When companies place initiatives for corporate events "on hold", they usually cite budgetary constraints as the main reason. It is surprising that, in an era of cost containment, a number of practices that inflate budgets and reduce value are continuing.
Consider this medical analogy. When patients needs braces, dentists don't:
- tell the patient they provide orthodontic care
- invite the orthodontist to use one of their chairs
- charge the patient a hefty mark-up
Instead, they refer patients to specialists....orthodontists. Why does the same line of thinking not apply in the event industry? Here are some examples of missed opportunities for cost-savings.
Sourcing Incentive Travel Through Travel Agents
Companies in Europe tend to rely on this model. They select 3 local travel agencies to submit proposals. Often, the travel agencies have no experience in the client's preferred destination. Each agency sends an RFP to a least 3 destination specialists (e.g. event planners, destination management companies, or incentive travel planners). These requests are usually made with less than a 48 hour turn-around time. The result? Nine or more companies bombard the same hotels and resorts with urgent requests. This is a major source of frustration for hotel Group Sales departments and a huge time waster.
Although the RFP was issued to the destination specialists on an urgent basis, decision-making is slow. Eventually, the travel agents disappear into cyberspace and one never knows if incentive travel ever took place.
Corporate Event Planning Through Advertising and Marketing Agencies
The client identifies the need for an event to reinforce brand messaging or corporate values. It could be an employee kick-off, trade show, sales incentive trip, luxury corporate event for clients, or sales rally. The agency convinces the client that they provide those services. They don't disclose the fact that:
- event planning is not their core competence
- they are outsourcing event design and planning
This creates one of 2 scenarios:
- the client pays a hefty mark-up for service or
- the advertising agency squeezes its suppliers
- the suppliers have no option but to use inexperienced team members to execute the initiative
Outsourcing through travel, advertising, and marketing agencies often does not result of getting what you're pay for. It also complicates the communication process and increases design and execution time.
When cost containment is a stated priority, why are some event planning clients still engaging in practices that inflate budgets and reduce value? Comments? Reactions?