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Use of destination management companies to decline in 2017, says Amex

Meetings and Events forecast reveals shrinking budgets are forcing event organisers to cut DMC use

Pictured: Saskia Gentil, American Express GBT director for France and Switzerland, addresses the audience at ibtm world

Destination management companies (DMCs) could be used less as event organisers are forced to make budgets stretch further, American Express Global Business Travel (GBT) has predicted.

Speaking at ibtm world where the company released its 2017 Meetings and Events forecast, director of healthcare Richard Parker said event planners were opting to restrict DMC as a savings matter.

The forecast also saw London retain poll position in Europe based on meetings and events activity, while other predictions included smaller delegate numbers and shorter meeting lengths, as well as a reduction in food and beverage.

Parker said he was surprised to hear from several respondents that they would limit their use of DMCs in 2017.

He told the ibtm world session: "It's probably not news you're wanting to hear and hopefully you can come back next year and prove that's wrong. But we're reporting now and I think it's important we're transparent with the messages people are giving us."

The forecast predicts individual meetings budgets in the UK to rise 1.2 per cent, while group hotel rates will go up 2.7 per cent, the highest in Europe. Almost 90 per cent of UK respondents said they would use primary cities for meetings, down from 100 per cent in 2016.

London was named as most popular European city, while Barcelona jumped from eighth place to second, and Amsterdam, Paris and Berlin rounded out the top five spots.

London also sees the greatest number of hotel openings in 2017, with 24 hotels slated to open, followed by Hamburg with 16 and Moscow with 11.

Parker told the audience at ibtm that with shrinking budgets, more pressure was being placed on organisers to refine the content of meetings and events.

"It'll be important now than ever to really zone in on using time and money wisely and maximising the effectiveness of the meetings that people attend," he said.

Saskia Gentil, American Express GBT director for France and Switzerland, said major hotel acquisitions and mergers, such as Starwood-Marriott, would drive hotel prices.

She told M&IT: "People are really concerned. North America, Europe and Asia respondents all see a challenge in contract negotiations and contract terminations."

  • Darren Mitchell of destinations UNLIMITED 09/12/2016

    The demise of the DMC is a topic that has reared its head pretty much every year for as long as I can remember. The first time was I think about 15 years ago; when the internet enabled the ‘do it yourself’ age in which the middle man began to be edged out. But just because you can do something in theory, doesn’t mean that you should. The world is even more complex that it was 15 years ago, with many different factors contributing to the volatile and fast changing environment that greets today’s event planner.

    A DMC is your insurance policy should something go wrong. Whether it is a local strike, unexpected renovations, a medical emergency, a stolen passport, weather issues or an unruly guest who may meet with the law. A DMC, with years of local experience, knows what to do, who to call and how to handle any situation seamlessly.

    Anyone with a laptop can do some research, but the suppliers you found to be great last year may not be so good next year. The local transfer company that you visited six months ago, might go out of business next week. When you rang the restaurant to book in your party of 200, could you really be sure that they fully understood your request? Or could the language barrier lead to your client suffering with an embarrassing lack of a meal one evening?

    Of course, there are some very basic international events that may not require the help of a DMC, but think of the most successful & memorable events and the vast majority, if not all, have included behind the scenes help from a locally-based DMC.

    Budgets are being cut and I’m sure it is tempting to ask your agency team to do everything themselves, but their time is still a cost and how many man hours will you waste researching, negotiating and booking local suppliers? The experienced events agencies use DMCs as an extension of their own team, and continue to recognise the value of working with DMCs regardless of how well they think they know a destination. The relationship between agency and DMC is a tried, tested and essential part of an international event.

    As Amex suggests, if budgets allow surely all agencies will use a DMC, which means that the only reason a DMC’s value is questioned is when a client’s budget is tight? But what is the real cost to the client? The future of the DMC is a subject that I suspect will continue for many years, but the level of quality enquiries we receive on a daily basis, proves that the DMC/event planner relationship is still very much in demand and remains consistent. Isn’t it just a false economy to cut out the DMC?

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