Spurred by an increase in the number of corporations restricting the use of vendors outside of preferred supplier lists, destination management company network Global Events Partners has hired a sales executive to establish preferred agreements with large companies.
Though the vast majority of corporations have no preferred agreements with any destination management companies, Chris White, chairman of Washington, D.C.-based GEP, said the increasing influence of procurement departments on meeting purchasing has helped make preferred DMCs a slight, but growing, trend. White last month hired former American Express and Thomas Cook Travel executive Marianne Toldalagi to create such agreements with Fortune 100 companies.
"It's unbelievable. It's part survival, part an answer to a growing trend," White said. "We didn't initiate this, the market did. One of our partner DMCs lost significant business because it was not on the preferred vendor list of a major company. This is a hot subject, because more companies are going to put together approved vendor lists. Perhaps an individual DMC can't get on that list, but GEP probably can."
GEP, which was created in 1999, is a network of about 50 DMCs throughout the globe that features single points of contact for corporate buyers
(Meetings Today, Jan. 25, 1999).Currently, White said, GEP is on the preferred vendor list of one major company, London-based pharmaceutical company AstraZeneca PLC, which ranked 90th on the most recent Corporate Travel 100 listing (BTN, Aug. 26, 2002). GEP received that designation last year, he said. "We have a lot of their business, and we wouldn't have 10 percent of it without this agreement," White said. "That was the first time we did anything like that with a company and the first time they initiated it. We didn't decide to do it on our own."
The arrangements GEP seeks likely would include the right of first refusal for DMC services in cities where there is a GEP presence, in exchange for lower prices. However, White said, other preferred-relationship models could develop, including the possible offer of discounted meeting cancellation insurance. However, in AstraZeneca's case, GEP does not insist on being the exclusive provider of destination management services.
The impetus for White's move is the influence of procurement.
"This is the trend in Corporate America with everything," according to Toldalagi. "They want to ensure that their purchasing dollars get everything they can: Develop the right mix of vendors and it can bring the company value. Here, we have experience with delivery, and we've focused on the quality of our partners, financial stability and global reach. We can go to these corporations with confidence."
Still, GEP's plan has some obstacles, White acknowledged. Not every corporate meeting department of the Fortune 100 is working with internal procurement and purchasing; some meeting and travel executives actively have resisted the notion. Though the DMCs in White's network are "100 percent" committed, he acknowledged that for a group of suppliers that traditionally have not developed preferred agreements with corporations, there might be resistance to the concept and a reliance on longstanding personal relationships.
"DMCs with long-term relationships might lose those relationships if they're not on a preferred vendor list," White said.
White and Toldalagi declined to say which particular industries might be fertile ground for such corporate agreements.
GEP has preferred relationships with travel agencies and incentive companies, White said, including American Express, WorldTravel BTI, Navigant and USMotivation.