About Egencia Meetings & Incentives Egencia Meetings & Incentives combines strategic meetings management expertise with fullservice meeting and incentive planning, all backed by an expert team of meetings professionals and the first fully-integrated online meetings management platform in the industry. Whether your company seeks to consolidate meetings spend, effectively execute a large meeting or conference, or reward employee excellence, Egencia Meetings & Incentives is uniquely positioned to take meetings programs from concept to reality and to help organizations realize the greatest possible value from their meetings spend. Strategic Meetings Management: Solutions and Consolidation Opportunities Introduction As the meetings, incentives, conferences and events (MICE) industry bounces back after the economic turmoil of 2009, companies are reinvigorating their programs with an increased focus on improving ROI. Following the lead of the corporate travel industry, the desire for greater visibility and control over meetings and events has come to the forefront and led to increased demand for Strategic Meetings Management services (SMM). In this paper, we will explore the market trends which have led to this phenomenon and also explore the ways in which establishing an SMM program can add value and increase the effectiveness of MICE programs. Empower your meetings and incentives program For a customized MICE program evaluation, contact an Egencia Meetings consultant by calling toll-free 1 800 701 4264 1
Why Partner With Egencia Meetings & Incentives? Egencia s innovative combination of full-service program management and market-leading technology means organizations get more value out of their meetings programs than ever before. Clients realize the benefits of end-to-end strategic meetings management, extending from procurement services to event planning (design, production and logistics) to program optimization and analysis. The Egencia team embraces your program s goals, working as an extension of your business and partnering with your team to anticipate every need. Clients continue to tell us that we provide the most personalized and superior service in the industry an endorsement evidenced in our repeat business, established relationships and experienced team. Recap of 2009 Trends Although 2007 and most of 2008 were great years for the MICE industry, the economic downturn in the fourth quarter of 2008 set up 2009 to be one of the most challenging years to date. Decrease in overall volumes The downturn in MICE was sparked not only by reduced meeting and event budgets, but also by the negative press and public outcry surrounding high profile companies hosting what appeared to be large expensive events. Companies, regardless of whether or not they were publicly traded, began to evaluate not only their budgets, but also the optics surrounding any meeting that the public or their shareholders could perceive as excessive or superfluous. By March, 2009, almost all new MICE requests had come to a halt and companies began assessing the impact of canceling scheduled programs, many influenced by the actions of their competitors. For example, in Toronto most of the major Canadian banks canceled their 2009 incentive events within the same week. Other companies that were thriving financially followed suit, fearing public scrutiny, and often walking away from thousands of dollars of lost deposits in the process. Contract renegotiations Decreasing volumes led to a reallocation of resources throughout the first four to six months of the year. Rather than negotiating contracts for new events, meeting planners were renegotiating cancellation policies with hotels and other vendors in an attempt to decrease penalties and exchange deposits for future program credits. In addition, as the travel industry declined overall, hotel rates plunged as much as 20 to 30 percent, often disadvantaging those who had entered into fixed contracts years before. In cases where participants booked outside of contracted rates, organizers risked reaching their guaranteed minimum commitments, and hotels risked realizing expected volumes and revenue. As a result, hotels were often forced to reduce their prenegotiated rates to recuperate the business. Due to the expertise and market insight required for effective negotiations, many companies that didn t have professional meeting planners were at a disadvantage and often overlooked potential savings and cost avoidance opportunities. 2
Signs of recovery Although few new events were planned and executed in 2009, proposals started picking up in the fourth quarter for events in 2010 and 2011, as signs of the economic recovery emerged. By the end of the year, proposals and projected volumes started to reach 70 to 80 percent of 2008 levels. General Outlook for 2010 As the market recovers and reversal trends pick up momentum, MICE is returning to the forefront, but with a whole new set of dynamics. Competition is fierce Given the extent of lost deposits due to cancellations in 2009, clients today are taking longer to review contracts, compare options, and research providers before making decisions. Simultaneously, providers are increasingly motivated to win business and make up for losses incurred in 2009. This dynamic has, in some cases, put downward pressure on prices. Fees for some services have declined as much as 20 percent, but it is yet to be seen whether or not lower prices will lead to lower service levels as well. From a supplier perspective, available inventory still exceeds demand and therefore hotels and other venues are continuing to offer very competitive pricing for 2010 programs. It is likely that this trend will reverse throughout the year as the levels of supply and demand converge. Predicted MICE spend for 2010 appears stable While meetings and event planners are becoming more cost conscious, programs don t appear to be downsizing overall. Incentives are strong, as are some industry sectors, such as Pharmaceutical and Insurance, which did not suffer as much as others during the downturn. According to a recent Egencia survey of more than 200 travel managers, a majority expect their MICE spend to be similar to what it was in 2009, or increase somewhat 1. (See Exhibit A.) Exhibit A 15% Expected change to 2010 MICE Budgets vs. 2009 5% 2% 21% 57% Increased considerably (>15%) Increased somewhat (5% to 15%) Stay about the same (5% to -5%) Decrease somewhat (-5% to -15%) Decrease considerably (>-15%) 1 Egencia Travel Managers Survey, January 2010 3
Not surprisingly, 70 percent of respondents indicated that their main focus for MICE in 2010 would be around identifying cost saving opportunities, which in turn would help them improve the ROI on their meeting spend. Increased Focus on ROI While MICE budgets are recovering, there is an increased focus on ensuring that more and more value is received for every dollar spent. Just as it occurred years ago on the transient side, CFOs, Procurement and Travel Buyers are now focusing more on increasing the ROI from their MICE programs. As companies think about how to maximize ROI, there are five questions they should ask themselves. Question #1 Do you know your MICE spend? Although it seems like a basic question, only 27 percent of Travel Buyers surveyed at the February 2010 NBTA Master s Program in Washington D.C. admitted that they have clear insight into their corporate meeting spend 2. (See Exhibit B) Without having a grasp on where and how all MICE funds are being spent, it s difficult to even start identifying ROI-enhancing opportunities that are going to have a significant impact on the bottom line. Companies, especially those running many small meetings, often underestimate their total spend because the activities of unofficial meeting planners (such as Administrative Assistants) are often overlooked. Exhibit B Insight into Total Meetings Spend 33% 27% 40% Does not currently have clear insight Clear insight into large events, but less visibiity on smaller ones Clear insight into all spend - large and small meetings Question #2 Do you leverage your scale with suppliers? Once a company has visibility into its total MICE spend, it is able to analyze the following: (1) whether or not spend is being appropriately distributed (i.e. too fragmented vs. too concentrated) and (2) whether or not scale is being adequately leveraged with suppliers. 1) Companies that gain visibility into their total spend for the first time are often surprised to learn how fragmented their supplier base is. When this occurs, it s worth evaluating whether or not the fragmentation makes sense based on the needs of the business. For example, creating a master MICE calendar helps companies identify opportunities to coordinate events, consolidate vendors, and preference suppliers that can offer the most favorable value proposition on an enterprise-wide scale. 2 Travel Buyers and Travel Suppliers survey conducted by NBTA Master s Program in Washington D.C., February 2010 4
2) Visibility into total spend provides companies with business intelligence to renegotiate contracts with key suppliers. Meetings volume can often be directed to existing corporate suppliers to increase purchasing power, which can then be leveraged for both meetings and transient travel programs. Based on the Egencia Travel Manager survey, 48 percent of companies currently do not effectively leverage their scale and those that do, do so infrequently, which indicates they may be missing out on lower rates and value-add concessions 1 (See Exhibit C). When NBTA surveyed Travel Suppliers, they confirmed that there were strong interlinked opportunities between transient and meeting spend (over 50 percent agreed) which makes it a critical opportunity not to be missed 2. Exhibit C Leveraging MICE Spend when Negotiating with Suppliers 25% 15% Question #3 - Do your travel/meeting policies increase the ROI of business activities? In addition to corporate travel policies, companies often create meeting specific policies that take into account the objectives and budgets of their individual MICE programs. While the two types of policies may vary the more coordinated and consistent they are, the easier they will be to manage. Performing a review of these policies helps companies balance the need to control spend with the need to effectively do business. Polices that are too restrictive may have unintended non-monetary costs (i.e. worn out travelers running meetings ineffectively). Yet policies that are too loose may cause travel budgets to unnecessarily balloon out of control (i.e. travelers booking fares that are twice the price of comparable alternatives just to receive the frequent flyer miles). Finding the right balance and creating effective policies ensures corporate travel is an investment rather than a liability. Question #4 - Do you have a well-designed and implemented meeting planning process? Even companies that manage their meetings via a centralized meeting planning office may find that some processes are overlooked, overly manual, or 23% Do not know Not at all 37% just plain inefficient. Ongoing evaluation of the processes can uncover opportunities to reduce costs, streamline operations, optimize service and increase scale. Efficient and sound processes also enable planners to focus on value added activities to ensure that each event is successful and achieves all objectives. Sometimes Always 5
Question #5 - Do your meeting planners effectively negotiate and mitigate risk? While any meeting planner can cut costs by cutting things out, it takes skill to reduce costs without compromising the success of the overall program. A professional meeting planner knows that every element of a meeting is negotiable. And the best meeting planners know that the key savings aren t always in the rates, but rather in the value-add concessions, and terms and conditions that reduce exposure and mitigate risk. Question #6 Are you using the latest technology to your best advantage? Technology has taken a lead role in travel management and has now become an integral part of strategically managing meetings. Utilizing integrated online booking engines that are linked with registration tools can help drive policy, deliver visibility into meeting spend, and maximize cost savings opportunities. The ability to utilize the same booking tool for transient spend provides complete visibility and the opportunity to leverage overall T&E spend, be it from the transient or meetings arena. However, 44 percent of Travel Buyers recently surveyed have not yet identified a technology provider that fits their plan requirements, which signifies that there are still unmet needs that need to be addressed in the meetings technology space 2. Increasing demand for Strategic Meetings Management Programs Attempts to answer these types of questions and consequently increase visibility and control over corporate meetings spend has led to an increasing demand for Strategic Meetings Management services. SMM services can help companies identify spend through discovery, develop business intelligence through analysis & recomendations, and implement strategies that take advantage of ROI-enhancing opportunities. Armed with a holistic view, companies are better equipped to increase value, efficiency and effectiveness to their MICE programs. Discovery The first step in developing an SMM program is to identify all MICE activities, stakeholders, goals and current best practices. Understanding the current state provides a clear picture of an overall program s needs, spend, and unique characteristics. Organizing findings into master calendars, process flow charts, and other consolidated reports facilitates analyses and the pursuit of ROI-enhancing opportunities. 6
Analyses/Recommendations After the discovery phase sets the stage, analyses can begin. Analyses should always be tailored to a company s unique needs but often center around identifying opportunities to streamline processes, improve the effectiveness of travel policies, and better leverage scale during supplier negotiations. The latter has become increasingly important as 68 percent of Travel Buyers recently surveyed cited vendor management and contract negotiations as the most compelling reason for meeting management 2. During the meeting planning process, additional analyses can identify opportunities to more appropriately set budgets, optimize logistical choices, and maximize value via effective contract negotiations. Implementation ROI-enhancing recommendations are better equipped to increase value when they are implemented effectively across the organization. For this reason, change management is vital to implementing new practices and taking advantage of opportunities identified through analyses. In fact, during a recent survey of Travel Buyers, greater than 60 percent of respondents said that change management was integral to their company and that they used it diligently to ensure successful programs 2. Once implementing an effective SMM program, it s critical that the progress of change is monitored and re-evaluated on an ongoing basis to ensure success and lay the groundwork to identify new ROI-enhancing opportunities. Conclusion As the economy rebounds and companies focus on revitalizing their corporate travel and Meetings programs, Strategic Meetings Management plays a vital role in bringing it all together. Creating visibility and understanding of where and how spend occurs, SMM combines holistic program insight with purposeful direction. With an emphasis on return on investment, Strategic Meetings Management makes a difference by developing a corporate travel and Meetings strategy and execution plan that aligns with the company s overall goals and objectives. Authored by: Debbie Grossi - Director of Egencia Meetings & Incentives Karen Weegar - Strategic Account Manager, Egencia Meetings & Incentives 7
Whether you re looking for consolidated meeting spend, an annual company meeting, large partner conference or employee reward programs, Egencia Meetings & Incentives partners with clients to take their meeting program from concept to reality. Egencia - an Expedia, Inc. company - becomes an extension of your business, working in partnership with your team and anticipating your needs. Our clients tell us that we continue to provide the most personalized and superior service in the industry-an endorsement backed by our extremely low staff turnover, experienced team and return customers. www.egenciameetings.com 800 701 4264 TM