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Why benchmark meetings spend_24.11.16


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Why benchmark meetings spend_24.11.16

  1. 1. BENCHMARKING MEETINGS SPEND Why corporates need to benchmark, and how.
  2. 2. According to C&IT magazine, around 0.5% of all corporate revenues is spent on meetings and events. In the UK that equates to £19.9 billion a year on meetings and conferences alone. It’s no surprise that corporates want to know their money is being spent effectively. The discipline of Strategic Meetings Management (SMM) is believed to realise savings of up to 25% once introduced into an organisation. And with 30% of corporates citing budget as the main barrier to holding more meetings, the pressure is on planners and their suppliers to deliver more, for less. Agencies – both TMC and Meetings Management Companies (MMC) – have a big part to play because benchmarking is the ideal way to health- check any SMM programme. Predicting rate fluctuations and analysing the impact of those changes on savings and compliance are essential deliverables in any service level agreement. The Global Business Travel Association predicts that UK hotel prices will rise by 7% in 2017 despite the current boom in hotel developments. PwC forecasts a marginal growth in Average Daily Rate of 0.4% in 2017, taking ADR to £141 and £142 respectively. However there are no equivalent predictions for the meetings sector. Just how big a part a TMC or MMC plays depends on the available expertise and data. In-depth understanding of the issues facing meeting planners and buyers on a national, regional and international basis should be part of any agency’s toolkit, but is not enough in itself to constitute benchmarking. That requires the knowledge and access to the necessary technology to compare one client’s programme to another. At the same time there’s no point comparing different companies’ meetings spends if those businesses have nothing in common. The most relevant data set is that of any direct competitor because that information can be used to improve performance, of companies with similar meeting spend profiles or simply organisations of a similar size. There are lots of variables. The problem is that the available data set rarely goes beyond the confines of business transacted by the agency concerned. In other words, benchmarking is usually based on a fragment – large or small - of the overall picture. Benchmarking isn’t just about Day Delegate or 24 hour rates. It should encompass the aggregated size of your meetings and transient travel spend, including F&B, AV and meetings production. In the longer term, video, audio, virtual and hybrid events will all become elements of Strategic Meetings Management that need to be covered in any benchmarking process. This demands a holistic approach to meetings data combining sufficient data to provide an accurate overall picture, enough sub-categories to enable multiple comparisons and the analytical expertise to extrapolate their meaning. The ultimate objective of benchmarking is to determine what and where improvements can be made both in ad-hoc venue sourcing and in Strategic Meetings Management Programmes. The real question isn’t ‘why benchmark’, but ‘where do I start?’ The answer lies with a new breed of intelligent, independent benchmarking tools developed especially for the meetings planner and buyer. Introduction 2
  3. 3. 3 Fig 1 I manage our Strategic Meetings Management Programme I book venues for meetings, conferences and events I book venues for meetings only I have no involvement in how my company buys meetings’ venues or services I manage travel but not meetings for the company One of my team/a colleague manages our Strategic Meetings Management Programme 0% 20% 40% 60% 80% 100% 62.5% 12.5% 25% 0% 0% 0% Do you benchmark? Often the key to the future lies in the present. This paper is based on research undertaken during July 2016 amongst a wide group of travel and meetings managers. We wanted to understand current benchmarking practices, aspirations, objectives and attitudes. We received over 150 replies. As Fig 1 shows, 62.5% of respondents manage their company’s Strategic Meetings Management programme; a further 25% book venues for corporate meetings and events. Whilst only a quarter of survey respondents currently benchmark their meeting rates, 62.5% are either planning or want to do so in the near future. Fig 1
  4. 4. 4 Benchmarking enables corporates to budget meetings and events spend more effectively; validate programme efficiency and compare achieved DDR and 24 hour rates against peer-set or industry-wide averages, improving understanding of rate variations between locations, period and venue type. Private and public sector organisations alike are now issuing RFPs that require responding agencies to outline how they will benchmark the clients’ meeting rates, and against what. In our survey, we asked buyers and planners why they benchmark and, of those who do not yet benchmark their meeting programmes, why they now wish to do so. As Fig 2 shows, the three most popular reasons that corporates benchmark are to ensure they get the best price compared to market rate; to identify opportunities to reduce expenditure, and better-informed budgeting. Benchmarking also benefits the supplier community. Agents can cut out the need to spend time reviewing multiple quotations for each venue enquiry, as Michael Begley, MD of explains. “On behalf of our agent clients we currently source 4.9 venue options for meetings of less than 30 delegates and more for meetings with more delegates. We can process enquiries much more quickly if we can negate the need to source multiple venue options” says Michael. “Benchmarking gives corporates confidence they are paying fair market prices” confirms Jim Cockell from Revenue Management consultancy Rattray Milne. “It provides access to true, rich data about pricing, lead times and sector pressures, minimising the back-and-forth between venues and agents because respective expectations are managed far more effectively.” Tim Chudley from the Sundial Group provides the venue operator’s perspective. “Meetings spend has been identified as an important spend category by most corporates with the consequent involvement of procurement professionals. This added discipline has enabled a more structured approach to the ROI from meetings. Benchmarking is rightly valued by procurement professionals tasked with driving financial efficiency and the sharing of management information.” Why benchmark? “Benchmarking gives corporates confidence they are paying fair market prices.”
  5. 5. 5 Can the benefits of benchmarking in this context be quantified financially? Indirectly, says Jim Cockell. “Financially the savings will initially be marginal but venues are much better at pricing and costing meeting programmes than they were 10 years ago because their pricing is much better forecast. Robust benchmarking will give venues the information to be able to forecast even more accurately.” However Cockell still believes that benchmarking can generate an immediate Return on Investment. “Operationally the savings should be seen in time taken to negotiate and convert bookings” he says. It’s a view shared by Tim Chudley. “Recently the balance of power seems to have swung back towards the supplier in the current phase, allowing suppliers to use benchmarking data to achieve better yield management. Pricing is a two-way street!” Fig 2 For audit purposes To see if my 3rd party suppliers are achieving the best price To inform travel budgets To see if I can reduce my/our meeting expenditure To see if the price I am paying is going up or down Other 0 20 40 60 80 100 To inform marketing budgets To see if I am achieving the best price vs market rate 11% 22.22% 33.33% 44.44% 55.56% 55.56% 77.78% 11% Fig 2 Why benchmark?
  6. 6. 6 As Fig 3 shows, benchmarking does not end with delegate rates. Room hire is an area of interest to three-quarters of meeting buyers, followed by delegate rates, food & beverage, audio visual and WiFi charges. Group accommodation, achieved savings, car parking and overall travel costs are also identified as key benchmarking criteria by our survey respondents. What to benchmark Fig 3 Other Savings Group accommodation rates Wi-Fi charges Car parking charges Travel costs to/from meetings 0% 20% 40% 60% 80% 100% Delegate rates Food and beverage costs Audio Visual equipment charges Room hire 11% 33.33% 44.44% 44.44% 55.56% 55.56% 66.67% 66.67% 66.67% 77.78% Fig 3
  7. 7. 7 For many years, the provision of three venue options has been standard industry practice for any agency response to a client planner. Unsurprisingly this is also reflected in survey respondents’ views on what to benchmark against, with 87.5% believing the three option metric to hold most value. As Fig 4 shows, the previous year’s rate and previous events staged by the client company ranked second and third in the list of priorities, followed by rates achieved by industry competitors and corporates of a similar size or profile. There is a broad range of opinion on how often meeting rates should be benchmarked, ranging from quarterly (44.4%) and monthly using a random sample of data (33.3%) to every meeting being benchmarked at the time of booking (22.2%). What should you benchmark against, and how Fig 4 Direct competitors Previous year benchmark rate 3 alternate venue options Your own previous events Industry sector 0% 20% 40% 60% 80% 100% 37.50% 50% 50% 37.50% 87.5% Fig 4
  8. 8. 8 Of course, if it was easy they’d all be doing it. Meeting managers have been restricted to the benchmarking provided by their appointed agency or to doing their own mystery shopping. Benchmarking is not new to the meetings industry. Many have tried to benchmark properly before. The Hotel Bookings Agents Association began an initiative in the early 2000’s which required HBAA members to submit a monthly return, albeit manually, as’s Michael Begley explains. “Many agents didn’t have any real systems then. They were faxing out to clients; there was no consistency of format or even regularity, some submitting data one month but not the next. Technology has now moved on to enable that data to be brought together because it’s easier to get systems to talk to each other.” Another challenge lies in comparing apples with apples. “The meetings ‘product’ is so varied that rating systems, brands and price products make like-for-like comparisons very difficult” says Jim Cockell. “The other challenge is being able to collect the data in the most efficient way, the more manual input required, the less adoption will occur.” Michael Begley agrees that confidentiality is an issue; how secure the data is and who has access. However he believes that a benchmarking revolution is gaining momentum. “It is now possible to aggregate the data in sufficient volumes for the resulting analysis to have real gravitas. The opportunity…is huge.” Barriers to benchmarking
  9. 9. 9 Benchmarking tools The poor range of benchmarking tools available to meeting managers and planners is borne out by our survey. Most buyers and planners rely on their TMC, MMC or supplier venues to provide the information they seek, although demand for more robust benchmarking shows those needs are not being met. As Fig 5 shows, 57.14% of corporates rely entirely on the management information provided by their TMC or HBA and a further 28.57% drawing on the MI provided by in-house finance departments. 15% benchmark manually using data drawn from websites. By contrast, venues use a number of tools to benchmark transient bedroom rates, both for corporate and leisure business, such as Future Pace; Hotelligence 360; Hot Stats and STR. All are subscription based. Fig 5 MI provided by in-house Finance Department Websites Industry publication/white papers Management information (MI) provided by TMC, HBAA, or MMC 0% 20% 40% 60% 80% 100% 57.14% 28.57% 14.29% 0% Fig 5 A benchmarking revolution is gaining momentum...
  10. 10. 10 There is a real sense that things need to change. Over 62% of respondents said they would be ‘very likely’ to use an on-line tool that could provide benchmarking functionality for meetings. As Fig 6 shows, the range of functionality sought is broad, ranging from dashboard control to comparing rates by venue type, segmenting by location, meeting size and industry sector; segmenting rate by room hire, AV, food & beverage etc, and being able to view corporates’ own rates. Fig 6 55.56% 55.56% 66.67% 66.67% 66.67% 0 3 6 9 12 15 Select comparisons by venue type - eg 3 star hotel vs 4 star hotel vs training centre vs non-residential venue Display future rates as well as historic Be able to see my own benchmark rates Segment rates by 24 hours vs Day Delegate Segment rate by room hire, F&B, AV etc Segment by location (within UK) Segment by location (outside UK) Segment by industry sector (eg banking, retail etc) Anonimity of company names Meeting size Meeting purpose eg training, meeting, team building day etc Dashboard control - ability to select multiple reports Data collected from multiple sources Data provided to an independent organisation Same content and functionality available to TMC/HBAA/MMC consultant? Other Fig 6
  11. 11. 11 The solution A new digital tool has been developed to meet the needs outlined in this paper. is a live application that independently benchmarks DDR and 24 hour meeting rates for all types of venue in any location. MeetingsBenchmark aggregates and analyses data from hundreds of thousands of meetings at all types of venue across Europe and internationally. MeetingsBenchmark can be accessed from any desktop or mobile device, 24/7, 365 days a year. The dashboard displays real-time average day delegate, 24 hour and group accommodation rates for a given date range, showing the number of meetings on which the results are based. Searches can be refined further through filters including location and venue classification, whilst flexible reporting allows the results to be extracted and shared. Data integrity is all-important. MeetingsBenchmark has no vested interest in the results and will only use the data collected for market intelligence and future forecasting purposes. Where does the data come from? MeetingsBenchmark draws on data provided by subscribing agents, venues and booking channels. API integration enables mutual subscribers to share data easily and securely. Data can also be shared by way of csv upload ensuring anyone, and everyone, can contribute their data. All data is anonymised to remove any reference to a specific provider, venue or client and only aggregated data is published. The data is tested to ensure no supplier trade benefits are divulged and no results are returned where the sample size may inadvertently expose individual data sets. Data security & confidentiality Privacy is taken very seriously. The infrastructure on which the platform runs has been certified by national and international security standards (ISO9001:2008, ISO27001, and SSAE16 / ISAE 3402). By implementing recommendations from the Open Web Application Security Project, data is protected and housed in EU-based servers which are subject to rigorous penetration testing. User benefits Corporates can… • Manage and budget meetings and events spend more effectively • Validate Strategic Meetings Management Programme efficiency • Benchmark achieved DDR and 24 hour rates against peer-set or industry-wide averages • Improve understanding of rate variations between locations, period and venue type • Eliminate the processing time & cost of reviewing multiple quotations Agents can… • Save time and money by searching multiple sources by providing one benchmarked rate instead of three options • Add value for clients by providing them with industry trend and forecast data • Demonstrate quantifiable negotiation skills • Reduce investment in developing bespoke benchmarking technology • Aid clients in budget exercises without performing the enquiry process Venues can… • Access robust, independent data to improve revenues and yield management • Benchmark competitor sets on meeting and event rates • Draw on real-time data for expansion and new opening business cases • Better forecast demand through understanding of lead time & market share • Set, validate and test pricing strategies in specific markets and locations
  12. 12. 12 Conclusions 85% of executives say that the greatest barriers to achieving their growth objectives lie inside their own corporate walls, according to research by Bain & Company. In the largest companies, this rises to 94% of executives who believe that their most difficult challenges are internal. Other than increasing attendance at meetings (which is another report in itself), meeting managers are concerned most with ever- tightening budgets. According to Cvent, top metrics used by corporates to measure their ROI are revenue from registration, sponsorships and number of new leads. Another should be benchmarking purchasing. There is no debate that transparency of data is essential to programme management, regardless of the field. The complexity of meetings and the variety of pricing models present in the market makes accurate comparison difficult – but not impossible. The market has tried to benchmark before, but never quite got it right. The solution is one that works for corporates, agents and venues alike, rather than one of those audiences in isolation. Technology has simplified previously manual processes, so the opportunity to deliver a truly – end to end’ solution has never been greater. Acknowledgements Benchmarking Meetings Spend was written by Travel Intelligence Network for Research by TIN and Conference Doctor With special thanks to: Michael Begley ( Tim Chudley (The Sundial Group) Jim Cockell (Rattray Milne). Sources Bain & Company, C&IT magazine, CTM, Cvent, CWT, Eventbrite, GBTA, Inntel, PwC and The Business Travel Magazine. (Sourcing + Process + Policy + Compliance = Savings) + Benchmarking = MORE SAVINGS Performance analysis for strategic meetings management To discover more about MeetingsBenchmark, its features and pricing, go to Powered by