Strategic meetings management has been on the corporate radar for well over a decade, but most companies are still grappling with whether and how to implement a formalized program. The investment is significant: To achieve true SMM not only takes human resources but also requires a spine of technology upon which to build policies and processes. It requires a marketing and training effort, and perhaps the hardest of all challenges is to drive change management throughout the organization.
According to BTN’s 2015 Strategic Meetings Management Survey, however, more companies are bringing SMM concepts to bear on their meetings business. Eighty-five percent of respondents had at least some aspect of SMM in place in their companies, and it may be time to think about how to implement more. Click here for charted results of BTN's research.
In the past two years, meetings have experienced a surge in activity, particularly in the United States. As the seller’s market reasserts itself, negotiating rates and beneficial contract terms is only getting harder for planners. Supporting meeting organizers via defined policies and processes, particularly around sourcing and contracting, can help keep them afloat while protecting the organization from unnecessary risks. The BTN study showed companies putting a clear focus on these areas, as well as many more companies enlisting the help of procurement to drive this part of the planning process.
But sourcing and contracting support are just the beginning steps for SMM. Significantly fewer companies reported a serious investment in SMM technology to drive a formalized program, but gateway technologies were widely used, which may portend future tech investment.
More mature programs reported deeper initiatives on the horizon, pointing to globalization efforts, technology integrations and more granular data capture to drive that elusive metric of a meeting’s return on investment.
Meetings Market Snapshot
“A lot of people were waiting around for group business to recover,” Hyatt Hotels Corp. president and CEO Mark Hoplamazian said during a panel discussion at the New York University hotel conference in June. “In case you missed it, everyone, it’s back, and going well.”
Second-quarter earnings calls underscored this claim. Executives at both Hyatt and Marriott International beamed about their resurgent meetings business. Both companies cited the group segment as the primary driver of rate and revenue growth at their U.S. properties.
“Meeting planners are worried about securing availability more than negotiating hard on rate,” Marriott CEO Arne Sorenson said, noting that group volume had the potential to push rate even higher entering the fourth quarter, with projections topping out at 9 percent.
BTN’s SMM Survey bears out these claims. More than half (51 percent) of respondents reported a rise in meetings spend from 2013 to 2014, with an average increase of 13 percent. Another 51 percent projected a rise in meetings spend through the end of 2015, with an average increase of 12 percent compared to the prior year. Whether the increase in spend for a particular company reflects additional meetings or simply an increase in costs is hard to say, but on the macro level the two are intimately related: The more meetings demand across all corporations, the higher the hotel occupancy rates and average daily rates inevitably go.
While that’s excellent news for the hotel market, these are the times when corporations start to realize that meetings cost money and are hitting their budgets hard. Not only that, but a strong seller’s market can present a serious risk to the company if contracts are mismanaged. Inexperienced—or desperate—planners are more likely to sign one-sided contracts in order to secure dwindling conference space and to pay a premium for the privilege.
SMM Core Concept Adoption
In this type of environment, it’s no surprise that corporations are adopting a handful of SMM concepts, whether they are implementing full SMM programs or not. This year, surveyed companies showed an intense focus on limiting contract-signing authority for meetings. It emerged as the No. 1 policy provision by far, adopted by 65 percent of the survey base and surpassing its 2012 adoption rate by more than 20 percentage points.
The concept of limiting contract-signing authority penetrated companies at every level of spend in the BTN survey except those that spend less than $500,000 annually on meetings, a group that did not adopt any SMM practices. Those with $500,000 to $999,999 in annual meeting spend saw 75 percent adoption, while companies with $1 million to $10 million in spend claimed 72 percent adoption of this practice. Among those with budgets of $10 million or more, policies that limit contract-signing authority were in place for 81 percent, followed closely by requirements to source all facilities through a centralized procurement, meetings or travel management department.
Centralizing sourcing and contract signing was Amy Drotar’s first order of business when Polycom hired her in 2011 as its first global meetings manager. “[Sourcing] is the most important part of policy, and it involves a lot of different departments in order to ensure you are capturing every meeting,” she said. “We got procurement, accounting, legal and travel all on board with it. We worked hard to find out their pain points so that we could address them in our process and there would be no incentive for anyone to work around the system.”
At Polycom, contract signing belongs to the meeting owner, who has authority over the budget, but not before the contract goes through the meetings department, procurement and possibly legal if there are questions. “That’s rare,” said Drotar, since Polycom has a standard addendum that it expects hotels to accept.
Kari Wendel, senior director of global SMM strategy and solutions at Carlson Wagonlit Travel Meetings & Events, has seen this practice surging. “Centralized venue sourcing and contracting are the first steps to SMM,” she said. “So much is housed in that. It’s the biggest bang for the buck.”
For the smallest budgets, limited contract-signing authority was the single outstanding policy implementation that emerged from the study. For companies with larger budgets, other core SMM practices saw significant play. Companies with $1 million to $9 million in annual meetings spend required senior-level approval for all meetings (63 percent), and to a lesser extent required centralized sourcing (52 percent) and/or a standardized RFP (50 percent).
Companies with larger budgets—$10 million an up—and presumably more meetings volume commonly dispensed with senior-level approvals. Less than 20 percent of these companies required it. Instead, they relied on tight centralized sourcing and pre-defined RFPs to manage spend and risk.
Taking Responsibility: Travel Management & Procurement
With sourcing and contracting at the forefront of SMM, it stands to reason that travel management, which has been heavily influenced by procurement practices over the past 10 years, and procurement itself would become more involved in the meetings management process.
The migration of travel management into the meetings arena had largely occurred by 2012, comparing the current BTN study to the previous one. By 2012, already 62 percent of travel managers surveyed said that they were “somewhat” or “very” involved in managing their companies’ meetings. This year, that figure rose moderately to 68 percent.
The real change, according to this year’s SMM Survey, was procurement’s involvement in meetings. The migration of procurement into the meetings arena has been a clear trend for several years. But the 2015 survey results showed a major jump in procurement professionals who are now “very” involved in meetings management. That figure nearly doubled to 28 percent.
The recent seller’s market for hotels likely is driving this migration, but the relationship of procurement to meetings still seems to be in the nascent stages. According to the BTN study, procurement offers a very limited scope of potential services to its meetings colleagues. Less than half of survey respondents had implemented any procurement strategies beyond facilities sourcing. Forty-three percent said they had service-level agreements in place with certain suppliers, and only 16 percent said they had balanced scorecard or service-quality indexes in place with any of their meeting suppliers. Fifty-one percent said they had no procurement strategies in place, but there may be more aspirations in this area as the meetings-procurement relationship matures across the board.
The meetings and events department at McDonald’s Corp., led by director Kelley Butler and project manager Erin Stahowiak, is priming itself for this type of change. McDonald’s is transitioning its meetings department from a corporate relations reporting structure to a home within global shared services. “There are a lot of layers, and to move things faster … we need to be structured in such a way that we can react to the business needs and have a more global approach to a lot of the services that every functional unit may use or need,” said Butler.
For Stahowiak it means the ability to partner more closely with travel and procurement colleagues to push the company’s meetings program toward best in class. “We are just at the cusp of implementing some [more advanced] procurement strategies,” she said. “As we integrate more into shared services, we’ll have more opportunities to apply that to the program overall.” Currently, McDonald’s has SLAs with its technology vendor and sourcing partners “but not necessarily to the broader supplier set. We’re excited to bring those practices to the table.”
Policy Vs. Engagement
While 85 percent of survey respondents had some aspects of SMM in place, tracking compliance to meeting policies and processes emerged as a critical challenge for the vast majority. Less than 35 percent of companies did it, and Wendel said she sees this happen all the time. “It’s important to have a policy because that’s how corporate works. But it’s significantly less important than stakeholder engagement which drives compliance,” she said. “SMM failure cases are often linked to procurement seeing an opportunity, issuing a policy and buying a technology and then sitting in the office and wondering why nothing is happening. If you don’t build a great process, you will have a hard time driving compliance. Policy is just the stick.”
The good news, said Wendel, is that procurement has become much more aware of stakeholder engagement in recent years. “They know it’s really important.”
McDonald’s is a compliance success story. In the SMM program’s second full year, Butler and Stahowiak have achieved 90 percent spend compliance through the managed channels. Stahowiak credited a strong mandate from the CFO along with “a very grassroots” engagement effort that involved stakeholders in the process from the very beginning of the SMM journey. “They understood why we were doing it,” she said. Plus, McDonald’s hosts a variety of meeting planner training days that keep planners on top of McDonald’s requirements for meetings and educates planners about support services available to them.
Polycom’s Drotar said the success of her SMM program has become its own engagement vehicle. At first, she was focused on demand management—ensuring that only the meetings with clear objectives and strategy had the go-ahead.
“At Polycom, meetings are kind of a balancing act,” she said. “We are known for our speakerphones, but what we really do is videoconferencing. So face-to-face meetings are a delicate issue—and I’m constantly amazed at what can be achieved over videoconferencing. It’s actually really hard to get travel approved at Polycom.”
But as meetings became more successful at the telecom and videoconferencing company, demand for meetings began to increase. “We actually have more meetings now because they are so effective—much more effective than they used to be,” Drotar said. “That should be a change in the culture of all companies with successful SMM.”
SMM Technology: Implementation Status
While SMM technology can’t be implemented without a solid process behind it, the technology itself is critical to the ultimate success of any SMM effort.
The most important functions for Stahowiak as she rolled out the SMM program at McDonald’s were meetings registration and budget tracking. “The meeting registration tool is really the lynchpin for capturing your data,” she said. “The budgeting tool becomes the first step toward eventually looking at [ROI]. That’s a little further down on our strategy, but you have to start to rationalize that spend and understand it and measure against it. That’s a really important component.”
Drotar agreed. “You have to get your meetings all in one place. With the technology piece, you can get there fairly quickly, and it offers much deeper visibility into every meeting.”
While 85 percent of BTN survey respondents had some elements of meetings technology in place, the majority were a far cry from adopting an entire suite of SMM tools. The most commonly cited tool, online attendee registration, has been mainstream for at least a decade and is not necessarily tied to strategic efforts. These types of tools often are implemented to manage attendee logistics, which is helpful but not strategic. That said, virtually all respondents who are using attendee management tools are using at least one other technology module to support their meeting programs. The intent seems to be there, but full commitment is not apparent.
Overall, only 28 percent of respondents had access to internal calendaring/meeting registration tools and only a third could leverage budget tracking tools. Forty percent utilized online RFP technology, which was among the highest adoption rates for the technologies listed but surprisingly low considering the intense focus on sourcing and contracting seen elsewhere in the study. Looking at companies with more than $10 million in annual meetings spend, technology usage rates jumped, but they still did not blanket the majority of respondents. Just 56 percent of companies with “large” meetings spend used online RFPs and only 39 percent had budget-tracking tools for meetings.
SMM Technology: Integration Prospects
For companies that have not yet adopted a technology solution, Wendel offers a refreshing take: the technology isn’t perfect and neither is the data that comes out of it.
“In general, meetings technology that supports the SMM wheel [aka the Global Business Travel Association’s model for SMM], they are still not as advanced as the buyers can envision they could be. They are not as advanced as transient travel tools,” she said.
Those who are waiting to adopt a technology solution may ultimately get a better mousetrap. For those who are not waiting, there are other avenues forward.
More companies have integrated SMM technologies with transient travel tools and card, and there are aspirations about integrating expense tools to deliver a more seamless experience for meeting travelers and to automate additional data capture to inform meetings strategy.
Thirty percent of survey respondents said they had integrated their online booking tools with their meetings technology, most likely with online attendee registration. Meetings card data is another common integration, while more sophisticated link-ups may involve customer relationship and marketing tools. But meetings managers should tread carefully when it comes to integrations. “We have spent a lot of time exploring integration options out there but have not made a determination to move forward at this point,” said Stahowiak. As its meetings group moves to shared services, however, McDonald’s may integrate its online booking tool. “We have not been in sync when [travel management] has been in RFP and we have been in RFP. But now we are going to be within the same department, which will help some of those initiatives. I think [OBT integration] will create value pretty easily.”
Not so for card integration, though, “It continues to be on our radar,” said Stahowiak. “We would be really excited to have that end of the process be more efficient and more automated. We have not seen the integration that does that in a beautiful way.” A large part of the issue is the meetings card data itself, which does not offer the granularity or accuracy that would make a direct feed into the meetings tool valuable for McDonald’s.
“Right now, we are manually going through data and entering it,” said Butler. “It takes a lot of time, but there is a lot of error, and we catch a lot of money that would be left on the table if we didn’t do it.”
Wendel said this is a common SMM complaint—and not just about card data. “The quest for quality SMM data eludes many companies,” she said. “This is front of mind, especially if a company has been at the SMM game for a while and they still can’t figure out how much they spend. What we have learned over time is that it’s a balance of [automated and] manual data. I’m not going to lie: that’s been good for our business. We can step in and help companies get to the key metrics: budget, initial offers, contracted rates, actual spend.”
The Next Wave
For companies that can achieve the business intelligence that comes from solid SMM data, opportunities await. More companies are globalizing their meetings programs and exploring multiprovider service configurations to serve regional and local markets, while rolling up the data on the back end.
“They are doing something special that works really well,” said Wendel. They are allowing choice in the planning piece—the most emotive piece—while driving rigor around the outside.”
At the opposite end of the spectrum, Merck has put all its eggs in one basket, teaming up with American Express Global Business Travel for transient, Amex Meetings for SMM support and Amex corporate card in an attempt to leverage total volume across all categories.
BTN’s study suggests that, while few are going all in like Merck, more companies are indeed leveraging their joint travel and meetings volume for negotiations. But they need solid data and a history of meeting contract goals in order to make it work, said Wendel.
“To me it marks the next level of advancement,” she said. “I think the maturity curve for meetings is quicker than it has been for travel. And I see it coming together.
Methodology
The BTN Group conducted an online survey of travel and meetings professionals from March to July 2015. Invitations to participate were distributed to subscribers of BTN Group publications and newsletters, as well as to select readers of Meetings & Conventions, a fellow Northstar Travel Media publication. The research was sponsored in part by Carlson Wagonlit Travel Meetings & Events, Crowne Plaza Hotels and Delta Air Lines. A total of 271 respondents qualified by indicating they have decision-making responsibility for at least one critical meetings management function. Not all respondents answered all questions. Unless otherwise noted, data displayed in this report has been rounded to the nearest whole number. In some cases responses may total more than 100 percent as several questions prompted respondents to select all applicable answers.
Respondent Demographics
Respondents to BTN’s 2015 Strategic Meetings Management Study represented a cross section of corporate titles, meetings program sizes and industries. From a title perspective, participants ranged from C-level executives to administrative assistants, but the sweet spot was oriented around travel management titles, meetings management titles and procurement directors. Annual meetings spend ran the gamut from less than $500,000 to more than $50 million, with the largest segment landing in the $1 million to $5 million range. Twenty-three percent of respondents, however, spent upward of $10 million annually on meetings. The biggest spenders—and arguably those with the most advanced SMM practices—were in highly regulated industries, such as medical/pharmaceutical and financial, where untrammeled meetings practices can lead to considerable financial penalties.
This report originally appeared in the Sept. 14, 2015, edition of Business Travel News.