Outsourcing To Independents Grows - Business Travel News

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Outsourcing To Independents Grows

December 06, 2004 - 12:00 AM ET

By Corrie Dosh

A growing number of corporate travel buyers who outsource some of their meetings management functions are choosing independent meeting management companies and planners, while the popularity of using convention and visitors bureaus or destination management companies decline, according to an exclusive Meetings Monitor survey. However, some meeting management consultants see commission-based third parties as temporary fixes, rather than long-term solutions, as companies try to focus on what blend of outside assistance they need to bring value to their meetings and events.

The survey of 204 corporate meeting buyers found that travel management companies continued to be the most popular recipients of outsourced meeting functions, but that independent meeting management companies and planners made the largest gains from 2003 levels. The survey found that, of those respondents who outsource, 28 percent outsourced their meeting functions to independent meeting management companies, compared to 15 percent in 2003, and 24 percent of those respondents outsourced to independent meeting planners, compared to 13 percent the previous year (Meetings Today, Oct. 20, 2003). Survey respondents were permitted to select more than one answer.

Many companies have outsourced part of their meeting-planning functions, such as housing and registration or site selection, to independent planners that offer commission-based services.

"The biggest trend we're seeing is companies outsourcing their site selection," said Joan Eisenstodt, president independent meeting management firm Eisenstodt Associates. "They are outsourcing to companies that work on commission, which, in my opinion, is not necessarily the smartest thing to do." Companies can be fooled into thinking that outsourcing does not cost them anything when they choose a meetings management company that works on commission, Eisenstodt said.

"A company sees that it doesn't cost them anything, which is not true," Eisenstodt said. "There is a cost to somebody. Buyers should pay closer attention to the "real bottom line," she said, which is how well an outside planning service can work to bring added value, not just cost savings.

"Everybody has to worry about corporate culture. You can't factor a cost in on that," said Robin Buzzeo, director of corporate travel at Taro Pharmaceutical Industries Ltd. "If an outsource company doesn't understand your culture, it's very hard for them to operate, because they might think what's planned is fine, when it isn't. You need a relationship."

Buzzeo said she doesn't outsource any meetings at Taro Pharmaceuticals because she doesn't have to. With only about 15 meetings a year, Buzzeo claimed an advantage over planners at larger companies. "We have better control," she said. "When you're a larger company it's harder to control."

The need for control extends to companies that want to outsource, but in a more focused way, said Jay Roseman, vice president of corporate meeting solutions at American Express. "Companies are now starting to take aim at the dozens, if not hundreds, of meeting planning companies or companies that support their meetings across the world and trying to boil them down to a shorter list," he said.

Insurance and financial services giant Nationwide has outsourced much of its meetings management since 2003 (Meetings Today, May 12, 2003). Peter Welsh, director of corporate travel and expense management services, said the firm will narrow the list of preferred third-party management companies to a maximum of three in the first quarter of 2005. The process will be mandated in Nationwide's third major phase of overhauling its meetings management operations.

"We are still outsourcing, but we're asking all the company divisions to utilize a shared business model approach in which the supplier or suppliers we select are the ones that are going to be utilized," Welsh said. Nationwide meeting planners will retain control over front-end decisions, such as site selection, but the costlier aspects of meetings management, such as negotiations, are outsourced.

According to the Meetings Monitor survey, 50 percent of respondents said they outsource at least some of their meetings management. Among buyers who outsource, 69 percent said they use third parties for more than half of their meetings management function. The growing involvement of procurement departments in meetings management has had an impact on corporate decisions to outsource, Eisenstodt said. "The frustration for many people on the meeting side is that people in procurement really don't understand the whole buying cycle and the skills that are used," she said.

A better option is to work with a third party on a consultative basis, Eisenstodt said. Even if a company decides to eliminate internal meeting planners, an outside meetings management company might be used temporarily, while the company trains staff and sets up internal structures to eventually pull event planning back in house. "I am one of few who believe that, because most people think it's better to outsource and have that expertise and the supposed buying power," she said.

Eisenstodt said it remains difficult to assess whether corporate meeting buyers are outsourcing more of their events. She said that instead of a trend, there are pockets of greater outsourcing, and a return to internal meeting management might be on the horizon. When companies fell on hard economic times three years ago, she said many corporate meeting departments were eliminated, but a rebound may be seen in the near future.

"We're seeing some pullback. I've seen more [help-wanted] ads for internal meeting planners," Eisenstodt said. "I'm seeing a greater understanding of the value of having an internal planner."

Many corporate meeting buyers outsource selected features of their events based on the service provider with which they work. Independent meetings management giant HelmsBriscoe of Scottsdale, Ariz., has a comprehensive service, called ResourceOne, that assigns an individual planner to handle everything from budget formation to onsite management, but Bill Briscoe, chief industry relations officer, said the company's expertise in hotels remains its focus.

"The majority of our business is involving site selection and contract negotiation and not the full-service element," Briscoe said. Many of HelmsBriscoe's 575 associates come from a hotel management background, he said. "It's a niche that works well for us."

According the Meetings Monitor survey, 54 percent of the respondents who outsource at least some aspects of meetings management said they outsource event planning, followed closely by housing and registration, with 50 percent. About 37 percent of respondents said they use third parties for site selection service.ndents said they use third parties for site selection service.
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