“If you gave some associations a $100,000 invoice, they would not be able to pay it. You're going to read about associations that go out of existence because ofproblems.”
Thirty-one years ago Bruce Harris founded Cleveland-based Conferon Inc., the country's first independent meeting planning firm. With 500 clients and six offices around the U.S, Conferon is now the single largest customer for numerous hotel chains, including Marriott, Hyatt, Starwood, and Hilton. We talked with Harris about critical issues facing, as well his company's recent expansion moves.
Q: Does Conferon's success as the largest independent meeting planning company point to an overall trend towardsby associations?
I think that's absolutely the case. There's some paranoia out there — people think we replace planners. We're able to work with an association and let that planner focus on things that bring value to the members. Lowering costs is another reason for outsourcing. If you're negotiating for only one meeting, you're at a disadvantage. You don't have enough experience or power in that area. And attrition is as huge a problem for associations as it is for hotels. Associations want to talk to organizations that can help them lower their risks.
Q: What do you think is the most critical issue facing association meetings?
Attendance. For most associations, meetings are either their first or second source of operating revenue. With the economic slowdown and a lot of corporate mergers, there are fewer attendees. A 20-percent attendance drop has a disproportionate affect, since there are fixed costs. That may wipe out 100 percent of any operating capital the group might have gotten from that meeting.
To make it worse, lower numbers can result in attrition damages. If you gave some associations a $100,000 invoice, they wouldn't be able to pay it. You're going to read about associations that go out of existence because of attrition problems. Or else they now have an incredible financial burden — like a Third World country that has so much debt that it's hard to grow.
Q: Given the unpredictable economy, what is a fair solution to attrition penalties?
Because they are so service-oriented, associations want to be sure to have hotel rooms for everybody who wants to come. As a result, many associations end up booking whatever their count was this year, plus an increase for next year — and it isn't always the case that the meeting grows. The best thing to do is think about what hurts more as an association — paying attrition fees or saying ‘Sorry, we're out of rooms.’
I think associations have to knock their room blocks off by 15 percent, and negotiate that as the new block, with attrition starting from there. In this economy, you could get extra rooms if you needed them.
As an association, you have to look at attendees as being part of one body, not as a bunch of individuals. If the association incurs large fees it's going to hurt every member, those booking inside and outside the block. Set a higher registration fee for booking outside the block. If you find 20 percent going to a lower-cost hotel [outside the block], reduce that block by 20 percent and book those rooms at the lower-cost hotel.
Q: What is the biggest ethics issue facing the industry?
On the independent planner side, disclosure has been a huge issue for us. Conferon has disclosed exactly our source of revenues, which have been commissionable for 31 years. It is written in every singlewe write. There are independents out there who are getting 12 percent, 15 percent, 20 percent. The client has a right to know that. At our company we have a policy that we will never accept more than 10 percent. Sometimes hotels offer more, but every time that happens we say, then reduce the room rate.
When you sign with an independent, if they don't tell you specifically what commission they're getting, you have no way of knowing if there was an offer by the hotel that ended up benefiting the third party instead of the ultimate buyer, and that's highly unethical.
Q: Why has ethics always been such as cornerstone of your company?
If people can't trust us, then no matter how good our techniques may be, or how much buying power we may have, we won't keep our customers.
Q: Conferon carries a lot of clout in the marketplace. Outside of the commission issue, what issue would inspire you to take to the bully pulpit?
It has been difficult to get from hotels a real clear story of which rooms were actually picked up and utilized by a group. Associations have a hard time getting the list of the people in-house so they can check it against their attendee list and find the number of people who actually didn't show up. It is incredible how difficult it is to get some hotels to run that list. And at the same time, out of the other side of their mouths comes “Hey, you owe us $30,000,” or “You owe us $100,000.” Some hotels will say it's an issue of privacy. But if you talk to any industry lawyer, you'll hear that this is not true.
I'm also aggravated when a hotel promises X-Y-Z meeting space and does a switch and doesn't tell the client. Or when a hotel promises X-Y-Z guest rooms, a contract is signed, and they undersell the block — meaning that they get another group in the hotel and they don't allocate the full number of guest rooms [to the first group]. Those things in my mind are purely unethical and greed-based. Once you make a commitment to somebody, it means something, and it shouldn't mean that if a better piece of business comes along, you dump a relationship to chase the bigger bucks.
Q: What about unethical associations?
Some groups block more rooms than they really need, thinking they'll get more benefits and be able to negotiate more things. Then they get closer in and want to call the hotel and renegotiate. They want to lower the block and keep all the benefits. But if you reduce your business, you reduce the perks that go along with it.
Q: Let's talk about Conferon. Your business mix is about 80 percent association clients, 20 percent corporate. You want to grow corporate to 40 percent. Why?
It's a business decision. In a good economy, the corporate market is far more profitable. Every dollar an association spends detracts from its operating budget, because meetings are a source of revenue. On the corporate side, money is important, but if they spend another $1,000 or whatever [on their meetings], it doesn't detract from their ability to do other budgeted things during the year. For associations, take away that money and it might mean fewer services for members.
Q: Other areas of expansion for Conferon?
We have a group of international associations that have large and small meetings in foreign countries. We want to be their international provider. On theside, we didn't have the level of expertise that we have on the meeting planning side. So we made an alliance with Corcoran Expositions and have grown that business tremendously.
Q: How does Conferon's recent alliance with PlanSoft — which you co-founded — fit into your strategic plan?
We need to be able to transmit every function we do via the Web. We're about two-thirds of the way there right now and the PlanSoft alliance is part of that. PlanSoft's “mpoint” database is second to none. We'll be able to do all searches in our company through mpoint and then integrate that information into our own systems.
We're also working with mpoint's Meeting Management Solution program, which aggregates meeting expenditures, so we'll have more power when negotiating with hotels.
Q: Let's hear about you. How do you spend your workdays?
Each year I meet with each of our 220 employees for an hour. It takes about six weeks of my time just meeting with people to find out what their goals and dreams are and what we should be doing differently. I also spend a lot of time meeting with key clients and key suppliers, so there's an open dialogue with the top people who make things happen on the hotel and meeting side.
Even after 31 years, I go onsite to help with at least two meetings a year, which might mean I'll do things like sign-age or registration. If you're in management here, you never get so high that you are away from doing meetings. If I get a new employee and they go on site with me, I am going to be there to work for them. Sometimes new employees don't understand why. But on site the most important person in the company is the person who's running the meeting. When employees reflect on that, they see it really says something. It says we walk the talk.
Education: Government major, economics minor from Lake Forest College, Illinois
Outside Interests: Tennis, softball, learning to play golf, big Cleveland Indians fan
Family: Married to wife Barb for 26 years, three children: Matt, Megan, and Brent. “This fall I'll have three in college at one time. It will be just my wife and I, which is great, since I was blessed and married an angel.”
Original Career Plans: Working with his father in publishing.
How He Got in the Biz: “I fell into it like everybody else. I thought I was going to be a hotel rep and have a company that sold hotel space to clients. What I found out was there was real lack of understanding between the meeting planner and hoteliers and vice versa.”