Softer meeting volumes industrywide and tighter controls on meeting policies have led to a significant number of companies outsourcing fewer meetings to independent firms. Though those numbers are countered, to a point, by companies outsourcing more events after eliminating internal meeting planning positions, the net result is still less business for independents in 2002.
According to an exclusive Meetings Monitor poll of 109 corporate meeting buyers, 35 percent said their companies outsourced fewer meetings to independents this year, with just under half of those indicating much less outsourcing took place. About 17 percent noted there was more outsourcing.
Independent firms, while acknowledging softness this year and expressing optimism for 2003, cited reduced meeting activity overall as the culprit, rather than any great trend toward insourcing.
"Any reduction is probably related to sheer numbers of meetings going down," said Danamichele Brennen, chief technology officer and senior vice president of marketing of Maritz Travel Co. subsidiary McGettigan Partners. The pharmaceutical industry, which comprises a large portion of McGettigan's clients, has seen increases in outsourcing due to increases in meeting volume of late, she said, as corporations look outward to help contain overflow.
"There were a lot of clients whose meetings dried up or were reduced to a trickle," said David Peckinpaugh, executive vice president of sales and marketing of Twinsburg, Ohio-based large independent meetings management firm Conferon. "There was an increase in the timeframe of decision making, and budget issues pushed meetings back. The recovery has been delayed." Any decrease is not due to a lack of interest in the concept of outsourcing, Peckinpaugh said. "There have been more outsourcing opportunities in 2002 than in 2001 or 2000 by a significant percentage."
SBC Communications of San Antonio, Texas, reduced outsourcing because of a decrease in volume. SBC's meeting planning operations completely are outsourced, said director of e-procurement and corporate travel Rosemarie Moskow. However, the company's meeting and travel volume has decreased significantly during the past few years, leading to fewer meetings outsourced this year. "There are just not as many meetings as there used to be," Moskow said. The company does not delineate its meeting expenditures, so it is unclear exactly how much volume and expenditures the decline represents. SBC, however, is changing its outsourcing structures. The company recently completed a bidding process and selected five independent meeting companies to handle its operations, up from one travel management company. "We are putting together contracts now," Moskow said. "We've expanded to five companies based on a variety of criteria, including their planning expertise and their experience."
There is no evidence of any trend of hiring meeting planning staff and insourcing meetings. However, many companies have created new or tightened existing meeting policies
(Meetings Today, June 3) that frequently include registration of all meetings with a meeting or travel department.
New York-based investment firm Teachers Insurance and Annuity Association College Retirement Equities Fund normally outsources meeting management only of offsite events that include customers, said manager of corporate travel services John Hintz, which make up about 10 percent of total meeting volume. However, the firm has spent more time educating internal sponsors about existing policies that require all meetings to be registered with Hintz's department, limiting the noncompliant outsourcing of other types of events. "We have less outsourcing this year because we have higher discipline internally about identifying meeting travel and handling it internally," Hintz said. In most cases of noncompliant outsourcing, he said, the sponsor was unaware of the policy, and higher compliance was reached after more frequent policy communication.
Third parties downplayed any insourcing trend. "There's been a couple, not more than any other year," Peckinpaugh said. "There really hasn't been any significant impact from insourcing."
The specific planning functions companies outsourced this year were distributed evenly, with between 20 percent and 30 percent of respondents indicating that their companies outsource onsite staff, event planning, contract negotiation, housing and registration and site selection.
Roger Helms, president and chairman of Scottsdale, Ariz.-based large independent meetings management firm HelmsBriscoe, pointed to the growth of the influence of procurement philosophies and strategies for site selection as key drivers of outsourcing, though possibly less visible to those planning meetings. "On the procurement side, there's big growth in site selection as a vehicle for reducing costs," he said. "But it takes time and staff to determine which has the best property and the best deal, so they're more likely to use services like ours." Since a site selection-only outsourcing philosophy does not include any other logistical meeting management, planners using that service might not consider what they are doing as outsourcing, Helms said. "We'll do 10 site selection clients for every one meeting planning client," he said. "It's been separated, and site selection has come out as its own entity."
Peckinpaugh said housing and registration is the dominant service requested by Conferon's corporate clients, with overall meeting management and onsite management following. He sees the near future as a time of more corporate interest in enterprisewide meeting management solutions, as companies continue to focus on capturing volume and leveraging it in negotiations, as well as developing closer ties between group and transient travel operations.
Meanwhile, Helms said that 2003 looks "better, if not tremendously better. The booking pace is up."
"There was a resistance to move forward at the beginning of the year, but in the second quarter things started to break loose," Peckinpaugh said. "Overall, there's more activity now. There's a lot of RFPs. In 2003, there's a huge opportunity for service providers like us."