Susanna Tocca, MD Portugal, of destination marketing company AIM, looks at the added value of destination management services
Destination management companies (DMCs) have been having a difficult time. This is mostly due to heavy competition in the industry not only among the DMCs, but also between DMCs, hotels and venues, all targeting the same market with the same rates.
Competition has become that hard that everyone wants to get the same client at the best possible price and commissioning for intermediating service is increasingly left out.
Moreover, hotels enter into competition with DMCs not only by offering their own services and rooms at the same price to foreign clients as to local DMCs, but trying to gain additional revenues by offering DMC services such as transfers, catering and experience services (tours).
So the question posed is – where is the added value in using a DMC in these difficult times and slim budgets?
More than a booking agent
A DMC has to be much more than a booking agent. The company has to offer deep knowledge about the newest venues, people or trends and the best connections in the destination, opening to its clients the whole range of options available that an outsider would never know about.
The perfect venue is crucial for the success of an event: be it a hotel, a historical palace or an open space. While many of these can be found online, it is clear that not everything seen on a website can be trusted (contacts may not have not been updated for a while).
Having a local expert, a DMC, the client can be certain that all choices are double-checked, and that ongoing relationships with providers will not only secure a professional service, but also a better value for money.
Furthermore, the DMC can bring the attention to the most specific details, limiting dramatically the time for research and decreasing the room for error, such as:
• available options at the venue
• access to different sites
• parking facilities
Logistical aspects where the added value of using a DMC can be crucial:
• Defining and changing transfer routes according to traffic and local events
• Providing support through local authorities and the police
• Informing of any sudden changes brought about by local events.
To source the best solution in the target location is usually a much quicker and easier process when having a local DMC involved, which translates for the client in saved time, stress and at the end – saved money, too. A DMC can also add creativity – matching local attractions and hidden gems to the customer’s ideas and needs, creating a unique customised project – something that’s impossible to be find on the Internet.
The Best DMC and the pricing
An experienced DMC can offer overall better pricing due to its experience and relationship on the local market. While at first glance the services might not seem too different, a DMC knows the correct supplier to recommend for the needs of the client, optimising the value-for-
money ratio. The fundamental question here is not: to surpass the DMC or not; but which DMC to choose.
A good DMC
• invests in continuous staff training and education to have the best local experts
• is financially sound and has a track record of references
• has strong purchasing power
• acts as an extended local arm to the client’s team
• should have a multilingual staff to communicate in the best possible way with its international clientele
• cannot be confused with a tourist board which is financed through its members
• needs to sustain its operation, thus charging a mark up or management fees to earn commissions.
In line with an ever changing market, DMCs need to adapt their ways of quoting and the terms offered to their clients. There are many variables to be taken into consideration. This may contemplate a lot of fees for concept creation and creativity, project hours carried out based on a project plan. A handling fee on the overall monetary volume of a project, the percentage of which can vary according to the type of services rendered. A fixed management fee will be presented, taking into consideration all different activities involved with the projection, operation and file closure of a project. The most common mark up quotation is the one where the service fee is directly added to every single service provided.
Charging for days and hours spent on a project seems to be convenient for the DMC and transparent for the client, but experience also shows that it is the most expensive option. By building a strong relationship with the client, no proof of project hours is needed, as a professional DMC and a trusting client will find together the most convenient way of co-operation and a balanced system to charge for the services rendered according to the nature of the project and workload involved.
The future is teamwork
For a destination and its DMCs to be successful, teamwork is required by all stakeholders in a destination, in order to position the destination, and its USPs in as many potential markets as possible.
The successful destination team usually consists of CVBs, hotels and their associations, together with expert DMCs.
It is much easier for a destination team to win business than a DMC or the convention bureau competing separately for one project, or in one market. Once a destination has been well positioned through a strong local community, business usually not only flows much more easily, but also grows in volume, offering a larger number of opportunities for many of its stakeholders.
While standards are improving, with an increasing number of practices and industry bodies supporting the business, the destinations are getting stronger and better organised. This will lead to a better understanding of the DMC business by potential clients who will seek the experts’ help, just as asking for the right doctor in a hospital. Moreover there is a movement towards a DMC Certification, based on certain standards, in order to eliminate those poorly prepared who charge a lot for insufficient support, thus damaging the image of the DMC business in general.
This is an edited extract of the AIM Group White Paper: Added Value of Destination Management Services. Full version available at aimgroupinternational.com/