THERE'S EVOLUTION IN THE AIR for the meeting and corporate travel industries.
Companies ranging from Amway to Watson Pharmaceuticals are consolidating meeting and travel departments, and that is changing the way meeting planners do their jobs.
“It just makes good business sense,” says Craig Ardis, director of global special events at Amway Corp., Ada, Mich., which began the process four years ago and, as a result, is saving about 5 percent on its total spend each year. “The right hand needs to know what the left hand is doing.”
A growing number of companies are doing the same thing, but they aren't necessarily approaching it the same way. Some, such as Amway and Watson Pharmaceuticals Inc., have brought the two disciplines together under the authority of a meeting professional. Many more have folded meetings into travel.
“It's a natural partnership,” says Debbie Ricciardelli, CMP, manager, meetings and travel at Watson Pharmaceuticals, Morristown, N.J. “I can't see how it can be done efficiently and effectively any other way.”
Ricciardelli, who has a meetings background, has run the combined meetings and travel department at Watson since 2000, when Watson acquired Ricciardelli's former company, Schein Pharmaceutical. With corporate travel and meetings under her jurisdiction, Ricciardelli has a far more effective way of leveraging the total spend for negotiated deals with preferred providers. The company saves about $300,000 annually on combined airfare alone, says Ricciardelli, because of better coordination between corporate travel and meetings and leveraging the expenditures with two preferred airlines.
In another approach, Cracker Barrel, Lebanon, Tenn., is developing a business model that combines corporate travel and meetings, says Julie Craig, meeting planner, travel supervisor. Craig wants to centralize all corporate travel and meetings, which are handled separately at various Cracker Barrel locations, out of one office.
Amgen Inc. also found that it made sense to consolidate its meetings operation and source its hotel spend. Last year, the Thousand Oaks, Calif.-based company saved 22 percent on group hotel costs, according to Betsy Bondurant, associate director, meeting planning and. This year, it is tracking savings of more than 30 percent. Now, with savings in hand and meeting spend identified, Bondurant says Amgen is looking to leverage better rates on the transient travel side. “The data is powerful. Until you have that, you can't do anything.”
The savings potential is real, says Scott Graf, president of WorldTravel Meetings & Incentives, a division of WorldTravel BTI, who says companies can expect a 10 percent to 20 percent savings on their meetings spend by consolidating with corporate travel. By leveraging the spend alone, companies can save 10 percent on meetings spend right off the bat, says Graf. Over time, as consistent operating procedures are established, that number should rise to 20 percent, without cutting or sacrificing meetings.
MPI Partners with NBTA
While methods vary, the trend is expected to continue as companies take a closer look at the bottom line and the function of meetings. Recognizing this, two trade organizations that represent the respective groups — Meeting Professionals International and the National Business Travel Association — recently formed an alliance to encourage cooperation and networking.
“As a result of consolidation, there's an opportunity for us to work together rather than independently,” says Terri Breining, CMP, CMM, chairwoman of MPI and president of Concepts Worldwide, Carlsbad, Calif.
The alliance gives members of both NBTA and MPI discounts on professional development programs as well as access to all the tools and resources offered by the respective organizations. “It's a way of enriching the memberships of both groups without having to join each group,” adds Breining.
As part of the alliance, the two organizations agreed to testify jointly before the government on the significance of meetings and business travel to the health of the economy.
“We hope this partnership will expand understanding of the significant economic impact provided by the meetings and travel industry,” said Kevin Iwamoto, president and CEO of NBTA, in a statement. He could not be reached for further comment.
Value of Meetings
What does all this mean for meeting planners?
“It's raising the level of people who plan meetings,” says Terri Breining, MPI chairwoman, “and in turn, raising the level of meetings.” Planners have more bottom-line responsibility, buying power, and a higher profile in the organization, she says.
There are some challenges, too. For starters, there is greater scrutiny on the financial side of managing meetings. In most cases, this means reporting to purchasing, or being folded into the more bottom-line driven corporate travel departments, which were forced to consolidate in the late 1980s and early 1990s. Prior to that, it was largely fragmented, as meetings and events are now.
“It's a pretty big transition for a meeting planner who in the past was judged on the success of the event,” explains Christine Duffy, president and chief operating officer at Maritz McGettigan, a Philadelphia-based travel and meeting planning company.
At many firms, all meeting-related functions flow through procurement. Tim Brown, managing partner at Meeting Sites Resources, a Poway, Calif.-based site selection company, says procurement plays a “quality control” role. Procurement signs off on meeting-related, keeps an eye on budgets, sets guidelines, and manages risk. Planners don't enjoy the freedom that they once had in terms of booking, and they have to use preferred airline and hotel providers.
Adapting to the cost-conscious approach of procurement is the biggest challenge for meeting planners, says Graf. “The real focus is on cost management, more so than the ‘wow factor,’” says Graf.
Consolidation also broadens the skill sets of meeting planners. At most companies, travel managers run combined departments because they typically have broader business experience. An industrywide push to bring more professionalism to the job, driven by organizations such as MPI, is helping to change that. “MPI is seeing meetings absorbed by corporate travel and is saying, ‘Let's see what we can learn from them in terms of procurement, etc.,” adds Duffy.
To keep pace, meeting planners need to think like business managers, says Brown. Using technology, tracking spending and procurement, leveraging resources, negotiating contracts, and integrating staffs all come with taking on more responsibility, he says. “It's part of the education process.”
Planners are also being expected to catch up in their use of technology. Corporate travel divisions made a big investment in technology in the late 1990s, explains Graf. They became very adept at technologies such as online booking and expense management tools. In fact, nine in 10 companies now use online booking tools for corporate travel, according to a recent survey sponsored by PhocusWright Inc. and NBTA.
Meeting planners have typically been a little slower to embrace technology, but that is changing. By the end of this year, four in 10 companies will be using an online booking tool for meetings/group travel, according to the same survey. That is expected to increase 11 percent by 2005, says PhocusWright.
At Watson, for example, Ricciardelli books all trips through American Express and its corporate travel software. Amway, on the other hand, is testing a new software system that links meetings to travel, procurement, and the general ledger, explains Ardis.
Finding the right technology is one of the biggest challenges he faces in integrating systems. “There's not one technology solution that can do it all,” says Ardis, so the company is looking beyond the typical industry offerings.
Talk about pulling it all together. Kari Knoll Kesler, sourcing specialist, travel/meetings & incentives/promotions at ING Americas, Minneapolis, had a huge task on her hands when she joined the company two years ago.
Consolidating the departments was almost like starting from scratch. Kesler, who has a background in corporate transient travel, consolidated separate travel and meetings operations from 37 different ING offices. “The ultimate goal is to leverage all of our spend in a benchmark way.”
Despite the size and fragmented nature of the organization, the transition to a centralized operation has gone smoothly. The potential challenge of having to book different hotels for meetings and corporate travel was made easier by the fact that ING has been able to lock in the same rates for each. “It's probably a sign of the times. Ten years ago, this was not the case,” she says.
All business transactions run through her office. “Any piece of paper that needs to be signed comes to me,” Kesler says. That allows her to have a better handle on expenses and helps to minimize contractual risk. “That [Minimizing contractual risk] was as important as saving money,” she says.
Centralizing the paperwork also helps her office to track the spend at different providers, to see which is having the most — and least — effect on the bottom line. “We'll let the data outline what the next phases of our strategy will be.”
In addition, ING uses Web-based registration systems to automate things such as assigning each meeting a number, registration, destination analysis, request for proposals, initial contracting, budgeting, and reconciliation. Kesler says technology is an “imperative tool” for meeting planners. Adapting to technology has been the single biggest challenge that meeting planners have faced at ING, but the new processes have freed up their time to concentrate on what they do best. “It is our hope that the automation through technology will enable them to focus on their core competency: planning,” says Kesler.
The consolidation process at ING is ongoing, so it has been hard to quantify savings just yet. But with standards in place, Kesler expects to see the savings add up in 2004.
Ardis at Work
At Amway, reorganizing meetings and travel has been evolving under Ardis, a meeting planner by trade. It started by centralizing the meetings group, which runs about 400 meetings each year, and expanded into corporate travel.
Four years ago, the procurement division brought in a consultant to look at the best way to leverage the meetings and corporate travel spend. The consultant found that the meetings group under Ardis was already doing what they recommended.
Although payments are made through the procurement process, the meetings/corporate travel group at Amway does not report to procurement. “They don't dictate to us,” says Ardis. “We manage the department, we negotiate our own contracts,” and they pay the bills. The partnership between procurement and meetings/corporate travel has been a “good marriage,” he says. “They recognize that we take it from a procurement approach.” Yet they also know what it takes to run a successful meeting.”
As a result of centralizing meeting and corporate travel air and hotel booking, the firm has saved about 5 percent. But the evolution is ongoing. Now, the company is evaluating the best way to run the corporate travel arm. Group travel is booked in-house, while the rest is outsourced to a travel agency, an arrangement that is under review. At present, Amway uses the Amadeus system for in-house travel bookings.
Ardis walks a fine line in getting all affiliates around the world to “play in the same game” without dampening the entrepreneurial spirit of the company. “There's a little conflict there,” he says, in terms of getting affiliates to understand the strategy and its impact on the bottom line without dictating. In North America, for example, Amway has contracts with three airlines that are preferred providers, while overseas affiliates have relationships with local carriers. Creating the most efficient structure worldwide involves working with affiliates' agreements.
Overall, the job of combining meetings and corporate travel is not easy, and it takes time. “There's a lot of trial and error,” states Ardis. There's no standard blueprint to follow and no “right” way to do it — it just depends on the company.
The Down Side
If planners have one reservation about the merging of roles, it is that companies might become so bottom line-driven that they don't take into account the complexities of meeting planning. There is an assumption, says Duffy, that the two can be married because they both involve air and hotels.
“There are synergies in corporate travel and meetings, but they're not as similar as some perceive,” says Duffy. “Meetings are not black and white.”
On the other side, there appears to be a growing realization of the importance of the meeting planner's role. While ING's Kesler has never planned a meeting, she sees her background in corporate travel as a plus in working with planners. “I think it has helped because I'm less of a threat to them,” she says.
Most importantly, she doesn't pretend to be as an expert at planning meetings and lets the meeting professionals do their job. “I assume they are spending the money well.”