For the past couple of years The Site Foundation has been conducting annual research on topics of current interest to The Meetings and Events Industry. This research released as “The Site Index” has been extraordinarily useful to the industry presenting an up- to-the-minute snapshot on a variety of topics of both generic and specific interest. One of the more interesting, and potentially controversial, is the recently released survey on Destination Management Companies (DMCs) and the role they play in a rapidly evolving industry value chain.
Back in the day destination based DMCs were briefed by Incentive Houses and the two worked together with distinct yet complementary roles to create and deliver the customer’s dream. The Incentive House knew the customer and his business, the DMC knew the destination and its secrets. It was the perfect marriage, the off-spring or progeny of which was, usually, a perfectly formed and smiling motivational experience. Most of us – both Incentive Houses and DMCs – still believe in the sanctity of this marriage and yearn nostalgically for the old style values of commitment and loyalty which underpinned it.
However, the internet-led easy access to destination knowledge along with the restrictive dictates of corporate procurement have now shaken the foundations of this marriage and given rise to all manner of promiscuity as the former livelong partners vie for control of the off-spring, each making its own compelling case for custody. The responses to the Site Index paint a picture of a rapidly mutating value chain where the “Do it Yourself” mentality – facilitated by the internet or imposed by procurement or both – leads customers to eliminate at least one link in the delivery chain for their meetings and events.
According to the Survey, most DMCs and End Users agree that DMCs are being asked to provide a “one stop shop” for customers thereby eliminating the Agency, Planner or Incentive House from the delivery chain. Even higher numbers of DMCs and End Users agree that DMCs are finding it necessary to provide this “one stop shop”. While there are no data around “why” this is the case we must presume it’s due to market/economic conditions or internal corporate protocols and procurement policies. Not surprisingly the majority of agencies don’t accept that it’s happening at all and appear to disingenuously look the other way while, apparently, their DMCs and their customers cavort with gay abandon, jumping in and out of bed with one another!
The survey provides additional interesting insights into this trend when it clearly reveals that DMCs are not necessarily comfortable assuming the “one stop shop” role. When asked whether they “want to venture into the realm of traditional incentive company services” the percentage of DMCs that agrees drops significantly. However, when questioned on whether they are equipped to venture into the agency realm, a bigger percentage agrees that it is. Curiouser and curiouser!
How are we to interpret all of this? DMCs are being asked to venture into the agency space. Consequently they are finding it necessary to do so and are equipping themselves accordingly. But they don’t really want to be there. A bit like the slightly restless married lady who gets asked out on a date, does the fake tan and the make-up, looks a million dollars but deep down she’s extremely uncomfortable and she’d stay at home in a heartbeat if only her husband would pay her some attention!
End Users, ultimately, will always dictate how the supply chain expands and contracts. Those with internal planning teams will continue to dis-intermediarise the agency and work direct with DMCs. Sometimes their own internal infrastructure will cause them to ask their DMC partners to provide services more usually provided by an agency. However, other end user customers who traditionally outsource will require the agency to control and consolidate as much of the destination spend as possible and, in these cases, the DMC will be dis-intermediarised. Depending on how the winds of economic change blow, the pendulum will swing repeatedly between these two extremes.
But what of that once happy marriage between agency and DMC? Can they still gaze lovingly into each other’s eyes or is this relationship really and truly dead in the water? I firmly believe it will both endure as is and evolve to its next stage. Happy marriages are built on the foundations of trust and this, increasingly, is the key ingredient for success in any service delivery. In the pure “incentive” space end users will continue to procure motivational experiences through Incentive Houses they trust and they, in turn, will develop the destination dream with the trusted DMC. The truly motivational experience or the dream incentive has so many moving parts it needs expert input at both the customer and the destination interface. How it was, how it is and how it will be.
But such programmes, in the current economic cycle, constitute only a small percentage of the overall business mix. What of strategic meeting management programmes or corporate conferences or meeting programmes? Can the Agent / DMC marriage survive within this context? This is where I believe there will be change. Inevitably, one or other of the partners will be selected exclusively to manage these events – the newly emerging trend identified in the Site Foundation survey is that DMCs are now, for the first time, also being selected for this work. But does this have to fracture the relationship or threaten the marriage? Does it need to lead to the “friction” identified in the Site Survey?
I think this type of business offers up new ways for agencies and DMCs to work together. Agencies tasked by customers to execute SMMPs across multiple destinations where they have no local presence themselves could consult with their DMCs and pay a fee to them for their destination knowledge. This shifts the emphasis onto the key, unique dimension to the DMC value proposition and places a financial value on it – good news for DMCs who have often been obliged to live on line item mark ups. Food for thought.
This is but one of the key findings in this truly useful research brought to us courtesy of the Site Foundation. To ensure we continue to receive such quality data it’s essential that all industry practitioners sign up to be part of this on-going project. Please register at http://siteindex.monmouth.edu. For full compele survey results please go to http://www.siteglobal.com/Foundation/SiteIndex.aspx