R.O.A.R.: Consolidate or collapse?

Earlier this year I moderated a panel of industry experts at ESNEP (the European SITE Networking and Educational Programme) where Roger Tondeur of MCI, David Hornby of VisitLondon, Patrick Sullivan of PRA New York and Katrin Schmitt of CIM Magazine discussed current trends in our industry. The economy, the war for talent, sustainability and consolidation were all given an airing. One trend in particular, however, generated quite a lot of subsequent discussion amongst ESNEP delegates: consolidation.

Mergers and acquisitions have been taking place for some time now in the hotel and venues sector of our industry with the likes of Starwood expanding its brand portfolio by acquiring Le Méridien or Colony Capital/Kingdom Holdings bringing Fairmont, Raffles and Swissotel under the same ownership. Much consolidation is driven by the simple desire to accumulate and by the assumption that bigger is always better as it always creates competitive advantage.

However, at ESNEP both Tondeur (MCI) and Sullivan (PRA) provided more compelling explanations for the relatively new phenomenon of consolidation in the agency and DMC space – they assert that it’s simply about serving customers better. Tondeur described how the rapid expansion of MCI from a Swiss based DMC into a truly global meetings and events agency was driven by customer needs. On the conference side, large PCO customers of MCI in Geneva were so satisfied with the experience there that they asked for MCI to handle their meeting in the next destination. Equally, on the corporate side many customers were increasing their own global footprint and required MCI as a trusted partner to work with them in these new locations. On the DMC side Sullivan related how the PRA / Allied Europe merger is equally driven by the need to provide consistent and seamless DMC experiences on both sides of the Atlantic.

Ovation Global DMC is another clear example of this latest industry trend. Created as a result of the merger of Ovation Group with MCI, Ovation Global DMC is now present in 13 key meetings and events destinations, 11 of which are in Europe, the other two in Arabia (Dubai and Abu Dhabi) and China (Shanghai). For Ovation too the growth and consolidation is not about being the biggest but about meeting customer needs as customers look beyond the existing, mature markets in western society to the new emerging markets in China, India, South America etc

Purchasing and procurement within large corporations is having an immense impact on both agencies and DMCs and is one of the factors influencing the frantic mergers and acquisitions activity we are now seeing within this industry space. The contracting of global events and meetings within a large corporate organization doesn’t quite harmonize with the core concept in purchasing of buying more product or services from fewer suppliers. A corporation may need to operate meetings and events in scores of different locations. At each location it will require consistent branding and communications, the same seamless service, the same understanding of its corporate objectives, the same focus on delivering results etc Working with a plethora of different DMC partners around the world is clearly inefficient from a purchasing perspective but also potentially dangerous from a brand integrity point of view. And this is where the new “global” DMC brands can deliver best – value for money can be achieved by leveraging the volume of business contracted and brand integrity can be protected by having all local services delivered by a globally aligned DMC organization.

So does this new trend of consolidation spell the end of the line for the independent DMC? I do not believe that it does. However, I do believe that all DMCs will be aligned in some way, either as members of marketing consortia (The DMC Network, Euromic etc), as exclusive, strategic partners of global third party agencies, as franchisees of a global DMC Network or as niche specialists (in golf or culinary experiences or team building etc). I also believe that DMCs will focus more and more on core, indispensable competencies such as being local destination experts with a unique understanding of the needs of organizers of meetings, incentives, conferences and events and a focus on delivering business results.

So this new trend towards “Global DMCs” is not the oxymoron that it may appear to be. Not only is it possible to offer local services globally, it is now an absolute requirement in the brave new world in which we live. Customers from the corporate and the institutional sectors, increasingly, have meetings and events needs that require both global and local know-how and only Global DMCs can provide these solutions seamlessly and efficiently.

Pádraic Gilligan is managing director of Ovation Global DMC and also serves as international president of the Society of Incentive and Travel Executives (SITE) for 2008. Based in Dublin, Ireland, Gilligan has been in the MICE business since 1993 and is a regular speaker at industry events around the world.