The Rise of Third-Party Meeting-Planning Firms
The ever-broadening role of third-party planning firms
by Cheryl-Anne SturkenJanuary 1, 2013
Finding the Right PartnerAs the former
executive director of an international trade association for 16 years before leaving in 1991 to launch his own independent meeting planning company, Walt E. Galanty Jr., president and CEO of Alexandria, Va.-based AIM Meetings & Events, has an insider's perspective on what meeting planners should look for when they seek a third-party provider.
"Start by getting some background on the company," he says. "You have to ask a lot of hard questions. Who are their clients; how long have they worked with their accounts; are they mostly from the association or corporate side; what size meeting do they typically handle; what kinds of services do they offer that might dovetail with what you are trying to accomplish? It's also important to know if they have a brick-and-mortar operation. It's not that I think everyone has to have an actual office to go to, but it's an indicator of how established a company is."
When it comes to pricing, "it depends on the service. Planners seeking site-selection services won't pay anything. The third party is compensated by the hotel the business ends up getting sourced to -- typically a 10 percent commission. Some companies charge by the hour, based on the services provided."
At AIM, where 80 percent of clients are associations, Galanty says, "our fee typically is based on how much time it will take to complete the task, from planning and execution to signing off on the master bill, because we usually provide full-service meeting management. But, say, if we are asked to sell sponsorship for an event as well as promote it to new attendees, then we negotiate an additional fee based on the income that would be generated by those services."
Other considerations, says Galanty, include "How great is their buying power? The bigger their buying power, the greater their leverage with hotel vendors, CVBs, etc., at the negotiation table. Also, what percentage of their clients are repeat business? Check references, just like you would for a new hire. There are no standards or qualifications to be an independent meeting planning company. At AIM, we have a 30-point questionnaire that we ask our new clients, because we need to right-size their meetings in order to deliver their goals and meeting objectives. I think meeting planners should take the same approach."
Maurits Coppenrath of Atlanta-based Porsche Cars North America has little time to pour over the minute details of his meeting contracts. As manager of after-sales development, he also is responsible for handling his company's regional meetings and sales promotions, and he coordinates its annual Latin America and Caribbean incentive program. It's a task, he says, that he hands over with complete confidence to his third-party partner, Deborah Rich of Scottsdale, Ariz.-based HelmsBriscoe, with whom he has worked closely for several years.
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"Every company has its own legalese, and she took the time to learn and understand our particular style of contracting, like what we will and won't pay for," says Coppenrath. "There is no back-and-forth. It's a model that is clean, efficient and to the point."
As the multibillion-dollar meetings industry evolves to meet the dynamics of a rapidly changing global economy, planners like Coppenrath have turned in increasing numbers to third-party companies, aka independent meeting planning firms, for assistance in everything from site selection to complete turnkey event management. And as these third parties have morphed into global entities with significant buying power and extensive client reach, they have become game changers, literally forcing hotel companies and convention and visitor bureaus to reassess their business models, particularly their group sales and marketing strategies.
In fact, while hotel chains and CVBs compete with each other to gain access into the meeting departments at corporations and associations in an effort to increase their share of the lucrative group market, many third parties already have moved in, advising on and performing a wide range of functions.
Their appeal lies in their individual business strengths and ability to adapt to changing client needs. Increasingly over the past few years, third-party planning companies have moved beyond the confines of traditional site-selection assistance into providing services that meeting professionals, lacking the time, budget and manpower, are eager to procure, including help with cost-containment solutions, revenue-growth strategies, contractual expertise, best-practices guidelines and government-compliance know-how.
What follows is a closer look at the evolution and impact of these increasingly important partners in the meeting planning process.
Risk Mitigators In the desperate months of 2009 and early 2010, when the recession was bottoming out, the meetings industry plunged into a sustained free fall. As corporate America slashed travel spend, Experient account managers switched gears overnight and unfurled a new battle flag. Instead of securing and placing group business, the Twinsburg, Ohio-based third-party planning company focused its efforts on managing the ballooning attrition fallout -- $6.2 million to be exact -- that its clients suddenly were faced with. Thanks to decades of partnering with hotel companies and long experience with strategic problem solving (Experient's roots go back to the creation of pioneering corporate planning firm Conferon in 1970), the company helped clients to get 91 percent of their contractual obligations written off the books. It was risk mitigation on a colossal scale.
"It didn't happen because we closed our eyes and waved some magic wand," says Andy Smith, senior vice president of Experient ESN, a 75-member account team in a work force 3,000 strong. "It happened because we absolutely embrace the third-party concept, which means being sensitive and aware of our hotel partners' needs, as well as our clients'. Having that objective makes you turn your head and come up with solutions all parties can live with."
It also helps to be a major industry player with tremendous volume buying power to leverage. In 2011, Experient and its parent company, St. Louis-based Maritz Travel, were responsible for booking some 6.4 million group hotel room nights, which generated more than $2 billion in total group spend. To put that figure in perspective, it's more than the total GNP of Mongolia and the same dollar amount the International Monetary Fund loaned to Jordan in July of this year to steady the country's battered economy. It would be very hard to ignore that kind of track record at the bargaining table.
For Amityville, N.Y.-based McVeigh Associates, which sources more than 800 meetings around the globe annually, risk mitigation for clients means a constant honing of its compliance-regulation skills as applied to the federal Sarbanes-Oxley Act, aka SOX, which set standards for corporate governance and financial practice.
McVeigh's team of 75 planning specialists, who book roughly 130,000 hotel room nights per year globally, specialize in handling pharmaceutical meetings for corporate clients, several of which are in the top rungs of the Fortune 500 list of U.S. firms. It's hardly unusual for one meeting to have attendees from several states and countries, which translates into a lot of legal legwork for the company.
"A huge portion of our time is spent working with our clients' legal and compliance teams, sometimes in multiple countries for the same event, for the same client, and where the laws vary by country and even by state," notes Frank McVeigh, president and CEO. "Over the years, we have added SOX compliance experts to our team, and the accounting department has grown considerably. Some clients are even looking to us to monitor their people -- when they arrive at the meeting and how long they stay -- to make sure they don't get into trouble. You could say we are now their gatekeepers, too."
At HelmsBriscoe, risk mitigation has moved into the top three concerns new corporate clients are voicing, according to founder and CEO Roger Helms -- right up there with site-selection expertise and hotel contracting, traditionally the 20-year-old company's core components. "It's bigger enterprise stuff today," says Helms. "Right now we are working with a large corporate client that recently bought another company. They discovered they now face substantial liability in attrition from that company's annual event. They had never looked at the meetings side of the business before."