Portugal: The Added Value of Destination Management Services
By Susanna Tocca, Managing Director AIM Portugal
In recent years it seems that Destination Management Companies (DMCs) are having a difficult time. The effect of the last recession has had its toll on DMC services. Intermediary services are often left out to spare some money by trying to operate directly using the Internet, etc.
“It's all on the Internet,” we hear our potential clients saying, no DMC will be needed, moreover many international hotel chains are globally present and offers a whole lot of additional services to their meeting and incentive clients.
The hotels nowadays often suggest offsite catering and transfer services, as the competition is tough and margins are down – this gives the hotels a a good way to earn additional revenue.
So what is the added value in using a Destination Management Company (DMC) when times are difficult and spending budgets are slim?
A DMC has to be a consultant, knowing all the latest places and people, opening to its clients the whole range of options available in the destination that an outsider never would know of.
It starts with the venue finding.
The perfect venue is crucial for the success of an event; be it a hotel, a historical palace or a modern open space building. All of this can obviously be found on the Internet, but can you always trust what is up there and is it up to date? Would you not rather have a real person to advise and help you? Would you not feel much safer dealing with your own local expert?
A DMC would also know about rental conditions, heating /air-conditioning system, options for lighting and sound and what is best used in terms of catering, decoration or entertainment in the chosen location.
Access to places, parking facilities, security -- it all needs to be considered. To find out the best solution in the target location is usually a much quicker and easier process having a local DMC present, which in the end will save the client stress and time!
A DMC adds creativity to locally available services or helps you to find the local solution for your most creative ideas, solutions that mostly are not on the Internet but are unique and tailor-made, especially when you want to give a local colour to your teambuilding or personalise your sightseeing programme.
No doubt a DMC and its local staff are of great help by defining or changing transfer routes according to traffic situation and local events occurring. DMCs usually also have good contacts with local authorities and the police, which turn out to be useful in many different and often crucial situations.
Can a DMC then offer you the best prices on the market?
Through research one always finds out the reason for price differences and it often has to do with the service itself that is the same at first glance but after analysis is not. A DMC always has a better experience regarding which supplier to choose for which service and optimizing the value for money ratio for its clients.
Having said this, when choosing your local DMC, do some research and be sure that you are working with a partner that really provides added value for you.
DMCs should have best local knowledge and therefore continuously train their staff in order to become local experts and know all the latest changes, updates and innovations in their area.
DMCs should be financially sound and have a track record of references.
It’s easy to offer advice but to have a good reputation in the market takes time and dedication and exceptional service year after year. A good DMC will have strong purchasing power, many times much better than an independent client and hence the DMC will get its client the best value for money.
The DMC team should act as a local extended arm of your team rather than a supplier and should have reputation in the area through references from important hotels or tourism authorities.
The DMC team works very closely with its clients and therefore empathy and good personal relationships are crucial for the success of a jointly organised event. (Choose someone you like!)
The Correct Pricing
Nowadays DMCs are often confused with tourist boards and the other way round. Destination management services are not free!
A DMC needs well trained multilingual staff to provide excellent service.
A tourist board never has enough staff to be able to deliver the many hours of consulting and assistance needed to deliver a first class event, while a DMC will never be able to deliver extended services, site inspections or assistance during an event for free.
It seems so obvious “there are no free lunches” but our DMC everyday life unfortunately shows a different side of the coin.
Often we get a completely elaborated request that has already been negotiated by the client, who in the middle of the project suddenly wants us to take over, but without paying anything for the service!
A DMC has to charge for its services as any other service provider does, be it a lawyer or a dentist, according to the type of event hours used, extent of complicity, etc. In most cases the simplest and cheapest way for the client is a mark up quotation where we pass on our supplier net rates to our clients including our mark up.
With a changing market however also some creativity in this field is needed. Good DMCs nowadays have learned to quote in advance for the hours they will need before, during and after the event to fulfill all of the client’s needs.
According to client’s wishes we quote our handling fee on services in percentage or as a lump sum and some of us quote per days and hours we invest on an account, which seems more convenient but turns out to be the most expensive solution in many cases for the client.
I believe the most important thing is to build a relationship of trust with our clients in order for them to realise how many hours we work and how we make their life easier through our local expertise, so that they feel comfortable to pay for the added value service a professional DMC expert delivers.
On the other hand the stake holders of one destination need to work as a team to promote the destination and to take advantage of their different USPs and strength.
Convention bureaux and hotels should know their place and opt to build a team with the DMCs to get important events to a destination rather than to try to get them just on their own.
Finally DMCs should value their own work and charge the client the right amount from the beginning for their consultancy, services and proposals. This would eventually save a lot of time spent answering “clients” who are just “fishing” or just need to have a certain number of bids to compare a quote!
Standards are getting better, best practice is being used and industry bodies are getting stronger and better organised. The future and survival of DMCs would need some radical changes. We need to also educate our clients that our service has a value – nobody flinches when you pay for a lawyer or a dentist, so why is the price always an issue when it comes to DMC expertise? Maybe the European industry bodies and the local industry bodies should set some standards and minimum fees for services? Also establish rules on how to be a certified DMC, to avoid some competitors trying their luck and offering bad service for little money. As the old saying goes “when you pay peanuts, you get monkeys”. If the industry bodies, together with the industry, came up with a plan with a standard minimum mark up to really make the proposals about service while guaranteeing that the proposals would be won because of creativity, personal relationships, etc. not because some competitors just slashed the price to win the business while destroying the reputation of the market.