Why DMCs and DMOs need to work better together as destination partners

by Pádraic Gilligan, Chief Marketing Officer, SITE & Managing Partner, SoolNua

The initial release of the Incentive Travel Industry Index took place during IMEX Americas back in September 2019 but for numbers nerds and data daleks it continues to provide rich pickings. It also offers up some great insights for incentive travel professionals working in destinations, setting up an compelling proposition for how destination management companies (DMCs) and destination marketing organisations (DMOs) could, and should, work together.

DMC in crisis

It’s no secret that the DMC sector has been undergoing a painful crisis ever since the internet, like the new kid in town, became everybody’s new best friend. Long standing relationships between buyers in source markets and DMCs in destinations were turned on their head as this  Johnny-come-lately, who knew everyone and everything, beguiled buyers with his intoxicating black magic.

He was irresistible and rock solid rapports were shook to their foundation. He even knew the price of everything. His ideas were inspiring too, and he came up with them effortlessly, at the mere click of a switch. His sizzling sex appeal caused promises to be broken and vows to be breached and many steadfast, faithful partners morphed into insincere, promiscuous Exs only in search of the cheapest deal.

And, yes, we eventually saw through this charlatan but, by then, the damage was done. The disruption had taken place and things could never be the same. With everything available on-line, how would a DMC  prove their value? Did they have value? What was their value proposition now that “local knowledge and connections”, clearly, was not enough?

RFPs would be received, work would be done but then clients would go direct for everything, or only purchase partial services – “I found a great venue on-line and I’ve booked with them direct. Can you just take care of the coaches and the guide?” DMCs were left hurt, confused, disappointed not to mention furious, frustrated and downright angry.

DMC – nature, purpose, identity

The crisis in the world of DMCs stems primarily from nature, purpose and identity. What is the nature, purpose and identity of the DMC in a disinter-mediated marketplace where the core value proposition of “local knowledge, expertise and connections” is no longer absolute as these elements may be accessed, sometimes more efficiently and affordably, via other platforms?

DMCs are being by-passed because the services they provide can be accessed via alternative channels. They’re also being by-passed because, God help us, many buyers neither want nor need their services. How could this be possible, you ask? How could any out-of-destination buyer operate efficiently and successfully in a destination they don’t know, without a DMC?

Very easily, it seems. Buyers may not want the services of a DMC because they’ve operated many times in the location and are comfortable doing so without additional local support and an extra budgetary line item. Equally, they may not need the services of a DMC as it would only add another needless layer to a simple destination operation. And, you know, most DMC are perfectly fine with this so wherefore the crisis?

The crisis, anger and frustration stem from the ambivalence that still prevails in the channel whereby the buyer often consults with the DMC before realising that, in fact, they don’t want or need local support. So RFPs are sent to DMCs. Time is spend responding to the RFP and expectations are raised. Next the DMC hears from a venue or a restaurant that the buyer has been in touch directly and so the crisis deepens.

Insights for DMCs from Incentive Travel Industry Index

This is where the Incentive Travel Industry Index provides some interesting insights. When asked whether DMCs will manage more or less of the destination budget in 5 years time, DMCs, on average, respond that they will handle 9% LESS in the future.

Interestingly, this percentage varies across regions and countries, rising to 11% for all of Europe and reaching high double figures in some destinations – Ireland -16%, Portugal -19% and Holland -37%. If there is a crisis now, DMC are aware of it and anticipate that it will get worse. Recognising and acknowledging the problem is the first step to recovery. DMCs know the value proposition needs to change. They know that buyers will operate without them in their destination. Good DMC are radically altering the business model.

Another survey question on the Incentive Travel Industry Index asks at what stage a buyer might connect with a destination marketing organisation (DMO), the “official” entity in a destination with responsibility for generating leads for the location from the 4 channels that make up Business Events, meetings, incentives, conferences and events/exhibitions. Surprisingly, fewer than one in three buyers connect with the DMO prior to the formulation of an RFP – probably because they’re doing their initial shopping with the DMC!

Steps for Success

So what needs to happen?

DMOs, clearly, need to make themselves more visible and relevant to the incentive sector. They need to be the first point of contact with the destination, the triage station, that can send the business where it needs to go – to a DMC or, as they case may be, direct to a hotel or a venue when DMC services are not wanted or needed.

While DMOs  do a wonderful job with the association sector they are not sufficiently present in the incentive sector and, therefore, tend not to be used – the research demonstrates this with empirical precision.

DMOs also need to up-skill massively so as to understand the unique requirements of the incentive travel sector and therefore know when DMC services are absolutely required. They need to sell DMC services with compelling conviction.

DMCs, meanwhile, need to work in partnership with the DMO to ensure the incentive product in the destination is  supported, highlighted, well marketed. They need to build up relationships of trust with the DMO accepting that buyers want transparency.

Buyers want an honest broker in the mix, an impartial intermediary who can provide destination information and advice on a no-fee basis. DMCs need to accept, ultimately, that some buyers will elect to go direct but with this model, at least their time will not have been wasted.

Pádraic Gilligan and SoolNua co-owner Patrick Delaney know the pain in the DMC world having campaigned valiantly in the sector for decades. 

I took all of the pictures featured here during a recent visit to Istanbul, my favourite city in the world for incentive travel experiences. Here I am with Jenn Glynn, President-Elect, SITE in Istanbul during SITE Executive Summit