Editor's Blog

19/09/2018
Agencies and DMCs – increasingly uneasy bedfellows

Last week I was asked to be moderator for a conference session staged by Site, the Society for Incentive Travel Excellence, for its annual Site Summit event (pictured). There was a panel of five experienced intermediaries – both agencies and destination management professionals – and they were challenged with examining the future of their sectors. The subject was “The changing landscape of third party intermediaries”.

I like doing this stuff – it’s a live version of the editorial process. I interview person X, put their views to person Y and invite contributions from the audience. Easy. It’s much easier than presenting your own ideas solo from a lectern where you might get shot down for being wrong or stupid. You can blame the panellists if the audience doesn’t agree with them and do the ‘don’t shoot the messenger’ routine.

The panellists for this session were very good. They were knowledgeable and erudite and I was keen to stir up some controversy around the subject of which group was most at threat from client cost-cutting – event agency or destination management company (DMC).

Henriette Speed’s company, Just the Letter B, represents a portfolio of DMCs around the world and she said the habit of agencies booking venues and accommodation directly has made life more challenging - “More than ever we need to justify our existence” - while she said the other habit of going out to tender to a large number of companies also makes dealing with requests for proposals hard work, with the same enquiry coming from multiple agencies. She believes DMCs will need to move to a management fee-based costing model and away from the old commission-based model very soon.

The other DMC on the panel – the TCE Group - was represented by proprietor Bill Prosser who said his company is increasingly handling groups directly booked from corporate clients (“but we are not going after them”, he added nervously). However, this is a trend confirmed by other DMCs (perhaps with a hint of optimism).

That view was also supported by event agency Wolf & White’s Lex Butler. She said: “Clients are savvy and understand what DMCs are and that when we engage with them, they are paying two agency fees. With tightening budgets and scrutiny from clients to have more bang for their buck, as an agency we have to do the leg work ourselves. We will use DMCs for transfers, local entertainers/talent, special access, hostess, unique requests, everything else we tend to source and manage ourselves. DMCs are not shying away from the direct corporate clients, DMCs are in cases a threat to agencies - they are our competitors. Why would clients not just start using DMCs and getting better local access and pricing?”

But Butler also had some criticism for DMCs. She said: “DMC attitudes are beginning to become dismissive and off-putting. With the client budgets tightening, the expectation for wow factor year-on-year still at the forefront and agencies wanting to keep prime services in-house, DMCs are getting the tough end of the stick, no doubt. However, when going to them for the minimal services still available, we have definitely felt the lack of interest and in some cases pushback - and we have walked away.”

So there is friction but while DMCs rely on agencies for business, it’s unlikely they will publicly bite the agency hand that controls the budget. And while DMCs will happily accept direct bookings from corporate clients, they are hardly likely to shout about it.

Top Banana’s Elliott Grant said he is a fan of DMCs but admitted: “With the rise in budget transparency it is becoming increasingly difficult to differentiate an agency’s service from that of the DMC.”

I asked them how they saw the future of the relationship and the results were mixed. But nobody suggested that agencies will buy DMC networks, as MCI did with Ovation, to keep all the budget.  

However, you never know….

 

 



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  • Jane Scaletta 20/09/2018 Of: AlliedPRA Orlando, Inc.

    Interesting read.