Destination management companies are the creative backbone of the meetings industry. More than just the people who see to it that the buses arrive and leave on time, they are the specialists behind the sunset dinners in the desert-the events you hope dwell in your award winners' memories.
Traditionally, meeting executives have been referred to qualified destination management companies by their meeting hotels. Now the partnership between DMCs and hotels is undergoing its sternest test, with meeting executives caught in the middle.
With an eye toward revenue flow and a marketing upper hand, more than a dozen prominent resorts in the Palm Springs (CA), Phoenix, and Tucson areas have established full-service destination management departments in-house. Many of these have started up in the past year or two, so they've only begun to be tested by meetings. But already the concept is spreading to major hotels in other resort-and even some city-destinations as well.
Targeting the Executive-and the Novice One type of client these in-house departments have ended up serving, says Lefty Novotny, president of Master Connection Associates, a hospitality industry consultancy, is the senior executive for whom meeting planning is not a full-time job.
"The customers are changing," says Novotny, who helps hotels get into the destination management business. "There are fewer professional meeting planners, fewer meeting departments. Financial guys are setting up meetings, marketing people are setting up meetings, the work is filtering down to other department heads. They need help. And what's the easiest thing for someone who doesn't know what they're doing? One-stop shopping."
Hoteliers, while admitting that they see destination services as a big way to "recapture" revenue, say they are also responding to requests for just this type of consolidated service. Using a hotel's destination management services, they say, means one less outside vendor to hire, and less paperwork, because the department's charges go on the hotel's master bill.
"As we see the booking cycle continue to shorten at resort and convention properties, the professional meeting executive-and the ad hoc meeting planner-will need ways to make their lives easier," says Don Welsh, vice president of sales and marketing for Westin Hotels. Five Westin properties, including city hotels in Seattle and Boston, have destination management departments, and Welsh says the chain is considering adding more departments.
"From a pure marketing perspective, anything that eases the process of booking and planning meetings for the customer is a benefit," notes Robert Gilbert, executive vice president of the Hospitality Sales and Marketing Association International. "But there are risks. Hotels aren't specialists in this area, and if they don't give the finest service, it'll backfire. And they need to proceed with caution, because DMCs have been their partners in travel for many, many years."
But hotels have zeroed in on meeting executives such as Lisa Corrente, a novice planner with no established ties to vendors, as the target user of their destination management departments. Last January, Corrente moved up the ranks from adminis- trative assistant to meeting planner at Biogen, a biotechnology company in Cambridge, MA. For her first meeting, a 120-person product launch at the Scottsdale (AZ) Princess, Corrente opted for the destination management department over an outside DMC. "Our business managers checked around, and the hotel department's price was similar, or less than, other DMCs," she says.
In addition to arranging all ground transportation for the meeting, the department organized and catered that Scottsdale staple-a desert cookout-for the Biogen group, arranged horseback riding and jeep tours, and made restaurant reservations for an evening of "regional" dinners.
The department, Corrente says, even went beyond the call of duty, helping her line up a new computer when a piece of equipment needed for the meeting was lost in transit. "They made all the calls and priced everything-how much it would be to rent, how much to buy," she says. "We ended up buying a new computer and color printer for the meeting. I couldn't ask for better people to work with."
A Premium on Creativity But convenience is not a priority for everybody, particularly incentive travel executives who make their decisions based on a vendor's creativity and reputation. Asked whether she considers one-stop shopping an inducement to use hotel destination services, Marianne McNulty, owner of Meetings Plus, a full-service incentive house and meetings company in Oak Brook, IL, replies, "Absolutely not. I want the flexibility to go out there and get bids from a variety of suppliers."
Jan Bernatz, travel director, meeting purchasing, for BI Performance Services, an incentive house in Minneapolis, is reluctant to use a hotel's department unless she knows the person who will be handling her programs. "When working with a DMC, you truly get tied in with the person and that person's creativity and sense of dependability," she says. "We have years of relationships built up with independent DMCs to the point where, seriously, I even have some of their mothers' phone numbers."
Pat Fagan, conference services officer for Sun Life of Canada's U.S. headquarters in Wellesley, MA, also cites the relationships she's built over the years with destination management companies. "It's better to go outside-you get better ideas and better creativity," says Fagan, who was displeased with the results the one time she used an in-house department.
Another corporate meeting executive, Kathy Kaskiw, senior marketing coordinator for Canada Life Assurance Co. in Toronto, worries about an in-house department limiting her options. "Independent DMCs aren't tied to the hotel, so they'll recommend all types of things," she says. "I'm not sure that I'd get the same ingenuity and spontaneity from a department within the hotel."
That's one of the thorniest issues surrounding the in-house destination management trend: Are meetings best served by a department that pushes on-property events over off-site programs?
Dawn O'Flannery-Cleveland, national sales manager for the Westin Mission Hills Resort in Rancho Mirage, CA, makes no bones about it. "Would we prefer that a client hold all events on property? Yes," says O'Flannery-Cleveland, whose hotel launched a three-person destination services department last November. "But there are also benefits to the customer. Lower transportation costs. Less travel time. We know if the event is held on property, we are able to provide the same banquet staff, the same captains, they had all week." If a group wants to go off property, she says, the hotel would "ask to bid on all facets of the program."
One hotel, Marriott's Desert Springs Resort in Palm Desert, CA, is actually seeking to develop new off-site venues. Marilyn McIver, the hotel's director of destination services, often uses a working nursery that lends itself to artists' demonstrations. Her department also arranges the celebrity home tours and hot-air balloon trips that are popular in the area; in fact, groups opting for ballooning have the advantage of being able to launch from the Marriott's expansive property.
What draws the ire of Meeting Plus's McNulty is when hotel salespeople offer to lower the room rate if she uses the destintion management office. "Why suddenly is the room rate affected by my choice of DMC?" she asks. "The very fact that the salesperson says, 'I can lower your room rate,' is pressure."
Other meeting executives report that they have felt pressured by the hotels to employ their destination management departments. "They've tried to foist it upon us in contracts," says Bernatz of BI Performance Services. "But we just cross it out of the contract, and no one's taken a strong stand with us."
For their part, hoteliers deny that they pressure meeting executives, saying that all they want is a chance to make a bid.
"It's folly to think that a hotel can strong-arm a client," says Trevor Barlow, director of destination services for the Westin Seattle, which opened its department this year. "Planners are intelligent people."
"We don't press it; we suggest it," says Harley Mayersohn, director of marketing at La Quinta (CA) Resort and Club, one of the first to create an in-house destination services department back in 1991.
Matthew Randall, media and communications manager at PGI, the Arlington, VA-based event management and business communication firm that owns and operates some of the nation's most pro-minent destination management companies, including Safaris, says he'd be surprised if any "strong-arming" were going on. "It's a naive hotelier who would back a meeting planner into a corner," he says. "It's too easy for the meeting planner to go down the street to the next hotel."
Hoteliers acknowledge that during negotiations they'll offer meeting groups inducements to use the destination management department. That, they insist, is just good business. "We consider our DMC an extension of the sales teams," says O'Flannery-Cleveland of the Westin Mission Hills.
Everyone Gets a Slice For now, the emergence of hotels' destination management departments has not had a dramatic impact on the industry beyond giving meeting and incentive planners another choice to make in places where the concept has taken hold.
A shakeout among destination management companies has not occurred, nor do industry observers believe it will; Hoteliers and DMC owners maintain there's enough business to keep everyone afloat. And the cost of DMC services has not been affected, although theoretically, heightened competition could keep a lid on prices.
If the hotels' gambit has had any impact, it is on the relationships within the industry. Not surprisingly, some DMCs, long dependent on hotels to recommend them to meeting planners, are miffed at hotels elbowing onto their turf.
"Our concern is that the hotels are cutting off their nose to spite their face and setting themselves up as competition," says PGI's Randall. "But we don't view them as competition."
Despite a cooling of relations, DMCs and hotels that offer similar services still work together. In some cases, Randall says, they might "divvy up" an account. For instance, the hotel might handle ground transfers while the DMC designs specific theme parties.
Ironically, the destination management industry may have helped facilitate the hotels' inroads by remaining fragmented and amorphous. "The industry has failed to define itself," Randall notes. "There is no list of ten criteria you must meet to call yourself a destination management company. There is no industry certification. The door has been left open for anyone wanting to call themselves a DMC."
Until a year ago, destination management companies did not even have their own professional association. Sylvia Rottman, executive vice president of the newly formed Association of Destination Marketing Executives (ADME) and a DMC owner in Denver, agrees that the issue is a hot button among some members. Still, she adds, "in a way, you can't call [competition from the hotels] a bad thing: It keeps 'em on their toes."
But is it what the customer wants? "Customers tell us all the time that the fewer people they can deal with, the better," says Steve Heitzner, director of marketing at Marriott's Desert Springs Resort, whose destination management department is two years old. About 60 percent of his hotel's groups requiring destination management wind up using the in-house department, which has seven full-time staffers.
Colleen Horan, director of destination services at the Phoenician in Scottsdale, reports 80 percent usage for its four-year-old department. And La Quinta Resort and Club, which has a five-year-old department, is increasing its full-time workforce from three to five because of rising demand, according to Mayersohn.
In the end, industry observers agree that whether hotel destination management flourishes depends on whether meeting planners feel they are getting top-notch service and quality-not just convenience-for their dollar.
"I think the jury's still out," says Lucy Eisele, incentive travel purchasing supervisor for Carlson Marketing Group in Minneapolis. "We haven't decided if we like it. But we will play along, to a certain degree."
Local destination management companies, as opposed to those with regional or national profiles, are particularly vulnerable to the proliferation of in-house destination management departments at hotels.
"Absolutely, we've lost business to the in-house departments," says Jim Lammy, president of Southwest Conference Planners, a nine-year-old firm in Scottsdale. "But we saw this coming four years ago, so we switched gears and focused on the incentive-driven market, figuring that the corporate market would be attracted to the one-stop shopping that the hotels are providing. If we hadn't switched our focus, we'd probably be out of business."
Lammy says it's more important than ever to "maintain the client relationship, to establish the personal rapport with clients, to make sure that we value them and want to take care of them." Toward that end, he has extended clients such value-added services as free staff transportation or free sedan transport for a VIP.
In years past, the relationship Lammy sought to strengthen was with the hotels. "I'd spend a lot of resources wining and dining the hotel salespeople so they'd recommend us to clients," he says, adding that the company now has a "cool" relationship with the hotels selling destination management.
"I understand what they're doing; it's fine," Lammy adds. "But I've been in this business since before they built the Phoenician, so I don't feel I have to be cashed out of the
market just because some corporate bean counter says, 'Hey, we need to increase our revenue.'"