The Rise of Third-Party Meeting Planning Firms

Finding the Right Partner

As 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.

"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."

Third Parties as Consultants

Sure, meeting planners still want the best rate possible in a hotel with the right space on the right dates. But they also want ideas and proven solutions to problems they are facing on the planning front.

Among questions they're posing to third parties: How can you help us improve attendance? What other sources can we tap to increase our marketing revenue? What kind of flexibility can I build into my attrition clause? Are there any other room-block models that will work better?

"Companies are being more selective about what shows they send their people to," says Rebecca Viani, vice president, operations, for West Palm Beach, Fla.-based Plan Ahead Events, a five-year-old global event-management company with a headquarters staff of 125. "Our clients want to know what will make them original -- what will set them apart from the competition and draw attendees and exhibitors."

According to Viani, taking the initiative when assessing a client's portfolio is often the best strategy. "We are always trying to get them to look at the big picture. Yes, we are helping you with that client event dinner, but what are you doing beyond that to keep their interest and make them want to stay involved?"

Providing advice is a necessary part of the third-party landscape, says Gary Schirmacher, CMP, senior vice president of strategic account services and industry relations for Experient. "Customers want answers. 'Should I keep going to the same city or try another one?' 'Should I meet in two cities instead of four?' As a third party, they expect you to find the silver bullet."  

Contract PowerhousesThe preparation and, often, rehashing of contracts has become a standard service for many third parties. Precisely because the founders -- and a good percentage of the rank and file -- of companies such as HelmsBriscoe and Los Angeles-based ConferenceDirect are made up of former hotel salespeople, they can tap into years of contract experience. That translates into significant value for their meeting clients as well as their hotel partners. Some third parties even have gone a step further, making contractual know-how a guarantee of their value proposition.

Such is the case with ConferenceDirect, which two years ago took the bold step of creating and rolling out its own contract certification as part of its employee educational program. As it turns out, that certification is now mandatory for all of the company's 350 associates, who in 2011 hammered out contracts for a total of more than 8,000 events. It's an angle that has borne fruit time and again, especially for one recent new client -- a charitable organization whose annual meetings spend included $15,000 in state and local taxes on hotel rooms. "They knew they were tax-exempt but had never thought to ask the hotel for the exemption," says Brian Stevens, founding president and CEO. "Well, hotels are not going to offer unless you ask, and believe me, that was one of the first things we spelled out in our contract and secured."

Denise Beran, project manager for the Miami-based National Parkinson Foundation, won't go to contract until her third-party partner has cleared the deal for sign-off. Beran, who plans and manages 12 to 19 meetings a year across the country, says she relies heavily on the vendor to negotiate and draw up contracts and notes that she typically doesn't even "speak with the hotel until we sign the contract."

That wasn't always the case. Before she began outsourcing contracts, Beran recalls time wasted and high frustration levels solving contractual disputes. "Now, If I have an issue with any property, at any point from the time we contract until we pay the final bill, all I have to do is call my vendor, and they resolve the issue," she says. "I don't spend my time chasing it down."

Legal finesse may factor heavily in settling contractual disputes, but the strength of third-party relationships with their hotel partners lends significant weight at the negotiating table when it comes to helping meeting clients clear financial hurdles. That was precisely how Scottsdale-based Global Cynergies approached negotiating down the hefty room attrition fees one corporate client faced in 2011, after a much-touted worldwide meeting became a direct casualty of the ongoing euro crisis and nearly turned into a financial disaster.

Global Cynergies, which has a long-standing relationship with the hotel, dug deep to reduce the company's attrition penalties by replacing some of the hotel's lost revenue with another piece of meetings business. Not only was the client satisfied, the hotel appreciated their commitment to resolving the issue, a process that took months and came at no cost to the client.

"We don't charge an extra dime when we are called back in to resolve disputes," notes Pat Durocher, who started Global Cynergies in 2007 and guided it from a one-person operation to a major player that booked more than 100,000 hotel group room nights in 2011, 60 percent of them in international destinations.  

Partners or Preditors?

While many in-house planners rely on third parties as welcome allies, others view them as unnecessary or even threatening.

At the International Association of Operative Millers in Overland Park, Kan., Shannon Henson, director of meetings and exhibits, has decided not to reach out to the third parties. "We are probably an association that third parties were built for: We have an annual conference of about 800 attendees with a 100-company trade show, plus two additional international conferences each year and only one conference planner -- me," she says.

"For me, it's more about a resistance to outsourcing the parts of my job that I enjoy most, the parts that keep my job interesting: site selection and contract negotiation. I also don't want to lose touch with the relationships I've worked so hard to create in more than 15 years in this industry."

A planner for an educational institute, who prefers to remain anonymous, notes that while his organization now uses two third-party planning companies, it is poised to let go of one of them, thereby saving $250,000 of the $350,000 spent annually on outsourced meeting services. "We are large enough to get the discounts from the hotels on our own," he says. "It's not really beneficial to have them doing the sourcing for us. We will keep the other company for on-site logistics."

Another association planner, who also requested anonymity, worries about perception. "My job is to take care of our meetings from A to Z. It's important that my boss feels I have enough to do to keep me employed full time. I actually know of a third-party planning company that e-mailed my boss, saying how much money they could save my organization by going with them and not keeping in-house staff. I know that many third-party planners are not this way, and they have the power of a large company behind them for negotiations, etc. But I have chosen not to go that route."

By Sarah J.F. Braley 

Data Depositories The saying "knowledge is power" is particularly true for the third-party industry. Their proprietary intranets contain a wealth of data, sometimes dating back decades, which can be manipulated and measured to fit any client proposal. Not only can they provide information on individual hotels, such as dates, rates, even feedback from other clients, they also can compare brands against each other, booking patterns by city and state, renovations, star rankings and more.

"We have rate history that goes back to the early 1990s," according to Gary Schirmacher, CMP, senior vice president of strategic account services and industry relations for Experient. "We even have food-and-beverage rankings. I don't think there is any aspect of a meeting that we don't track."

Maurits Coppenrath of Porsche Cars North America considers the depth of HelmsBriscoe's data one of its greatest value propositions. "I could waste three nights in Chicago doing site inspections or three hours online looking at websites," he says. "The information in the HB database, which is presented to me when I am considering properties and cities, I could never tap into on my own."

Lauren Cramer also relies on such insider information. As director of events for North Andover, Mass.-based User Interface Engineering, a research and consulting technology company, Cramer oversees dozens of seminars, training workshops and other events across the country. There are times when she goes with an unfamiliar venue based on the strength of HelmsBriscoe's data. "No matter how well traveled you are, there are always locations you will need more breadth of detail about," she says, and she taps into that resource regularly.

Cramer cites one recent program that took place in San Diego, where she was hesitant about a property under consideration because of its star rating. "I typically book only four-star or above, and this hotel had a three-star rating," she recalls. "So, of course, I wondered whether it was their service or maybe the location. But after I read the insider comments of some of HB's other clients who had used that property, I went with it and was very pleased. That's the type of information I could never get on my own."