Some of the meeting industry's smallest suppliers — DMCs and event planners, for example — are reporting faint signs of a recovery as meeting volume slowly picks up. But it's clear that the economic slowdown has dealt a serious blow to many of these support companies.

“Sometimes, being lower on the industry food chain, we get hurt a little more when the economy goes south,” says Lex Lyons, vice president, PRA Destination Management, San Diego. To cope with what he sees as a continuing loss of meeting business, PRA is looking at acquiring shuttle-bus operations in San Diego and other U.S. cities.

Also, spouse programs and special events — the bread and butter for DMCs — are the first to go in recessionary times. “When a company lays off a bunch of people, they can't very well turn around and say, ‘Let's throw big party,’” explains Helen Moskovitz, Helen Moskovitz Group, a major DMC in Nashville, Tenn.

“In times like this, corporations will use DMCs only for the more difficult tasks of event management and will do the simpler things themselves,” adds Fritz Lehman, president of Orlando, Fla.-based DMC Hello Florida. “For example, they might have you do transportation management, which has a very high staff ratio — and thus is not as profitable for a DMC — and they'll take care of those evening receptions and special events themselves.”

The situation has spawned more mergers among DMCs. For example, the Helen Moskovitz Group merged with Key Event in March. “You're going to see more mergers with companies like ours that can find a symbiotic matchup,” she predicts. She also reports that, in her 23 years in the business, she has rarely seen so many DMCs going after long-term contracts with incentive houses and meeting-management companies — a strategy that she's pursuing.

In response, the DMC Network, a 30-year-old consortium of independent DMCs, is pursuing companies and major meeting management firms to partner with the association's 30 member firms as preferred DMCs. Executive Director Darlene Sweeney says that one deal has already been cut with TG Worldwide, a Colorado-based meeting-management firm, and another is nearing finalization.

DMCs have different opinions on what the year will bring. “Business is better for us this year than it was last year at the same time,” reports Janet Elkins, president of Los Angeles-based special-events firm Event Works. Moskovitz predicts some companies will “fall out of the business before 2004. That's when I finally see things coming back closer to where they were.”