Corporations have tried to manage meetings for decades. Through various types of centralization, policies, payment vehicles and technology, executives grapple with how best to evaluate, procure and manage this elusive--but typically substantial--spend category.
How substantial? Of Procurement.travel's "State Of The Practice" respondents, 4 percent reported meetings spend in 2007 of more than $60 million, 15 percent reported between $5 million and $60 million, 20 percent said their organizations' total was from $1 million to $4.9 million and 46 percent noted less than $1 million. It's anyone's guess for the remaining 15 percent. Yes, 15 percent of respondents said they "don't know" how much their companies spend on meetings.
Work In Process
Despite the attempts, few consider meetings management a mastered category.
In a 2008 client survey, BCD Travel reported that just 1 percent of respondents ranked the effectiveness of their meetings program as "excellent." Almost one-third categorized their programs as either "poor" or "needs improvement." ( 1)
For myriad reasons, many corporations simply haven't applied standard procurement and travel management practices to meetings. They might not have a separate meeting policy. They might not even define the type of meeting that they want to manage by competitively sourcing a contract, comparing rates and properly contracting. (Those with policies typically define a meeting as gatherings of 10 or more individuals at an offsite venue for which a contract is required or events that cost more than $5,000, $10,000 or $25,000.)
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers |
But the focus on effectively managing this spend appears to be intensifying, according to a bevy of new evidence. Whether spurred by the rising costs of the category or simply the challenge of exploring this final frontier of potential savings, corporations are embracing strategic meetings management initiatives.
Nearly one-third of corporate planners surveyed a year ago by Meeting Professionals International said they expected "changes in the way their organizations view or use meetings." However, the 343 corporate planners surveyed in late 2007 predicted a 27 percent increase in their meeting budgets for 2008. Association planners (243 among the 1,285 buyer and supplier respondents) had predicted a 9.3 percent budget decline. ( 2)
In a study last February by Aberdeen Group, 60 percent of 300 enterprise executives surveyed said the amount invested in meetings had increased from the prior two years. Among survey participants, the average meeting spend in 2007 was more than $17 million, up more than $1.5 million from 2006, and represented 2.8 percent of revenues, making "this category difficult to ignore," the report stated. ( 3)
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers
Member polls released by the Association of Corporate Travel Executives and National Business Travel Association indicated that corporations either had or expected to curtail internal meetings and some meeting attendance as part of broader economic cost-cutting. In a September poll of 131 ACTE members, 39 percent identified internal meetings as the area to experience the largest travel cutbacks. (
4) In an NBTA poll of 230 U.S.-based travel buyers conducted between July and September 2008, 51 percent of respondents said they were sending fewer employees to conventions, conferences and trade shows. (
5)
"Even as budgets shrink, events are increasing their share of the remaining spend," according to a survey of more than 1,000 marketing executives conducted by Event Marketing Institute, MPI and George P. Johnson. ( 6)
Event marketers last year also expressed optimism about the future of events. Two-thirds of more than 1,000 respondents said the future importance of events would only increase. More than one-third of those surveyed said event marketing delivered the greatest return on investment of marketing dollars.
But various studies also indicate that procurement or travel departments are increasingly involved in meetings within organizations today. "Three-quarters of 'FutureWatch 2008' respondents, and almost 85 percent of respondents in Europe, reported that procurement plays some role in their purchasing decisions," that report stated. But of 150 MPI respondents who expressed their satisfaction with procurement's involvement in meetings, only 24 percent said it had led to significant cost savings, only 27 percent said it had sometimes led to better rooms, venues or other services, and 42 percent said it had "created significant frustration or difficulty with contracting processes, timing or decision-making."
Like it or not, most indicate that the role of travel and procurement in meetings will only grow. In a study released last month based on a May 2008 survey, AirPlus International said 45 percent of the 1,500 travel buyers it surveyed around the globe agreed, and 21 percent somewhat agreed, that "travel management will increasingly take over meeting and event management tasks." ( 7)
In Procurement.travel's "State Of The Practice," the bigger the T&E spend, the more likely companies were to use attendee registration technology, in use by 37 percent of all respondents. In companies with T&E of less than $1 million, 27 percent of respondents said they used online attendee registration. But use of such technology more than doubled--to 57 percent--for respondents with T&E of $60 million or more. A central meeting calendar, used by 36 percent of all respondents, was more often cited by those with T&E volume of less than $60 million than those with larger T&E budgets.
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers |
Across all respondents, 21 percent said their organizations used electronic request for proposals tools. But the figure was nearly double--39 percent--among those with a $60 million-plus T&E budget.
Nearly 30 percent of respondents said their organizations used a payment system to manage meetings. But payment systems were far less likely--at just 21 percent--to be used by respondents with the smallest T&E budgets and far more likely (51 percent) to be used at the biggest T&E spenders.
Just 15 percent of respondents said their organizations had outsourced meetings management, but that percentage was nearly double--28 percent--among respondents with T&E budgets of $60 million or more.
Across all respondents, nearly half (49 percent) said their organizations directly negotiate preferred rate agreements with meeting venues. But among the largest meeting producers (more than 500 events per year), 64 percent negotiate directly.
The biggest spenders aren't always the fastest adopters of meetings management tactics, "State Of The Practice" survey results reveal. Centralized sourcing as a meetings management technique was embraced by 42 percent of all respondents and 56 percent of those with T&E budgets between $5 million and $14.9 million. Centralized contracting, used by 38 percent of all respondents, was cited by nearly half of those with T&E spend between $5 million and $60 million.
Legal reviews of all contracts were cited by only 27 percent of all respondents and slightly more so at the biggest spenders. But only one in five respondents said they had a centralized contract repository for all those meeting contracts.
What is preventing more widespread adoption of meetings management practices and technologies within corporations? Procurement.travelsurvey respondents cited denial, politics, aversion to change or unwillingness to cross paths with those who consider meeting planning a "fringe benefit."
Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers |
According to PricewaterhouseCoopers advisory director Debi Scholar, company executives either "believe that they have it under control" or that because they have reduced travel, they "do not believe that they have many meetings still occurring."
Challenge Is Fragmentation
ConocoPhillips senior consultant of strategy, policy and compliance Allen Plumley opined that "meetings are usually dispersed or highly fragmented, and this makes them difficult to manage under centralized governance. There are too many inconsistencies with how organizations manage meetings and, oftentimes, the lack of volume of events management does not support the investment."
Another big obstacle, stated BCD Meetings & Incentives senior vice president for marketing and business development Bruce Morgan, is the "often contradictory allocation of responsibility and budget. Although a buyer may have been given a responsibility for meetings, he may not have the authority to truly control the meetings program, especially since meetings budgets frequently sit elsewhere in the organization--making meetings management a political issue." ( 8)