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Regarded by many as the last bastion of unmanaged corporate spend, meetings and events are coming under closer scrutiny as companies struggle to contain costs. Catherine Chetwynd reports
It should come as no surprise, given the amount of time we all seem to spend in meetings, that conferences and events account for a major part of corporate expenditure. The trouble is, within companies few people appear to know how much it is in total, as it tends to come from a variety of budgets, spread across the organisation.
What is not in doubt is that it is big business. The meetings and events industry contributes some £22 billion annually to the UK national economy and supports more than 500,000 jobs; an estimated 80 million people attend 1.37 million meetings and conferences a year; and 67 per cent of UK office workers travel to at least one meeting per week.
If that looks big, meeting spend in Europe is put at around €100 billion, according to Maritz Travel, while StarCite estimates worldwide expenditure to be in the order of US$300 billion.
Despite these awe-inspiring figures, meetings spend is justifiably described as the final frontier of unmanaged travel. Research undertaken by Aberdeen Group sums up the problem: 44 per cent of enterprises have meetings management responsibilities distributed across various internal functions, and 26 per cent do not have a formal organisation to manage strategic meetings.
And not only is it badly fragmented - as Peter Ducker, executive director of the Hotel Booking Agents Association, astutely points out, the other stumbling block is the ego factor. "People enjoy dabbling in events and believe they can do a better job than the professionals, although the truth is that they don't want to be deprived of their fun."
Lack of understanding is another problem. Many meetings bookers think the job will be taken away from them if the information surrounding their events is captured centrally, while some might prefer that their spend was not scrutinised.
So what can be done about it? Often, it's best to start with the basics. "First," says managing director of Inform Logistics, Ian Flint, "define your meeting. HR, sales, a locally booked hotel or a major event? And if it is a major event, who owns it? Travel? Marketing?"
PwC started to tackle the problem by analysing its venue spend. "We data-mined our systems, looking at how and where we spent money, and then built a database of properties through negotiation," says Mark Avery, head of business services. "We have 600-700 people, all regularly booking meetings, and it was a matter of creating processes so that they knew where to go. We are getting very high compliance in using three preferred venue-finding agencies."
Even selecting those was not a simple task, as PwC's spend was bigger than the turnover of any of them. "Duty of care meant that we would not put all our business with one company, because if we pulled away we could destroy them," he says. This was some years ago and Avery is now re-evaluating, with a possible view to consolidation.
Communicating the new process was central to its success. "Once we had done the tender and established the preferred suppliers, we embarked on a marketing campaign," says Avery. "And we took care of the terms and conditions, bringing in value through that, with improved cancellation terms and additional benefits, such as discounts on F&B. We saved in the region of £10 million in the first year, representing about 25 per cent [of our spend]."
Avery believes that control of meetings spend is about creating good processes and service, so that everyone who needs to can avail themselves of these benefits. "People turn to internal services, but as we do not have limitless resources for events and if we are unable to cope with the volume, we will tell them we cannot do it. That should not be the case, hence we outsource, otherwise people do their own thing and that is precisely what we want to prevent," he says.
And it does not stop there. "Having achieved it for venue spend, we are looking to combine travel and meetings spend. We have an RFP in the marketplace for events and are reviewing the response," adds Avery.
Identifying key stakeholders in events can be by department, service line or finance - whoever is spending large sums. "Our starting point is usually training and events and we branch out from there," says Fay Sharpe, joint managing director of Zibrant, a leading event services company. "We find out how they plan meetings and events, and which agencies or hotels they use. It is a matter of breaking down the services within meetings, not just venue-finding but also event management and communications, to get an idea of what people are spending overall."
To create a shortlist of agencies that might be appropriate, it is important to look at more than just price. "You need to consider culture, the objective, duty of care, cost consolidation and quality of service," she says. As there are not many mandated accounts, the key to success is the account team handling it. "The team will need to win over the booking community within the client company and promote the service so they want to use it. The delivery has to be there."
An obvious way to save money on meetings is simply not to travel, which is not as daft as it sounds. One government department took on a psychologist to analyse why people travel and identified potential annual savings of £11.5 million through travel avoidance. It required an investment of £800,000, plus another £100,000 a year, which proves that you have to spend to save. Using the same principle, reviewing meeting locations is often a good opportunity for an organisation to put in-house meeting space to better use.
The holy grail of meeting management is the ability to book meeting space live and pay for it online. Venues have traditionally been reluctant to do this, not least because it makes revenue-management nigh on impossible. If a company books a meeting room for, say, 30 delegates for one day, it effectively blocks a venue from selling the room, ideally with accommodation, for a more lucrative three-day event. Nonetheless, there is movement towards this goal.
HRS's online technology for meetings is available in the UK, with functionality that works across all countries. "Meetings are a key feature, as procurement tries to consolidate hotel and meetings spend," says commercial director Grant Appleton. "We offer electronic access to meeting rooms and rates online, with live availability for up to 20 people, with some hotels. Outside that, the booking process is taken offline."
And Zibrant has just launched Live Space, which allows clients to book space online in realtime with preferred venues, although, as Fay Sharpe points out: "People often check availability online and then pick up a phone. They like to have the comfort of talking to someone."
And HBI has recently introduced an online calendar which allows clients to check what events the rest of their organisation is running in the UK, removing the likelihood of conflicting dates. This complements the company's tool that manages meetings spend across Europe, allowing procurement to see which departments are spending where, and how much.
On a larger scale, meetings technology specialist StarCite combines technology and service to give the much-vaunted visibility that procurement and meeting organisers seek. Already successful in the US, the system is now beginning to make its mark in Europe.
"It provides an end-to-end solution, covering the entire process of planning, budget, sourcing, attendee management, payment procedure with the American Express Corporate Meeting Card, reporting and measurement of meetings spend - and that can be done worldwide," says marketing communication manager Blanka Michalski.
StarCite's database comprises 100,000 suppliers worldwide and the tool helps planners marry their requirements with what is available. Users may also insert preferred suppliers into the database or use them exclusively, including in-house space. However, Michalski adds: "StarCite is not a direct booking tool. Clients do their own negotiation and booking."
StarCite can be used in toto or in modules. "Even using it as a delegate management tool, companies have full reporting - who is doing what meeting, when, where, compliance, does something clash, how many meetings are planned, spend until the end of the year. And we don't just leave clients with the technology, we help them with an event," says Michalski. Some companies also have a link with flight-booking tools which brings the data into StarCite - a relationship with KDS suggests this might be the way forward. "It will allow us to have integration with the meeting product," says Annicka Lofstrand, business development manager for KDS. "We are talking with potential customers with a view to doing something soon."
Our case study (right) shows there are major advantages to consolidating spend on one card. However, research by ITM shows that payment methodology is disparate: 41 per cent of respondents paid for MICE by invoice from the venue, 33 per cent by invoice from an agency; 11 per cent on individual credit card; and six per cent on a specialist meetings card.
And the component parts of the transaction are also a minefield, comprising hidden commission (12 per cent), transparent commission (14 per cent), transaction and management fees (18 per cent), or a combination of commission and fees. Astonishingly, 24 per cent of respondents were unsure how they paid for MICE services. Which brings us back to the old adage: no information, no control.
Managing meeting spend
Case study When Sarah Young, Oracle's senior manager of global meetings services EMEA, joined the company two years ago, there was little structure for booking meeting space, choosing suppliers or raising purchase orders. "There was a preferred hotel programme for transient business and people were asked to use it, but I suspect they didn't," she says. "I was brought in to manage spend, track it and get data and reporting."
She had introduced the StarCite meeting request tool at Oracle in the US 18 months earlier and was looking to implement it in the UK. "Oracle has done it slightly differently from other companies and has integrated StarCite within its purchasing system, along with American Express as the payment mechanism," she explains.
The booker submits a request on the system and the budget tool auto-generates a purchase order for the requested amount. Once this has been sanctioned, approval is sent to American Express, which generates a card displaying the name of the event, the PO number and an expiry date 90 days after the event closes, giving suppliers time to invoice. The booker pays for everything connected with the event on the card.
There are other advantages to this mechanism. "Because the purchase order is made out to American Express, there will only be a single PO for an event with five or six suppliers, which will save money. And cost savings are also driven by loading our preferred hotel programme into StarCite, so all our preferred hotels come up first, and the sourcing team knows which to use."
Suppliers get immediate payment by Amex, which makes life easier for the booker, and Oracle also benefits: the company's terms in the UK are 45 days, but by the time the Amex statement and charges arrive, it could be as much as 60 days.
"Earlier this year, over a 45-day period, we held around 40 events with a total spend of US$3 million, and I reckon I saved about US$350,000 through contract negotiation. And I know there is a lot that is still not coming through me," says Young.