How Planners use preferred-vendor contracts and other techniques to control small-meetings costs
The economy may be tanking, but what has been a prolonged seller's market persists. Corporations are in a budget-cutting mode, meaning that the pressure is on meeting planning departments to cut costs and realize savings.
Increasingly, meeting planners are usingprograms to consolidate and manage spend. But when it comes to small meetings, SMMP can be challenging, “We have a corporatewide mandate to monitor and capture as much of small-meetings spend as possible,” says Karen Knox, CMP, CMM, manager, meetings management, for Blue Cross and Blue Shield of North Carolina. “The challenge is understanding that these meetings may be very small — as few as five people going off site to talk about the reorganization of some process or another — and that there is value in handling them strategically.”
Knox, who works out of the Durham headquarters of BCBSNC, helps plan 400 meetings a year, about 35 percent of which she classifies as “small.” In complying with her company's mandate, Knox says she makes every effort to capture the entire meeting spend.
“We're crystal clear about history and spend, and where that spend has been going,” says Knox. “We [prove] our value to the vendors by showing them it's worth doing business with us. My company is in an aggressive cost-cutting mode, and we're very focused on consolidating our meetings spend with our preferred vendors.”
Applying strategic meetings management techniques to small meetings held throughout the company and centralizing spend is “a hot topic,” says Melissa Logar, CMP, senior meeting manager, Meetings and Events Services, PricewaterhouseCoopers in Lantana, Texas. “How do you capture those small meetings within the other parts of your organization and bring them into your department?”
In PwC's case, even though the dollar amount at stake was substantial, the question was whether bringing those small meetings within the Meetings and Events Services Department would actually be a value-added proposition for PwC's local offices.
Considering that doing so would mean having to expand the meetings department to a size that was financially prohibitive, the answer, says Logar, was, “not really.” Instead, the department developed a small-meetings solution that is managed by PwC's local offices. It includes prenegotiated small-meetings agreements with preferred vendors. Room rates, discounts on food and beverage, and audiovisual fees are settled upon when these preferred vendors agree to come onboard. “We end up with athat's more a confirmation of issues like room blocks, cut-off dates, and meeting space. Everything else is agreed to in advance,” says Logar. “There are no 12-page hotel with 7-page PwC addendums.” This solution, Logar says, leverages buying power, mitigates risk by using prenegotiated agreements, and allows PwC to track spend for small meetings and events in its local markets. So far, it's been completely rolled out in such key markets as Boston, Chicago, and Atlanta, with more to come.
Although capturing small-meetings spend helps to boost buying power, planners still face challenges in finding hotel space. Laurie Fitzgerald, CMP, meeting manager at Northbrook, Ill.-based Allstate Financial, points out that many hotels won't book small meetings more than a month out. Fortunately, Fitzgerald usually has the flexibility to fit into open hotel slots. But she sometimes finds that hotels are less than honest about availability. “What I often get from hotels is, ‘Sorry, we don't have the space,’” says Fitzgerald, “What they're really saying is that they think they can use the space for a more lucrative meeting and they just don't want my business. So when I'm told, ‘We don't have the space,’ I question it.”
Her willingness to speak frankly with vendors helps when it comes time to negotiate, Fitzgerald says. “Pricing is an issue with everyone, so I lay my cards out on the table immediately. I'm specific about what I need and about the price points I can work with. And usually, because I'm upfront with them, they're upfront with me.”
Hotels refusing to book small meetings more than a month out are a problem for Mary Kay Hokanson as well. Hokanson, a meeting planner with Allianz Life Insurance Co. of North America in Minneapolis, helps to manage about 900 meetings a year, most of which are small. She says that even if her company spends millions of meetings dollars with a particular hotel chain, that same chain might still tell her they can't commit space for a small meeting until 30 days out.
However, the economic downturn may be starting to have an impact. Hokanson has experienced signs of change. “I've never had so many hotels calling me looking for business as in the last few months,' she says. “It's been kind of surprising. All of a sudden, my small meetings are looking more appealing.”
Suppliers say that the demand for space for small meetings is skyrocketing, but handling that demand is difficult — particularly because planners want quick answers. David Scypinski, senior vice president, industry relations, Starwood Hotels & Resorts, compares the small-meetings dilemma to “chewing on a whale — it's such a huge topic.” Particularly at large properties, he says, the challenge is usually about finding the space on the calendar for these small meetings. He compares the process to using a funnel. “You can't process these [booking requests] fast enough. It's all about speed — a planner comes in with a request in the morning, and wants an answer by the afternoon.”
Technology is the “big enabler” to help get answers fast, Scypinski notes. Starwood and most of the other hotel chains have been developing internal electronic solutions that can interface with software provided by meeting technology companies like StarCite, giving planners real-time online access to inventories of guest rooms and meeting spaces. (StarCite has recently made a big push in the small-meetings area with its Small Meetings Solution, which is being marketed to major hotel companies and Fortune 500 companies.)
Logar says that PwC would love to get its own small-meetings solution completely up and running by taking advantage of meetings- management technology solutions that are being offered. But she has found that the technology companies charge transaction fees to the hotels, “which is not going to work because I've already done the negotiating — I don't want the hotel to have to pay a commission or fee after I've negotiated a discount.”
While the parameters of a contract should be the same no matter what kind of meeting is being negotiated, in the case of small meetings, there are some clauses that might require more attention than others. “If you're talking about something like a 20-person sales meeting, I would always recommend against ‘overlawyering’ a contract,” says James M. Goldberg, principal in the Washington, D.C., law firm of Goldberg & Associates. But depending on the type of meeting, the contract could become more complex. Goldberg points to a recent court case in which a New Jersey casino was ordered to pay restitution to a company after it guaranteed 60 sleeping rooms for an event but failed to supply almost half of them. “In this case, a company was entertaining customers,” says Goldberg. “Given the nature of the event, and given who the attendees are, you might want to build more protection into the contract than for a small meeting for internal employees.”
“Our biggest [contractual] concern is always cancellations,” says Karen Knox, CMP, CMM, manager, meetings management, for Blue Cross and Blue Shield of North Carolina, Durham. “It's pretty easy for someone to cancel a five-person meeting. So we have to make sure we have adequate protection against cancellations — that we can cancel with credit given if we reschedule.”
Mary Kay Hokanson, a meeting planner with Allianz Life Insurance Co. of North America in Minneapolis, has one particular clause she's very careful about including in small-meeting contracts. “We always request that no other financial services institution is holding a meeting at the hotel the same time we are,” she says. “Our independent producers sell a variety of products and we want their meeting to be a total Allianz experience.”