Online Exclusive—DMCs Getting Squeezed
Staff Report In November, Global Events Partners (GEP), a partnership of destination management companies worldwide, released the results of a proprietary survey of its partner destination management companies (DMCs), representing more than 70 countries worldwide. The survey asked partners to indicate where they think the business is going in 2008.
Commenting on the survey results, Chris White, GEP’s chairman/CEO, said, “For a third year running, we are pleased to share these results with the DMC and meeting planning industries. As we close 2007, a year that saw strong results for the destination management industry worldwide, 2008 looks like it will be even better—though it is clear that external factors such as currencies, and internal factors such as profit margin compression, remain challenges.”
2008 DMC Survey Results
More than two-thirds of GEP’s partners responded to the survey, representing close to 40 countries worldwide. Among those responding to the survey:
- Revenue: More than 80 percent of all respondents expected revenues for corporate events to “increase or remain the same” in 2008, versus 2007. All but three DMCs in the United States expected revenues to increase year over year, with a slightly smaller percentage of DMCs outside the U.S expressing similarly optimistic views. DMCs in half a dozen international destinations expected either a decline in revenues, or at best, revenues to remain about the same as in 2007.
- Volume: While most respondents expect increases in revenue, close to half expect that “big events”—defined as programs for more than 200 attendees—will fall, as planners continue to look for maximum service and diverse experiences, with the shortest lead times possible.
- Location: The weakening of the U.S. dollar and strengthening of the Euro emerged as central themes, in terms of where programs are booked, the level of potential spending on events, and how DMCs adapt their business plans to serve clients. Several international DMC partners anticipated seeing less event traffic from U.S. companies owing to the rapid fall in the value of the dollar. U.S. Partners also cited fluctuations in currency as a major factor in determining how they plan for 2008, including hiring, negotiating fees and flow of business. All partners agreed that currency fluctuations would continue to play a major role in their business plans for 2008.
Facing Challenges
Apart from currency, the anticipated challenges for 2008 that were mentioned most frequently by survey participants include:
- Short lead times and shifting program requirements are requiring more work, faster turnaround and both without a concomitant increase in fees.
- Program budget constraints and stringent procurement requirements, together, are pressuring profits.
- The difficulty of finding, training and retaining qualified staff to maintain high quality service.
- In a notable departure from the 2006 and 2007 surveys, a handful of DMCs mentioned customers “going direct” to vendors as a major challenge to their businesses – suggesting that pressures on DMCs to deliver uniquely bundled and properly valued program options, will continue to increase.
