The recent spate of travel agency consolidation—particularly Carlson Wagonlit Travel's acquisition earlier this month of Maritz Inc.'s corporate travel operations—will have less proportionate impact on the agencies' meetings and group travel management operations than it will on transient travel operations. Yet, the deals have sparked a realignment of the competitive set and a reassessment of the value of TMC-offered integrated corporate travel and meetings management services.
Maritz Travel's meetings management offerings were not included in CWT's acquisition of what is now called Maritz Corporate Travel (see story, page 1), and the company will continue to offer all related group travel and incentive services.
"The meeting group is not for sale," said Maritz Inc. chairman and CEO Steve Maritz in an interview with Meetings Today after the acquisition's announcement. "This is all part of our focus on our core business, which is managing innovative sales and marketing programs for businesses, of which group travel is a big part—so are incentives and rewards, loyalty, learning and marketing and research programs."
Maritz's roster of meeting clients notably is populated with large pharmaceutical companies, largely due to the 2001 acquisition of McGettigan Partners and its client list. Though McGettigan—now Maritz McGettigan—widely was considered a pioneer in the concept of meetings consolidation, the subsidiary of late has focused its resources on staging events for pharmaceutical clients and creating technological tools for that particular market
(Meetings Today, Aug. 11, 2003).Though Steve Maritz said his company will continue to implement meetings consolidation solutions for interested clients, he and Maritz Travel president and CEO Jeff Reinberg, head of the remaining meetings, events and incentives business, left little doubt that they consider individual event management as a more important and valuable offering.
"The transactional end of the [transient travel] business fundamentally runs into the low end of the meetings business," Reinberg said. "That's why the technology solutions have tried to enter that market and are jockeying for position and why American Express and others have tried to rally around it. Attendee and event management and what you do on the ground is key. Look how important meeting-by-meeting spending is. It's far more important than air or registration or enrollment, and we see the market differentiating there."
The market, in fact, has several entities offering meetings consolidation services, including the meetings divisions or subsidiaries of American Express, CWT, WorldTravel BTI and Navigant International, as well as third-party meetings giant Conferon and a handful of technology solution providers. Reinberg, though, said he considers consolidation the "low end" of the business. High-service event management is "high end," he noted.
"If you look at the corporate travel business, as companies have driven costs down there have been more moves to online booking, where the traveler is treated as freight," Reinberg said. "Some companies quickly embraced it, some still wanted onsite services, but the tradeoff of unmanaged solutions is service."
Assessing the competitive set, Reinberg said he considers Maritz's competition "at the lowest possible end, everyone; at the high end, only the top [incentive] houses and boutiques."
The 2001 acquisition of McGettigan by Maritz raised internal hopes that McGettigan's consolidation services and Maritz's corporate travel offerings would be cross-sold to existing and new clients. This largely has not happened. CWT North America president Robin Schleien categorized the number of MCT corporate clients who also use Maritz's meetings management services as "nominal." Schleien said some Maritz meetings clients would switch over to Carlson's meetings management services, but Steve Maritz strongly denied that. He said all MCT clients whose meeting needs were serviced by Maritz would continue with the company.
The McGettigan acquisition is mentioned in a current lawsuit against Steve Maritz by his brothers, Maritz co-owners Peter and Philip Maritz. Peter and Philip allege the McGettigan transaction was "wasteful and unreviewed" and that its $48 million cost, including assumption of $15 million in liabilities, was more than $10 million more than the cost originally described to the company's board.
The suit, filed last summer, was an effort to dissolve the company after Peter and Phillip first sued nearly one year before that seeking a greater role in managing the business, the St. Louis Business Journal reported. Steve Maritz said the lawsuit had "nothing to do" with the acquisition.
However, the MCT buy will ripple in the meetings industry beyond its impact on Maritz and McGettigan. The influx of corporate travel clients theoretically could bring opportunity to Carlson's meetings management operations, housed under the auspices of CWT sister subsidiary Carlson Marketing Group. In a February interview conducted before the MCT acquisition was announced, CMG vice president of business development Peter Moen spoke at length of his company's interest in meetings consolidation and potential upgrades of its consolidation technology.
Navigant this month announced it would acquire Maritz's share of TQ3 Travel Solutions, a global joint venture with TUI Business Travel Deutschland GmbH, and become TQ3's Canadian and U.S. partner by May
(BTNOnline, March 17). Like CMG, Navigant's meeting services subsidiary, the Navigant Performance Group, theoretically could benefit from exposure to new corporate travel customers.
"We're very excited about the potential of the acquisition, but it's still very early," said Laura Yates, Navigant Performance Group vice president of marketing. "We are working with Navigant on a strategic plan to assess and optimize the opportunity, but as with any acquisition, there's a lot of work to be done."
The round of agency consolidation was touched off by the acquisition of Rosenbluth International by American Express in August 2003
(BTN, Aug. 11, 2003). Industry observers have maintained that the deal and subsequent integration would impact the transient travel industry more than the meetings industry, given Rosenbluth's generally light presence in meetings management. American Express Corporate Meeting Solutions vice president Jay Roseman had no comment on any meeting-side integration between the two companies pending an announcement American Express has scheduled for later this week.
Roseman, though, does not see the various agency acquisitions as significantly altering the competitive landscape in the meetings industry. "There's really not a whole lot of changes in the competitive set," he said. "I have the same amount of competition. We have consolidation as our primary focus, which includes managing large and small events. We still run into Maritz on the consolidation side, and we're still competing with them."