DMCs – New Models for the Future?

by Padraic Gilligan, Managing Partner, SoolNua

Since this blog began over two years ago I’ve posted a number of times on the evolving world of DMCs. These posts were then gathered together using the excellent Publicate and posted with the title “How important are DMC’s in today’s marketplace?” on the Site Global Linkedin Group. I’m pleased to report that the posting attracted comments from a veritable “who’s who” of the MICE industry highlighting, once again, not only the importance of the discussion but also the depth of emotion around it.

Comments were contributed by DMCs, Destination Marketing Specialists, Third Party Agencies and  Meetings Industry Consultants. All agreed that DMCs are important in today’s marketplace. Jane Schuldt described it thus:

I try to imagine a world without DMCs … and I simply cannot. DMCs are the connective tissue, and often the central nervous system of the organism that is business group travel

Maritz’s Rhonda Brewer and Viktor Incentive’s Mark Bondy, two stalwarts third party professionals, were no less emphatic:

 … nothing replaces the first-hand knowledge, personal recommendations, reassurance, and careful oversight [sic] during delivery provided by a creative and trustworthy DMC

I cannot think of anyone who would disagree with these statements. How could you? They’re as desirable and wholesome as human rights and world peace but, perhaps, as easily unattainable! But even if we could guarantee creativity in abundance and trustworthiness to beat the band I’m still unsure that the traditional DMC business model, as championed by the Linkedin commentators, is fit for future purpose. And while there are many contributory factors to this, one stands above all others: money.

It’s all about the money

End-user clients, increasingly, are mandated either by their own internal procurement protocols or by the realities of shrinking budgets to purchase MICE services as directly as possible thus the “ideal” supply chain of End User – Third Party – Air – Hotel – DMC – Production & AV is more and more challenged and disrupted. Thus, as we move forward, the incidence of best practice destination purchasing where clients brief agencies and agencies brief DMCs will decrease even more rapidly than heretofor.

So, in Jane’s words above, if DMCs are the “connective tissue” and the “central nervous system” of the MICE industry, does this mean the industry will fall apart? Of course not! The industry will simply evolve as will the crucial and indispensable DMC contribution. How the DMC contribution evolves remains to be seen but I think it’ll follow these models:

DMC as destination aggregator

This model presents the DMC as destination aggregator, offering a full range of in-coming destination-based services pivoting around the 5 core DMC services [ref: ADMEI] – Special Events, Staffing, Tours, Transport, Programme logistics – but extending beyond business travel into leisure to include group tour series, FITs, VIP, golf, special interest. Ironically this model has always existed in that many DMCs originated as in-coming tour operators and were criticised accordingly as “non-specialists”. The difference here is that its a reverse momentum – the specialist DMC this time is expanding his service palette to leverage his specialist destination knowledge for a discerning GenY leisure traveller who will seek unique destination experiences.

DMC as MICE specialist

Again this is already prevalent in that many DMCs also offer PCO, AV & Production and Event Management services. Playing in the PCO space takes the DMC outside of the “corporate” world and into the rather different but still complimentary world of associations and institutional buyers. Some core DMC skills are easily transferable – management of city wide transportation shuttles, for example – but to operate successfully as a destination specialist across the full spectrum of MICE involves considerable investment in IT, equipment and training. To be a true MICE destination specialist requires expertise in the latest AV equipment, the most up to date registration systems and advanced capabilities in marketing a destination to a congress delegate.

DMC as destination technologist

Every week another on-line portal for purchasing tours, excursions and activities is launched and each one is better than the previous one in terms of its functionality and the overall appeal of its on-line product. Increasingly these portals are capable of offering group activities and highly customised, unique experience [ref Localers – previously mentioned on this blog]. Some DMCs will diversify into this sphere or, perhaps, use digital platforms to distribute products and content previously created as once off offerings. And why not? A limiting factor in the current DMC model is the ephemeral nature of product – you spend time and money creating it for one client but often then never get to sell it again. Why not create a specialist destination digital platform where all these products, services and content are available on-line, 24/7 as a potential additional revenue source? Or, if you don’t want to create it yourself why not distribute it via Viator or one of the many on-line distributors?

DMC as consultant

In its excellent publication Best Practices in Destination Management, ADMEI (the Association of Destination Management Executives International) defines a DMC as

A professional services company, possessing extensive local knowledge, expertise and resources, specialising in the design and implementation of events, activities, tours, transportation and programme logistics

As the possession of resources (= overhead) become more and more expensive, it will become more and more compelling to play exclusively on “local knowledge and expertise” and leverage these to design events while allowing the client to implement directly with destination vendors.

This is the DMC as Destination Management Consultant and, I think, is a very credible value proposition for our disintermediated marketplace. With such a model the DMC or consultant would become another destination vendor and would be remunerated for his or her knowledge and expertise, not for implementation.

DMC as Agent or Third Party

This is perhaps the most controversial of all models but one which has already gained considerable traction. It will continue to evolve particularly in the context of “global” DMCs. Here the DMC works directly with end user clients who in-source their meetings and incentives, i.e., those who do not typically use third party aggregators. While this model can work extremely well it can cause channel conflict with third party agents particularly if the DMC then starts to actively market his or her services in source markets where he or she also has third part agency clients.

So what do you think?

Padraic Gilligan is Managing Partner at SoolNua, a boutique consultancy firm offering another viewpoint for meetings and events.

He’d like to thank Terry Epton, Bent Hadler, Bruce Tepper, Bonnie Boyd, Jane Schuldt, Carol Ann Kradin, Mark Bondy, Rhonda Brewer and Daniella Bikoulis for their very considered written contributions to the Linkedin discussion and to the many, many “silent” readers who simply “liked” the discussion.