Strategic Meetings Management

Peter Moen

Vice President, Carlson Meetings and Events

Strategic Meetings Management

I. Industry Changes

II. What is Driving Change?

III. What is Strategic Meetings Management?

IV. Where are the Savings?

V. What are my Options and Critical Success Factors?

Meeting & Events: A Fertile Ground

• Estimation of Meetings and Events spend is about 150 Billion US$ (35- 45 % of Business Travel spend)

• Historically meetings and events have been managed individually and outside of the corporate travel program

• Rarely do companies have group and meeting data to leverage with corporate travel data

• Meetings and Events often times is very nearly as much as corporate travel, varies by industry segment

Group Policies

Source: AT KEARNEY

Percentage of companies reported to have…

"No formal policy

"No formal policy but informal

guidelines exist "

"Meeting/Events policy as part of the T&E policy"

Embryonic MeetingEvents Policy

15 % 36 % 29 % 20 % 100 %

NascentStage

BestPractice

0

10

20

30

40

50

60

None MinimalInvolvment

(<50%)

Highly Involved(50+%)

Procurement Involvement

60%

18%15%

Source: Prmedia Business

Today

To what extent has procurement become involved in your decision-making process

0

10

20

30

40

50

60

None MinimalInvolvment

(<50%)

Highly Involved(50+%)

Procurement Involvement

To what extent has procurement become involved in your decision-making process

41%

27%32%

Source: Prmedia Business

Future

What is driving this Change?

Drivers of Change

• 9/11 – More control from Procurement

• Success of Corporate Travel Programs

• Sarbannes-Oxley

• Growth of the Internet

What is Strategic Meetings

Management?

Individual Business Travel

Highly leveraged through established supplier programs

Big push to book through the Internet

Typically consolidated with one agency

Large, Complex Events

Involves attendee mgmt, production, on-site assistance

Typically managed Ad Hoc

Separate procurement process

Small Meetings

Arranged by Administrative Assts

Booked as corporate travel transaction

Little or no procurement process for airline or hotel selection and contracting

Managed by Sales and MarketingManaged by Procurement

Three Major Travel Spend Categories

A different process is followed for every meeting and event

Existing Process

Meeting/Event Arranger

Meeting/Event Arranger

Meeting/Event Arranger

Procurement

ProcessSuppliers

Air

Fulfillment

Consistent Procurement, Delivery and Air Process

Meeting/Event Arranger

Meeting/Event Arranger

Meeting/Event Arranger

Procurement

ProcessSuppliers

Air

Fulfillment

Strategic Meetings Management

Where are the Savings?

Corporate vs. Group

45%

35%

15%5%

Air Hotel Ground Misc

25%

65%

5% 5%

Air Hotel Ground Misc

Corporate Group

AirAir

Hotel Hotel

Much higher hotel (65% vs. 35%) spend in group travel

Due Food and Beverage, Meeting Room, Audio/Visual

High Yield business for hotels, can be used to leverage transient rates

Procurement Process

Meeting Requirements

Site Selection

Bid Process

Concession Negotiation

Contract Negotiation

Meeting Operation

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Size, Type, Timing, Flexibility, Destination options

Air Analysis, Destination Scans, Final Specs

Availability, F & B, Room Rate, Function Space

Room Rate, Meeting Room, Commission, F&B

Cancellation Penalties, Attrition, F&B Guarantees

F & B Guarantees, Room Attrition/No Shows, Audio/Visual, Activities, Billing Review, Ground Transportation,

Following ALL Steps can generate 15% to 25% Savings

“Unmanaged” Procurement Process

Meeting Requirements

Site Selection

Bid Process

Concession Negotiation

Contract Negotiation

Meeting Operation

Without Steps 1-3, very little leverage, savings opportunity reduced

Without knowledgeable, experienced on-site support, very little savings obtained during meeting operation

Provides leverage with Suppliers, often these processes not followed without a policy and process

Performing only Steps 3-4 reduces savings to <3%

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Meeting Requirements

Site Selection

Bid Process

Concession Negotiation

Contract Negotiation

Meeting Operation

62% of savings generated following all steps of Procurement process

38% of savings obtained during Meeting Operation

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Procurement vs. Operation

Savings Breakdown

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

Air Lodging F & B Ground Miscellaneous

Majority of Savings are in Hotel Negotiations

15-25% Total Savings Opportunity

Spend by Meeting Type

26%

29%

45%

Low Med High

Low Complexity, (74%) yields the lowest amount of spend (26%)

High Complexity, (8%) yields the greatest amount of spend (45%)

74%

18%8%

Low Medium High

# of Meetings Spend

Savings by Meeting Type

7.8%

12.2%13.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Low Med High

What are my options?

Configuration Options

• Preferred Supplier– Allow planners to choose between 3-4 suppliers

• Outsource to One Supplier– Similar to corporate travel, leverage technology,

processes and dedicated teams

• Manage internally, central services– Hire and manage process through internal

workforce

Estimating Spend

• What is our Meeting and Event Spend?

• What is the savings potential?

• What technology do we need?

• What is the cost of delivery?

• What is the Return on Investment?

Estimating Spend

T & E Spend DomesticTotal T & E Spend 22,000,000$

Air 10,000,000$ Land 12,000,000$

Meeting spend is a function of total T & E expense

Step 1 - Estimate total T & E

Estimating Spend

Meeting spend is a function of total T & E expense

Step 2 - Estimate % of Meeting SpendT & E Spend DomesticTotal T & E Spend 22,000,000$

Air 10,000,000$ Land 12,000,000$

Est Meeting Volume @ 25% 5,500,000$

Estimating Spend

• Administrative Survey can also be used– Helps validate the “top-down” calculation

– Helps identify stakeholders

– Needs executive sponsor to ensure high response rate

• Questions will help identify # and type of meetings– How many meetings do you plan a year?

– What size are the meetings?

T & E Spend DomesticTotal T & E Spend 22,000,000$

Air 10,000,000$ Land 12,000,000$

Est Meeting Volume @ 25% 5,500,000$ Meeting Volume Breakdown Air 25% 1,375,000 Lodging 35% 1,925,000 Food & Beverage 30% 1,650,000 Ground Transportation 5% 275,000 Misc. 5% 275,000 Total Meeting Spend 5,500,000$

Estimating Savings

Savings is based upon spend categories

Step 3 - Estimate Meeting Spend Breakdown

Spend Breakdown % based upon consolidated database of spend

T & E Spend DomesticTotal T & E Spend 22,000,000$

Air 10,000,000$ Land 12,000,000$

Est Meeting Volume @ 25% 5,500,000$ Meeting Volume Breakdown Air 25% 1,375,000 Lodging 35% 1,925,000 Food & Beverage 30% 1,650,000 Ground Transportation 5% 275,000 Misc. 5% 275,000 Total Meeting Spend 5,500,000$ Potential Savings Air 5.0% 68,750$

Lodging 16.0% 308,000$ Food & Beverage 10.6% 174,900$ Ground Transportation 6.0% 16,500$ Misc. 5.0% 13,750$

Savings before Commissions 581,900$

Hotel Commissions 6.1% 117,425$

Total Savings 699,325$

12.7%

Estimating Savings

Step 4 - Estimate Savings based upon spend breakdown

Savings %’s by category are based upon historical results

Meetings Technology

Meeting Request

Qualification

Procurement

Sourcing and

Contracting

Invitation and

Registration

AirlineTicketing

On-Site Execution

Post Event Data

Consolidated

Program Management

Technology