Consolidating meetings expenditures, which can be highly fragmented across departments and geographies, into a cohesive meetings management program is one step procurement managers may take to better understand the size, scope and opportunity in this space. Taking a next step--combining meeting-related supplier contracts with those for transient travel--may help organizations discover synergies by better leveraging their spend, but the task can be difficult.
Executives speaking in Rome during an Association of Corporate Travel Executives event in October pointed out the hurdles to such an approach and the rewards for clearing them.
"Leveraging total hotel and air spend is always better than just transient or meeting figures alone," said Accenture procurement BPO European category lead for travel services Paul Cleveland. Some companies, he said, are "now claiming around 10 percent to 15 percent savings" on their conferences by combining their spend. Other benefits include reduced hotel cancellation charges and "an additional 20 percent on transient travel savings," he said.
"Larger companies are centralizing supply chains to make sure they are saving through a strategic sourcing methodology that is applied across as many categories as possible and as consistently as possible," said Michele Bryant, Deloitte Services LP travel procurement director. "Companies want to leverage analytical skills and decision-support tools found in centralized procurement. They want to ensure that all functions of travel (i.e., air, transient hotels) and meetings are consolidated for better negotiating power with suppliers." Deloitte began integrating travel and procurement in 2003, and travel and meetings in 2005 ( Procurement.travel, December 2007).
"Leveraged sourcing," added Cleveland, "puts negotiations in the hands of experts," while leaving meeting planning functions in the hands of experienced meeting planners.
[PULL_1]The challenges in combining meetings and transient spend include a lack of internal coordination between departments; disparate data sources and an inability to determine aggregate meetings and event spend; inconsistent meetings management policies and approval processes; strict legal and financial regulations, as well as traveler tracking and risk management concerns; and sacrificing pre-existing local supplier relationships.
There also are roadblocks on the supplier side. "Hotels are happy to negotiate transient deals but do not necessarily want to extend similar discounts for meetings," said Cleveland, who splits his time between supporting the firm's business process outsourcing team and Accenture's internal business travel and meetings team. "Many hotels still run separate profit centers and separate teams around transient and meetings. Sometimes they say they cannot put the two together. To be fair, this situation is improving."
Yet, hotel contracts present the largest opportunity for a merged purchasing approach, as they account for "70 percent of the meeting cost," Cleveland said.
Elsewhere, GlaxoSmithKline is working to complement a global hotel program for transient travel, which has been in place since the beginning of the decade, with a meetings component, according to Virginia Harris, the company's sourcing group manager for travel. The company goal is "consolidation of the transient and group piece, so they actually sit together and intersect with each other," Harris explained. "We implicitly and explicitly see year on year the benefit of leverage for GSK in terms of getting the best rates that we can for the meeting attendee and the budget holders."
Harris noted "an opportunity around global chain discounts" and "more demand and need within the GSK organization to actually bulk buy" with fixed rates rather than the current spot-buy approach. She also said the company is "being offered block solutions as well, where we get the air, the transient hotel accommodation and the event piece being offered up as one. How that actually plays out in terms of delivery and success, we haven't got there yet."
ACTE panelists also touched on the possibility of using a single travel management company to handle both transient travel and meetings and events. While some advocate this strategy, Cleveland noted an ongoing "skepticism around merging those relationships" and a continued preference by many to use "specialist companies for venue sourcing and other meeting functions."
GSK has "a group air solution, a venue sourcing solution agency and we also have about 11 events management companies that service our needs," Harris said. "We don't see any one of those agencies as more important than another. At any point in time they should be working together for our benefit for the delivery of our successful events."