.

While only a fraction of the overall agency, which has more than 550 employees, the division is "by far the most profitable in the company - we set new records each year," says Tony Swenson, vice president of Morris Meetings & Incentives. And while MMI once derived most of its business from Morris' corporate travel clients, that is no longer the case. "While the corporate travel side is primarily locally driven, our business is all over the map - New York, Dallas, Atlanta - not just within our region," says Swenson.

While MMI handles a wide range of meetings and incentives, they typically involve 1,000 participants or fewer. Larger groups are usually referred to another division at Morris headquarters, Convention Services Technology.

While business is growing, Swenson says Morris is not attempting to compete with the mega agencies. "We take the business they don't want," he says. "A group of 50 might not appeal to a mega agency, but we're glad to have them." MMI prefers to position itself as a company that provides a happy medium - large enough to draw on the services of a corporate agency with $210 million in annual air sales, but small enough to be flexible and provide personal service.

M.L.

Maritz Inc.
St. Louis, Mo.
Overview: Maritz Inc., a St. Louis-based company that began as a pioneer in the incentive field, divides its operations into three subsidiaries - Maritz Performance Improvement, Maritz Travel and Maritz Marketing Research. While Maritz Performance Improvement handles all major incentive business for the company, Maritz Travel oversees most meetings business, running the gamut from small corporate meetings to large sales meetings to trade shows. Last year Maritz Travel formed a new division called Meetings & Business Development, taking over most of the large non-incentive meetings business formally handled by Performance Improvement. Maritz Travel also includes a division called Meetings Management that works with corporate clients who want to consolidate their meetings and travel operations.

However, there is some overlap in responsibilities, according to Donna Jones, vice president of Meetings & Business Development. "If an incentive client has a meeting, it might be handled by Maritz Performance Improvement," she says. "The goal is to provide seamless service where it makes sense."

Client base: Mostly U.S.-based Fortune 1,000 companies, including Ford Motors, Sun Microsystems and Hallmark

Types of meetings: Maritz Travel provides a full range of meetings services, including on-site meetings management and consulting. Its Meetings & Business Development division primarily handles large, complex meetings, including trade shows. Maritz Performance Improvement handles full-service incentive programs.

Number of full-time planners: About 500; 80 percent at headquarters, 20 percent working at corporate site locations.

Meetings software: Proview; Budget Manager; Impact (registration)

Meetings volume: $400 million

Air volume: $1.4 billion

Fee structure: Most frequently a cost-plus arrangement where the client is billed for the labor involved plus a negotiated management fee on top of that. Other options include a charge per attendee.

Contact: Bill DeRoze, vice president of business development, (314) 827-2903

McGettigan Partners
Philadelphia, Pa.
Overview: Founded during the Depression, McGettigan specialized in steamship travel and eventually made its name as a charter and group travel company. In the late 1970s the company changed its focus from serving consumers to companies. Today, McGettigan is less a travel agency than a project management company, where revenue from air travel, for example, represents only 30 percent of overall volume. The rest comes from its various meetings services, of which consolidation is a growing part. In 1996, McGettigan partnered with Rosenbluth International, a major corporate travel agency. The relationship enables McGettigan to pitch its meeting and consolidation services to Rosenbluth clients. McGettigan employs more than 350 people and has regional offices in Chicago and San Francisco.

Client base: Mostly U.S.-based Fortune 500 companies

Types of meetings: Seventy percent of meetings are groups of 60 attendees or fewer, though growth is in consolidating corporate meetings departments and planning customer events such as road shows. One-third of the company's business is in incentives.

Number of full-time planners: 150 in three offices

Meetings software: Core Discovery

Meetings volume: $250 million

Air volume: N/A

Fee structure: Flat rate, based on an estimate of the number of labor hours required for the meeting

Contacts: Christine Duffy, division president, eastern customer business unit (CBU), (215) 422-1245; Beth Truett, senior vice president, midwest CBU (312) 739-2431; Lori Martin, senior vice president, western CBU, (415) 835-7402

Travel One
Mount Laurel, N.J.
Overview: Since the family-owned company began in 1970, it has remained focused on the corporate market. It comprises 88 percent of the business mix. Meetings and incentives make up 7 percent, up 2 percent over 1997 figures. Travel One has enjoyed some major growth spurts. Until 1982, total sales hovered around $10 million; by the end of the decade, the N.J.-based company was up to $600 million in total sales. This year, Travel One broke $1 billion in total sales. The company employs 1,000 agents nationwide and has affiliates in 44 countries.

Client base: Mostly U.S.-based Fortune 500 companies

Types of meetings: Sixty-five percent are corporate meetings; the balance are special events and incentives.

Number of full-time planners: 20 in headquarters office

Meetings software: Meeting One

Meetings volume: $50 million

Air volume: $676 million

Fee structure: Clients can choose to be charged a management fee, commission or on an hourly basis.

Contact: Jay Roseman, vice president, meetings & incentives, (609) 222-3900

What to ASK an Agency Can the travel agency you're considering really offer meeting planning expertise? To help determine the agency's usefulness, ask the following questions, compiled with the help of Gail Bayne, vice president of Chicago-based R.D. Brown Company, a meeting, corporate travel and expense management consulting firm.

Do you provide a way to register my company's use of air, hotel and ground suppliers?

Can you offer budgeting assistance, including cost comparisons between cities and meeting facilities within a given destination?

Will you negotiate with air, ground and hotel suppliers?

Will you do site research and selection?

How do you charge for your services? Can you price out a meeting hourly, by line item and by management fee?

Is a reporting system in place to track meeting registration and expenses, as well as savings from negotiations?

Can you recommend ways to cut costs, improve the registration process and simplify communication procedures?

Can you provide a way for my company to evaluate your services regularly?

Do you provide training for our employees who plan small meetings?

C .B.

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