Local Knowledge

DMCs Provide Meeting Planners with the Resources to Put It All Together.

By Robert P. Farmer

When planning a vacation, most reasonable people will spend some time learning about their chosen destinations.

Presuming some degree of naiveté, thumbing through a reliable guidebook in advance of a vacation can make the difference between a well-planned trip andtime spent wandering aimlessly and hoping not to step into a tourist trap.

The same concept holds true in meeting planning. Though most planners do not haphazardly select destinations and hope for the best, only a select few can enter any chosen destinations with the confidence of a local. In this case,it helps to have the inside scoop. Enter the destination management company (DMC).

Though the DMC, as a concept, has been around for some time, the DMC industry is still growing. As growth in the meetings industry has fueled other industries alongside it, DMCs have proven to be among the most valuable. Still—like the meetings industry itself—many DMCs continue to operate on a proving ground.

“In today’s outsourcing world, DMCs are still needed and continue to provide a valuable service,” said Wendy Scott, executive director of the DMC Network—the Raleigh, N.C.-based non-profit consortium of independently owned DMCs—and a member of the MPI Potomac Chapter. “When planners are educated and understand the value DMCs provide, we are able to be successful. And that’s one of our primary objectives—to educate planners about the resources that DMCs can provide.”

Yet into the world of outsourcing also creeps an abundance of middlemen. So the question becomes, has the DMC grown to be a middleman of oversized proportions? Or has the DMC industry asserted itself as an essential ally in preparing a successful event? And if so, are DMCs treading into territory already claimed by meeting planners?

Growing Pains
Fran Rickenbach, executive vice president of the Dayton, Ohio-based Association of Destination Management Executives (ADME), says that DMCs have enjoyed growing success—noticeable even in recent months.

“Business has really picked up for a number of our members,” she said. “There are still challenges to face. But the happy challenge that many DMCs are facing is how to best organize their staffs to efficiently and effectively deal with the amount of business they have.”

While being busy is always a good sign, the growth in the DMC industry has brought with it the need to adapt. The challenges have ranged from defining DMC value to defending the almost universally narrow profit margins. Exacerbating matters, DMCs in some states have also had to take on the government.

DMCs in California were notified last year by the State Board of Equalization of a newly formed law requiring them to pay taxes on the markups between vendors and clients. The board is requesting back payments from all DMCs that engaged in the practice during the year, treating the DMCs as resellers. To DMCs, however, this is tantamount to taxing the service above and beyond taxes on their hard costs.

The threat of additional taxation only compounds such ongoing issues as having to pay third-party vendors’ and hotels’ referral fees and commissions. The sum can quickly whittle a 20 percent margin down to single digits. The result is that DMCs everywhere are hustling to generate enough business just to stay in business. Many have found that the pressure can be alleviated, at least in part, through associations.

The presence of organizations like ADME and the DMC Network is evidence that the DMC industry has developed to a point of some importance. But it’s also evidence that few want to—or should—go it alone. As meeting planners have seen their industry grow exponentially in the past decade, their suppliers and third-party vendors made the leap along with them. And as planners have come to rely on a select group of DMCs that have proven value time and again, DMCs have looked to each other to define that value.

To that end, as in the case of meeting planning, associations and educational programs were developed to increase the level of professionalism among DMCs. Through such organizations as ADME and the DMC Network, destination management professionals are able to discover and share best practices and experiences. 

“Just as we’re committed to educating planners about the importance of DMC services, we’re equally committed to education,” Scott said. “Through constant evaluation and education, the DMC industry is able to keep pace with its counterparts. Communication is important to maintaining client relationships as well as to keep the competitive edge.”

And, similar to the meetings industry where meeting planners are able to demonstrate certain levels of knowledge and competency through industry certificatications, ADME offers the destination management industry the Destination Management Certified Professional (DMCP) certification.

Knowledge is Key
“It’s really pretty simple,” said Laurie Sprouse, CITE, CMP, DCMP, president of Dallas-based DMC Ultimate Ventures. “You have to know your destination and really listen to the client and react based on what they are asking you for. If you really provide what they’re wanting in the most flexible way, you’ll have a good chance to be successful.”

DMCs offer planners invaluable on-the-ground knowledge of a destination. Therefore, the relationship between planners and DMCs is integral, overlapping and symbiotic.

In addition to local knowledge, DMCs also specialize in logistics. Beyond organization of meetings and events, destination management now often entails social programs, offsite tours, local partnerships and pre- and post-meeting programs. DMCs are typically expected to know the ins and outs of the local hotel landscape, the best audiovisual services and the most reliable transportation providers. This sort of all-encompassing service is designed to help planners reach maximum ROI.

“It’s important for today’s DMC to offer a broad range of services,” said Bob Reed, president of Orlando, Fla.-based DMC Convention Planning Services. “From the planner’s perspective, they’re thinking, ‘When I land at the airport, what do I need?’ They don’t want to have to work with a bunch of different providers. One of the greatest benefits we’re providing is giving them one point of contact. This is important because we could be working with as many as 30 different bus companies, for example. We’re able to stay on top of all those vendors so the planner doesn’t have to deal with them. Our services optimize their costs.”

Service First...and Last
DMCs actually grew out of the transportation provider business. As meeting planners started to demand more from their ground transportation providers (Where are the best hotels? Where are the best restaurants? What should the group do during its down time?), destination management became a term and an industry. Today, the value continues in complete service. Modern DMCs are well versed in hotel contracts, but can also provide help in navigating permitting issues and insurance requirements. This is especially helpful when planning abroad.

“DMCs in Europe deal on a daily basis with the demands of a variety of nationalities and cultures,” said Paul Sellis of On Site Malta. “Working with DMCs in Europe can open up a whole new world of ideas for U.S. planners. The combination of all these cultures—each with its own history, cuisine and other intrinsic traits—with the pro-fessionalism of DMCs results in an authenticity that is highly appreciated by planners.”

In fact, when planning across borders, the value of local DMCs can reach far beyond mere appreciation. The companies are often key sources of critical information to a foreign planner. They can make the difference between presenting a customized program with a “local” feel and wondering if your
group will even make it through customs. European DMCs can also be of significant help with hotel purchasing power, says Celine Glon, director of sales for the multidestination DMC group Allied Europe. They provide “access to venues the U.S. planner would never be able to get.”

Again, DMC support is seen as critical to ROI.

“With the exception of perhaps the major cities, like London or Paris, one can easily pick a five-star property, have top-quality support by a professional DMC, serve great meals on and off location and include original activities without going overboard on the budget,” Sellis said.

Challenges Ahead
It’s clear that budgets remain a primary challenge to DMCs around the globe. The infringement upon margins from third-party vendors and competition from hotels continues unchecked. But the tougher test, in the view of many DMCs, is the nature of the business itself.

“I was talking to a member some time ago, and they had gotten a pickup order for more than 100 people the night before the job,” Rickenbach said. “That’s the kind of turnaround time we’re hearing about all the time.”

The influx of new companies can also present its own set of challenges. As a generational shift occurs from trailblazing operators to fresh new faces, the need to maintain continuity is crucial.

“A great number of DMCs are joining in cross-border associations, also sharing resources but mainly sharing know-how and appointing a professional company to handle their marketing,” Sellis said. “This is also linked to the fact that the traditional sales and marketing tools, like participation in trade shows, have become very expensive. Many DMCs are creatively using today’s inexpensive tools such as the Web and Web-based
networking tools to market and position themselves.”

Jim Grillo, CMP, general manager of Online DMC Inc., which operates the Web-based service Hereschicago.com, has another interesting view of this trend.
“The Internet has taken a lot of the wind out of the sails for many middlemen, especially when it comes to providing information. Planners used to call a DMC, and now they can turn to the Internet for much of the same information.”

But it doesn’t necessarily spell the end of the DMC, in Grillo’s estimation. For he, a DMC veteran, remains a service-first enthusiast.

“I still believe that you can’t commoditize this business,” said Grillo, a member of the MPI Chicago Area Chapter. “This is still a service business and it always will be. I think DMCs are going to be very important—there will be some merging among them, but they will always be around.”

ROBERT P. FARMER is a freelance writer in San Francisco.

DMCs are typically expected to know the ins and outs of the local hotel landscape, the best audiovisual services and the most reliable transportation providers. This sort of all-encompassing service is designed to help planners reach maximum ROI.

Modern DMCs are not only versed in hotel contracts, but can also provide help in navigating permitting issues and insurance requirements. This is especially helpful when planning abroad.