<B>PlanSoft Takes Zero</B>
<I>Removes Commissions From E-Bookings, Revenue Stream</I>
By Chris Davis
Meeting portal PlanSoft, beset by financial troubles seemingly inherent in all Internet ventures and a downturn in the corporate meetings industry, late last week was expected to slash commissions on all meetings booked through its public Web sites to zero--a groundbreaking move designed to increase the number of marketing packages sold to hotels and other suppliers.
PlanSoft will be the first third party of meeting planning or site selection services, online or otherwise, to offer its services free of any sort of charge or commission. The portal previously had charged a 4 percent commission on meetings booked.
The move does serve to put pressure on PlanSoft competitors: EventSource, which charges 10 percent commission; StarCite, which charges a flat fee per room night; and GetThere's DirectMeetings subsidiary, which charges a flat fee per meeting.
It also affects meetings booked through Web sites that host PlanSoft's private-label functionalities, including Hilton, GES Exposition Services and Business Travel News' sister publication Meeting News.
The move comes about a month after the portal laid off 25 of 115 workers. "This is the beginning of a process that will move many of our products to a low-cost or free model," said PlanSoft president Ed Tromczynski. "We believe this will help hotels and businesses build loyalty to us into their 2002 budgets."
Tromczynski and PlanSoft CEO David Hunt hope that the move dramatically will increase the number of visitors to the company's site, in turn attracting more hotels to buy marketing packages. The kits consist of about 60 photographs, floor plans and now videos that appear when a user clicks the name of a particular property. These packages usually cost between $2,500 and $4,000, and are intended by officials to be the portal's future sustenance.
The move is not without its risks, not the least of which is removing a revenue stream from a so-far unprofitable company.
Internet companies throughout the travel industry have long bemoaned low look-to-book ratios that occur when buyers use their free online services but use the phone or e-mail to actually make the booking.
PlanSoft has been successful in coaxing planners to explore the hotel site search functionalities on its Mpoint.com page, but there is nothing to prevent planners from using the portal to find a property, and even the name of the appropriate sales manager, but using their own requests for proposals offline, leaving PlanSoft with no commission.
PlanSoft officials are betting that the reason planners do so is to avoid paying the 4 percent.
"Though we handle thousands of RFPs, this is not a gigantic revenue stream for us," Tromczynski said. "It will also help us control our internal expenses as well."
Meeting technology experts were intrigued by PlanSoft's proposal, and praised the company's move as a method to offer planners more for less. These experts, however, did question whether the move eventually would prove successful.
"I think they have been an impediment to some extent," said Bellingham, Wash.-based meetings technology consultant Corbin Ball. "In the back of planners' minds, there is sometimes the thought that ultimately they could get a better deal. However, there are other factors that are in play as well: resistance to change, the fact that the existing way works well for the planner and planners like personal contact. We are in a personal business and calling your national sales representative might just be the easiest of all."
"Were I still a planner, I don't know that commissions would make me shy away from using an RFP through PlanSoft," said meetings technology consultant Jeff Rasco, also a senior vice president with Chicago-based JRDaggett & Associates. "There are a lot of third parties with low commission structures, so planners are accustomed to it. But there's a gap that I don't understand why planners aren't leaping over, whether it's wariness or perceived loss of control, between using the site and sending an RFP over it. Reducing commissions is reducing a barrier of entry. There's no reason it shouldn't work, but I don't know that there will be a wholesale change."
Rasco said the meeting portals' models still have potential, but the financial pressures on many dot-coms may lead to the success of "who can hold out the longest."
Ball agreed: "This is a hard space with lots of competition," he said. "They all must develop alternative funding strategies to stay viable. Not all of them will make it. Planners are time-starved and information-overloaded. Alternative strategies will be needed."
Some planners welcomed the commission cut as an attraction to potential business.
"I've used PlanSoft as a search, but not to send an RFP," said Patrice Essex, corporate meeting planner at Cincinnati-based LensCrafters. "We would certainly use them more now, because I don't want to pay for those services. This is the corporate world, and there's no time to get expenses approved."
Others said the changes wouldn't make any difference in their attitudes toward the portal.
"We use a lot of different resources to find sites, and I don't find the portals as user-friendly as it could be," said Jill Goldner, corporate travel manager for Manhattan Beach, Calif.-based Skechers USA Inc. "I get a lot better information about the properties when I pick up the phone and call regional sales managers."
Tromczynski said the zero-commission model is the first of several moves PlanSoft will be implementing throughout the summer. Others include: adding housing and registration capabilities through a partnership with SeeUthere.com, implementing capability to load distressed hotel inventory into all its distribution channels and creating a public version of its Meeting Management Solutions corporate meeting data consolidation tool (Meetings Today, Oct. 30, 2000), Tromczynski said.
The public version of MMS will be more generic than the first version, which PlanSoft sells to corporations for about $15,000, including set-up on the corporate intranet, training and customization for preferred vendors.
The public version will reside on the Web, won't capture meeting history or compile budget forecasts, Tromczynski said.
"We're dropping a self-serve RFP, self-serve Great Rates (distressed inventory), self-serve public MMS and self-serve housing and registration," Tromczynski said. "Now, our primary focus is technology solutions.