by Pádraic Gilligan, Managing Partner, SoolNua
The world of the Destination Management Company or DMC has been under-going a radical change over the past 10 years. I wanted to say “kaleidoscopic” change but, on reflection, much of this change has not been pretty, muddying rather than clarifying the value proposition at the heart of the DMC offer. Accordingly, there’s been a existential angst in the soul of the DMC community and it’s not going away. In this context, last year’s publication of a major research study by the Department of Hospitality & Tourism at the Isenberg School of Management (University of Massachusetts) was an important milestone for the DMC community. But I wonder how many DMCs actually read it?
Funded by the Incentive Research Foundation (IRF) and launched initially at the IRF Invitational last year by the inimitable Rodger Stotz, the study is a meaty, 58 page presentation. The title of the paper “Developing a new Business Model for DMCs by Redesigning their Value Proposition” lays out the study’s big ambition and high aim.UMASS compared responses from DMCs to key questions about their value proposition with those of their clients (Meeting Planners). Qualitative research involved separate in-depth focus groups with DMCs and meeting planners with the outcomes from these sessions tested in a quantitative field survey with a larger sample. The findings are somewhat limited by the small samplings involved in the survey and by UMASS’ lack of familiarity with the specifics of the marketplace but, regardless, there are interesting outcomes. Here are a few of them:
DMCs have high opinions of themselves
When evaluating their strengths, DMC responses to a series of statements where 0 = totally disagree and 5 = strongly agree ranged from a median value of 4.39 to 4.82 while meeting planners scores across the same metric were 3.74 to 4.55. Both communities agreed that “Local knowledge, expertise and networks” was a key DMC strength (rated 4.82 by DMC and 4.55 by meeting planners). However, there were broad discrepancies across other characteristics rated as core strengths by DMC. The biggest difference, interestingly, is in relation to “guarantee event satisfaction and client satisfaction” which DMCs at 4.82 believed was their most important strength but planners only rated it at 3.74 (lowest by far). So DMCs are clearly not guaranteeing event satisfaction at anything like the levels they think they are.
DMCs have low self-esteem
The comparative scores when evaluating weakness are, perhaps even more interesting. There’s clear agreement around some statements – both DMCs and planners concur, for example, that services supplied by DMCs and by meetings planners often overlap and this is a weakness in the DMC value proposition. Meeting planners regard the tendency amongst DMCs to work repeatedly with the same vendors as a limiting factor for creativity and, therefore, identify this as a primary weakness. For the DMC, conversely, this is considered the least impactful weakness. Finally, for DMCs, a key weakness is their deeply rooted conviction that nobody understands them, that no value to given to their role. Meeting planners strongly disagree with this to the point that there’s a 9 unit difference between their respective scores. There’s a touch about this of the bleeding heart, persecuted teenager who is convinced his parents and the world at large don’t value or understand him.
Networks and Consortia represent an opportunity for DMCs
Both meeting planners and the DMC respondents concur that “DMC networks are growing” and that this is an opportunity for DMCs. In fact, according to meeting planners in the field survey, this is the No 1 opportunity for DMCs. When the meeting planner focus group discussed the topic, apparently they expressed apprehension that “such alliances might standardise DMCs’ offerings and, therefore, undermine the creativity of the individual DMC”. However, they too could see the overall positive benefit for DMCs being part of a larger, more powerful organisation, especially if that alliance could also educate the industry around the benefits of using a DMC.
DMCs are paranoid
When assessing threats, DMC are decidedly defensive, convinced that meeting planners are stealing their IP. “Meeting planners learn from DMCs then do their own thing” is the No 1 threat identified by the DMC community. Meeting planners, needless to say, don’t see it this way at all and for them the biggest threat to DMCs is the pure and simple fact that some events – predominantly meetings – don’t actually require DMC services at all. Both parties agree substantially on other threats such as the creeping tendency for hotels to create their own in-house DMC or the fact that the internet, as an Oracle-like source of all knowledge, is disintermediating everyone.
DMCs are insecure
The researchers then applied social exchange theory to the DMC | Meeting Planner relationship to evaluate levels of mutual commitment and thus assess the relative strength and stability of the relationship. 9 different measurement items were analysed including communication, social dependence and opportunistic behaviour. The leit motiv here is undoubtedly the pathological insecurity of the DMC who believes he or she is significantly more committed to the relationship than the meeting planner is, a contention not supported at all by the data from the meeting planner survey.
Arrogant, insecure, paranoid, persecuted and … un-responsive
The research paper sets out with the lofty ambition of assisting DMCs to “develop a new business model by re-designing their value proposition”. Sadly it doesn’t come near to achieving this worthy aim but admits as much in a note towards the end of the presentation. Amongst the reasons given, it flags the small samples for the focus groups and national surveys and the extremely poor response rates to questionnaires – for example, only half of the 10 DMCs who had agreed to participate in the live focus group actually turned up, an extremely poor reflection on the professionalism of our sector.
Despite the skittish insecurity of the DMC, the study, overall, reveals a stable relationship between the meetings planner and DMC and a definite appreciate on the part of the meeting planner around the value of the DMC. It’s when you drill down into the findings you uncover a minor psychosis on the part of the DMC who doesn’t believe she’s appreciated (she is VERY much appreciated) who thinks the meeting planner is about to walk out of the relationship into the arms of another DMC (it’s not going to happen) and who’s unable to accept the independence of the meeting planner realising that sometimes the meeting planner doesn’t need her at all.
Check out the full study on the Incentive Research Foundation website.
Pádraic Gilligan is Managing Partner at SoolNua, a boutique agency working with destinations, venues, hotels … and DMCs (!) on strategy, marketing and training for the MICE market