With the growth inof meeting planning, one type of meeting industry supplier is becoming increasingly popular: the site selection firm. These firms come in all shapes and colors: Some handle destination research and , while others also manage your meeting. Site selection companies are paid a commission, usually 10 percent of the total guest room revenue, by the hotels.
Take Irvine, Calif.based Site Services, for example. Founder Laurie Mirman and her eight-person staff prepare reports for clients, comparing potential destinations. They work up a detailed profile of each hotel, including "any detail the client would want to know," Mirman says. "How many meeting rooms, restaurants, what kind of food? Does it have baby-sitting?"
The firm also does the negotiating once the hotel is chosen. Mirman has 20 clauses that she negotiates into, covering everything from food and beverage to comp rooms. As an additional service, clients receive an extensive post-con report.
This kind of research saves clients legwork and money.
But we all know nothing is free, which is why some companies are leery of using site selection firms, speculating that hotels simply raise their rates to accommodate the commission. Brian Stevens, a former Hilton exec who formed ConferenceDirect, a site selection firm based in Los Angeles, last year, says, "If you're talking about Manhattan in October, sure, it would be foolish for the hotel not to add to the rate. But if a hotel has a hole it wants to fill, it will be more flexible." He said, "That's part of our job, sniffing around to find the best bargain."
Site selection companies contend that it is the kind of expertise Stevens is referring to that results in a lower rate for clients, even if the hotels adjust for commissions. For example, Doug Wheeler, president of Conference Locators International, of La Jolla, Calif., a 19-year industry veteran, says that he typically negotiates rates 10 percent to 30 percent lower than the client's requested rates.
* A New Kind of Partnership Site selection firms now bring hotel chains such a substantial amount of business that Hilton, for one, this year created a partnership agreement with Helms/Briscoe. The company has become a heavy-hitter. Founded in 1992 and based in Scottsdale, Ariz., it handled more than 7,800 meetings in 1998, primarily for corporations. Under the agreement's terms, Hilton pays 5 percent of the commission up front, when the meeting is contracted, instead of paying the whole 10 percent commission after the meeting.
Other chains, including Wyndham, Fairmont, and CP Hotels, also have entered into similar preferred agreements with Helms/Briscoe, while 200 hotels have signed on with ConferenceDirect. In addition, individual properties can and do form partnerships with site selection firms.
Helms/Briscoe also receives a marketing fee from some hotels, which assures them of more exposure to Helms/Briscoe sales associates.
Does this mean that site selection companies play favorites, steering business toward their hotel partners or to destinations offering more incentives? "If it's good for the client, nothing makes us happier than putting clients in partner hotels," says Roger Helms, president and chief executive officer, Helms/Briscoe. But, he stresses, "We are 100 percent client-driven. Our goal is to have long-term relationships with clients. We want them for 50 years, not just one, so we put them in properties that best meet their specific needs."
David C. Scypinski, vice president, industry relations, Hilton Hotels Corp., concurs. "It's the customer who is going to [decide]. If everything [among several hotel choices] is exactly equal, I do think we have an advantage--but how often does that happen?"
Other site selection firms, such as Conference Locators and Site Service, have no formal attachments. "I don't want to limit the choices I give clients," Wheeler says, "or have an obligation to push clients in that direction even though it might not be the best opportunity for them."
* But Who's the Client? Regardless of whether the hotel has a formal agreement with a site selection firm, the fact remains that the hotel is paying the third party. So, who's the client? Some say the meeting planner, others say the hotel.
"When clients ask me, 'Why do you charge a fee vs. a commission? I can get these people [site selection companies] for free,' I say, 'You get what you pay for. If you don't pay anything, [the third party] is working in the best interest of the hotel. I work for you,'" says James R. Daggett, CAE, CMP, of JR Daggett & Associates Ltd., a meeting management firm in Chicago.
And those higher rates are in the best interest of the third party, too. Just do the math: The higher the room rate, the higher the commission. Says Daggett: "I see that as a potential conflict of interest."
* Questions to Ask Asking the right questions will help you determine how a third party operates--and to make the right choice. Consider the following:
* Ask for references--of clients and suppliers--the company has worked with.
* A reputable third party shouldits fee structure, but if it doesn't, ask how the company gets paid and what services it provides.
* Ask if staff people sometimes accept commissions higher than 10 percent. Does the company have partnerships with any hotels or chains?
* Some of the less ethical site selection companies have assessed hotels commissions "in perpetuity." In other words, you book a meeting once through the firm, but it demands a commission for every meeting you hold at that hotel in the future, even though you handle the bookings directly. Make sure the company is charging a commission only for meetings you book through them.
* When you've chosen a firm, get a written agreement that includes how the company will be paid.
Site Selection Companies Who's the Client?
* You, the planner of the meeting; however, site selection firms may have partnerships with particular hotels or chains.
What Do They Do?
* Find sites and negotiate contracts. Some also offer full meeting management services.
How Do They Charge?
* They charge a commission from hotels, usually 10 percent of guest room revenue; hotels may also pay a marketing fee. Some firms charge the meeting organizer a flat fee for additional services.
Hotel Rep Firms Who's the Client?
* Hotels, mostly independents, sign on as members of the rep firm. What Do They Do?
* Account executives assist companies with site selection, but will only book member hotels. Some also help with contract negotiation. How Do They Charge?
* Hotels pay these firms a retainer; some firms also get "incentives" from hotels, a percentage of the total guest room revenue if a meeting is booked.
Meeting Management Companies Who's the Client?
What Do They Do?
* A full range of services, from site selection to on-site meeting details
How Do They Charge?
* Fee structure depends on many factors, including the meeting size and services provided.