Savings Accounts

Meetings & Conventions - Savings Accounts - August 2000

August 2000
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Savings Accounts

Eight case studies in unconventional cost-cutting

By Carla Benini

Everybody likes to save money. And the thrill of finding a prized item on the clearance rack translates to the workplace on a much grander scale. Of course, there’s an art to bargain shopping, whether it’s for a designer suit or a block of hotel rooms. When the savings are earned by unconventional means, the victory is even sweeter. Often, those who get the best deals have taken creative approaches to buying meeting services and saved thousands of dollars as a result. Following are some of the best cost-cutting tactics planners shared with M&C.

Water ways
As frustrating as it can be to shell out $4 or more for a small bottle of water at the hotel gift shop, consider the bill a big meeting racks up to keep its attendees well-hydrated. Kinetic Concepts Inc., a medical equipment company in San Antonio, doesn’t just pay the per-bottle price; its planners have saved hundreds of thousands of dollars by buying bottled water in bulk.

“The cost of water at a meeting is so high. Depending on what part of the country, it runs between $2.25 and $4.50 per bottle,” says Nancy Kenney, corporate meeting planner for the 1,200-employee company.

For an upcoming 600-person meeting in Scottsdale, Ariz., Pamela Varnon, corporate travel and meeting manager, estimated she would need five bottles of water per day, per person, for a total of 13,500 bottles. By buying in bulk, each bottle (with a customized label) cost her 59 cents. The total tab: $8,000. If she had opted to buy water directly from the hotel, she would have paid significantly more. At $2.25 per bottle, plus a 5 percent tax and 18 percent gratuity, the total charge for water would have been $37,000. By using her own supplier, Varnon will save $29,000 in the course of a single meeting.

Kinetic contracts with a water supplier; a premium company puts labels on the bottles and also stores some of the cases. More Kinetic water is kept at headquarters and at several hotels that are frequently used for local meetings. During the past three years, the firm has saved an estimated $300,000 on drinking water. Many hotels impose a fee of about 10 cents per bottle for allowing the company to bring its own.

Company picnic, take two
“It was all by accident,” says Matt Gillam, president of Enterprise Events Group in San Rafael, Calif. A Fortune 500 firm in Silicon Valley approached him with plans for a company picnic. With only a few outdoor venues in the Bay area that hold 2,000 people, Gillam thought of a space where, coincidentally, another client of Gillam’s was staging its own company picnic of about the same size the day before the proposed event. The first company had arranged for live music, games, kids’ rides and food stations. Gillam’s second client had the same type of upscale picnic in mind. Instead of breaking down the event and putting it back together the next day, Gillam could save both companies thousands of dollars by leaving the infrastructure in place. The hitch: The two were fierce rivals. “They were uncomfortable at first, but when we started running the numbers, they were OK with it,” says Gillam, who felt it necessary to protect the names of the companies so employees wouldn’t learn they’d helped the enemy. The first picnic was left intact, including the stage, lighting, all rides, even the catering equipment, since the second firm agreed to hire the same caterer. “It’s the setup and tear down that’s so expensive. This was set up once and torn down once,” says Gillam. Money saved by the second firm in setup fees was partially credited to the first company. Gillam estimates that together, the two rival companies saved a total of $50,000.

Trade agreements
There doesn’t seem to be many things IMG hasn’t traded. The Cleveland-based company has scored grandfather clocks and watches for incentive gifts. It has bargained for the use of forklifts and cranes to set up car-racing events. Countless airline seats and hotel beds have been negotiated by IMG salespeople, all in the name of cost savings. “We do between $10 million and $15 million in barter deals annually,” says Richard Hughes, vice president of financial planning for IMG, a marketing firm whose clients include more than 1,000 athletes, actors and musicians, including Tiger Woods and Monica Seles. Hughes’ current position was created by chairman and CEO Mark H. McCormack, because IMG needed to keep better track of the deals. Hughes even gives seminars within the company on how to trade.

IMG has set up a separate category within the travel department for inventory attained by barter. Hughes estimates the company has $1.5 million worth of hotel rooms, airline tickets, car rentals, courier services and telephone air time at any given point.

In exchange, IMG offers items typically sold to corporate participants at its sporting events, such as tickets, sponsorships, hospitality suites and advertising. For instance, a hospitality suite at a major car race buys IMG the use of heavy machinery needed to set up scaffolding for the event.

“The hard cost for us in providing the service may be 15 percent of the price of that service,” says Hughes. Sometimes, IMG is approached by companies looking to barter. Especially when it comes to airlines, says Hughes, they would rather part with seats than cash to sponsor cocktail parties or premium gifts.

Taking credit
There is nothing like a last-minute meeting cancellation to put a budget in the red by several thousand dollars. That was the reality faced by Donna Bacco, director of conference services and special events for Cablevision Systems Corp., a media, telecommunications and entertainment company in Bethpage N.Y., that employs 20,000. A business conflict forced her to cancel a management meeting with less than a month’s notice. She was obligated to pay the southwest Florida resort more than $120,000 in room night charges.

Or, maybe not. In a negotiating move that would result in no lost revenue for Bacco and more business for the resort, she agreed to pay $120,000 in cancellation fees if the hotel would consider it credit toward other programs she would book through the end of 2000.

“Even though they lost money in January, they were [being] ensured more business,” says Bacco. She already has booked two additional meetings at the resort to make dents in her sizeable credit line. By October, she believes she will have spent it all.

In the end, the resort will enjoy more revenue from food and beverage, spa, tennis and golf charges than would have been spent by attendees and the company at the one meeting.

“Resorts don’t want to close the door on a large corporation such as Cablevision,” says Bacco. “Even though you have these contracts, people are reasonable.”

The greenhouse effect
Kellee Magee, director of meetings and business programming for the American Nursery & Landscape Association, heard a speaker at a meetings industry event and thought he would be perfect for her group. Magee liked the fact that he discussed the new millennium not from a technical standpoint, but from a social one. But the Washington, D.C.-based association already had booked all the speakers and entertainment for its annual meeting, held in Philadelphia in July 1999. Funds for the event were dry. She looked for a sponsor, and while Nexus Greenhouses considered helping fund the speaker, “they couldn’t get a check cut,” says Magee. Then Magee remembered the speaker (who she prefers not to name) told her he happened to be in the market for a greenhouse himself. She asked Nexus to offer a greenhouse as payment, and the company agreed. “It was easier for them to come up with a product.” Magee estimates the greenhouse was worth about $20,000, far more than the speaker’s typical fee. And Nexus Greenhouses was featured in printed conference materials and banners posted at the meeting.

Into the black
The International Pediatric Endosurgery Group, now based in Santa Monica, Calif., had about $2,000 in the bank when Steven Rothenberg agreed to take on the presidency. The annual meeting had lost money every year, says Rothenberg, chief of pediatric surgery at the Hospital for Infants and Children at Denver’s Presbyterian St. Luke’s. Yet, Rothenberg says, “I had a plan.” IPEG turned to BSC Management, also in Santa Monica, to boost membership, collect past dues and bring greater exposure to the niche association. BSC also facilitated a partnership with the well-established Society of American Gastrointestinal Endoscopic Surgeons. IPEG and SAGES agreed to hold their annual meetings simultaneously.

BSC agreed to move SAGES attendees into the IPEG room block if it was not filled. (Rothenberg signed for the room block himself, in part because IPEG would not have been able to pay attrition charges.) The two groups shared the cost of rooms for guest lecturers. At the meeting, held in Atlanta in March, BSC only needed one person to staff the office. The two associations shared the cost of a VIP event and audiovisual and laboratory equipment for seminars.

“Piggybacking” on another meeting was only one budget-smart tactic. With a $10,000 loan from Rothenberg’s own pocket, a successful grant search that landed IPEG $100,000 and a supportive management company, IPEG has grown from 70 members in May 1999 to more than 250 today.

The group is now planning a 2000 meeting in Brisbane, Australia.

Building a crowd
Flora Moorman, CMP, realizes speakers on her “A” list might not come to a small local event. Moorman, president of the Greater Triangle, N.C., chapter of the International Special Events Society, feared that would be the case for John Daly, a noted event specialist and owner of John Daly Inc. International in Santa Barbara, Calif.

Daly doesn’t make it to the East Coast very often, says Moorman, who is also manager of special events and assistant to the president of management for the North Carolina Biotechnology Center in Research Triangle Park. “We’re talking about one of the busiest people in the events industry,” she says.

So she doubled the crowd and her cash resources. Moorman asked Daly to address an audience of at least 140 ISES peers from both the Greater Triangle and Charlotte chapters. The Charlotte chapter agreed to share his fee, a charitable donation to a foundation.

Moorman expects Daly to speak about creativity at a joint meeting of the two chapters in February 2001.

The big break
Another tip from Moorman: The conference center on the campus of the North Carolina Biotechnology Center hosts as many as 100 meetings a month among its seven meeting rooms, videoconferencing room and auditorium. Often, three groups are meeting simultaneously, says Moorman. Outside companies as well as internal divisions use the space.

Moorman decided to try something different on one of those typically busy meeting days. Instead of holding meeting breaks separately, she planned one huge break for all groups at the facility. Now, savings and other benefits have made shared snacks a common practice, provided groups give their OK.

The break is set up buffet-style. The facility staff spends less time setting up and has an easier time replenishing the food than with several individual break areas. Another advantage: Because people are making introductions and networking, “they spend more time chatting and less time eating,” says Moorman. “As a rule it seems people take less.”