More Buyers Take On Mtgs. Consolidation
As senior executives continue to demand cost cutting in all facets of corporate operations, more meetings and travel buyers are considering or developing measures to consolidate and centralize meetings management operations or forge closer ties between travel and meeting spending philosophies.
Many buyers for years have considered meetings consolidation—though fewer actually implemented the practice—but an exclusive Meetings Today survey of 108 buyers found that more corporations now are crossing that line.
According to the Meetings Monitor study, 57 percent of respondents consolidate at least some of their meeting spending, an increase of 11 percent from the last Monitor survey on the topic in early 2001.
The difference, some meetings consolidation suppliers said, is not only the maturation of the meetings industry or the necessity of cost-cutting in shaky economic times, but also a new focus by senior management and procurement executives on streamlining meetings operations.
"We are seeing more serious interest in consolidation from corporations, and I attribute that to greater involvement in the process by corporate strategic sourcing and procurement groups," said Dick Zeller, vice president of enterprise solutions for Maritz Travel Co.'s Philadelphia-based subsidiary, McGettigan Partners. "We're seeing large companies with senior level people on the procurement level in the room. Some organizations are beginning to apply the same strategies and approaches to this as they have more traditional suppliers."
Zeller said about 30 percent of corporations fully have consolidated meetings spend, or are in the process, but did not discount the higher Monitor number. He said the percentage of companies that have consolidated meetings and group air spending is between 60 percent and 70 percent
Scott Graf, president of WorldTravel Meeting & Incentives, has seen an increase in interest in consolidation, but noted the sluggish pace of corporate decision making. "Clearly, this is gaining momentum and there are business conversations about it at all levels, because executives are looking at all savings opportunities," Graf said. "But they are slow in decision making right now. I don't know if that cautiousness is because of the time of year or the economy."
Some of the growth in interest in consolidation, Graf said, is due to the number of suppliers that recently have introduced data consolidation tools, as both travel management and technology companies continue to develop solutions. "In the past six months, there have been a lot of companies jumping on the consolidation bandwagon," Graf said. "Clearly, the industry says there's a need for meeting consolidation tools, so this will be survival of the fittest."
One aspect of meetings management that often, but not always, goes hand in hand with consolidation is centralization, or managing corporate events from a single point, usually a meetings department. About 53 percent of respondents said their companies have a fully centralized meetings department, with an additional 18 percent noting their departments are partially centralized.
Northfield, Ill.-based Kraft Foods Inc. this year centralized all domestic meetings operations, said associate director of conference services Andrea McGrath. "There are cost-saving opportunities here, and this is a way to define what we spend on meetings," she said. "It seems this is an appropriate time to pull all that together." Kraft's meeting spending declined in 2002 due to economic conditions, a trend McGrath sees as likely to reverse itself, in Kraft's case, next year. The centralization effort began in February, and McGrath estimated that her department now handles between 60 percent and 70 percent of the company's events.
Another potential cost-saving move, usually reserved for companies with at least some aspects of their meetings program consolidated, is merging meeting and transient volume to foster better negotiations with suppliers. About 55 percent of Monitor respondents said their companies do this for both air and hotel negotiations, with an additional 9 percent and 6 percent reserving such negotiations for, respectively, air contracts only and hotel contracts only.
New York-based Foot Locker Inc. fully consolidated its group and transient volumes "quite some time ago," said manager of travel and meeting services Eileen Leddy. "We use the group department of our agency for air fulfillment, and we'll piggyback on our corporate discounts if necessary. We try to take advantage wherever we can." Foot Locker negotiates combined hotel deals by property, as the company does not produce enough volume for substantial chainwide deals. Leddy often attempts to negotiate a corporate rate for her travelers after a meeting has been booked at a particular property.
Though some buyers who have merged the meeting and travel sides of their operations have praised the concept, not everyone believes a full merger is a particularly good idea.
"Transient travel is more commoditizable, while meeting planning is more project-based," said Danamichele Brennen, McGettigan Partners chief technology officer and senior vice president of marketing. "These are complex front-end functions, and it's not all about technology. We see technology companies suggest they can combine transient and meeting spend on the front end with their software, and that's pretty misleading."
That said, McGettigan's Zeller differentiated between combining transient and meeting management and aligning the two. "On the meetings side, you can use corporate contracts and discounts, and if you have a preferred vendor strategy, you can align that with the meeting side," he said. "But alignment is better than merging. The two sides need to be aware of each others' strategies, but you don't want to force a square peg into a round hole. Some of the strongest corporate travel companies aren't very good at meetings."
WTMI's parent company is mega agency WorldTravel BTI, and thus the companies closely have studied synergies between travel and meetings management, Graf said, and concluded that further migration is inevitable. "It has a lot of merit," Graf said. "It's not generally the way it works, and people like to keep the two sides separate, but it makes sense. We will see that trend; it has to happen in time. Maybe not today, but, at some point, senior executives will look at this to save some money and find singularities. That time is coming, and the decision will be top-down." Graf also pointed to the proliferation of meetings data consolidation technological tools as a precursor to further alignment between corporate meetings and travel spend management.