Meeting With Success

With group travel already becoming a rapidly lucrative and increasingly popular market niche, a new growth trend may be emerging as travel professionals take more notice of small-business group opportunities.

The SME or “small to medium enterprise” travel market has generated rising interest among suppliers in the past several years even as a PhocusWright study estimates business group and meetings travel will hit $175 billion by next year.

While some of that is contributed by mega-corporations, an estimated 25.8 million U.S. businesses employ 500 or fewer employees that some say could represent a travel market of as much as $28 billion a year. “Based on our experience it’s one of the fastest-growing markets [small businesses] are doing a lot more traveling. Historically, small businesses & have been forced into solving their own travel needs & [But] if there’s someone that can help them cover all the components, I think they’d be very interested in doing that,” said Chuck Sharp, president of the American Small Business Travelers Alliance, headquartered in Irving, Texas.

Small-business group travel can take a variety of forms from motivational, incentive and professional-development meetings to convention and conference attendance. And such events are on the rise.

A survey by Meeting Professionals International indicates that this year companies, nonprofits and associations forecast holding more meetings with larger budgets. And the Society of Incentive and Travel Executives recently cited industry research pegging American business spending on incentive travel and motivational meetings at more than $10 billion a year.

“For SME customers, their time is the most important asset. Agents and planners can add value by helping coordinate all the components of the trip air, travel, hotel, local transportation,” said Sharp. “Many SME travelers are going international and are not equipped when challenges arise.”

For agents, however, tapping the market can be a challenge. While some of the fundamentals of group travel remain the same, there are more demands and nuances in catering to business group travel. “The biggest challenge facing agents/planners is that the SME customer has been neglected, so they’ve had to try and meet their needs on their own,” said Sharp. “Corporate and motivational meetings probably offer the best opportunity for agents and planners to re-establish themselves.”

Among the keys is understanding that business group travelers are not motivated by the travel experience, but by the purpose of the meeting. And that means a new, more customized sales approach.

“I think that it can be very lucrative, but it requires a lot of attention to detail and it’s fairly constant,” said Andi McClure-Mysza, co-owner of California-based Montrose Travel. “And a lot of it has a shorter lead time than leisure. A company will decide three months out to do a sales meeting and & it usually ends up you drop everything to arrange it. That’s what it takes and then it can be lucrative.” Montrose Travel started its business-travel unit about 17 years ago. Today, it’s one of the top 50 travel management companies nationwide and completed 2005 with over $100 million in gross sales. McClure-Mysza forecasts Mont-rose will see a 15 percent increase in business group travel in the year ahead, on top of a previous strong year.

But it hasn’t come without specialization. Business groups and particularly smaller groups have specific concerns about destination meeting spaces, tax implications, special hotel amenities such as room layouts and wireless access, group pricing, airport shuttles and transportation, food and beverage options and audio-visual equipment.

And there are other challenges in the market that McClure-Mysza sees.

“I’d say that the first thing is that the corporate client has become a lot more price sensitive,” she said. “Budgets have gotten cut back, and where they used to, for instance, put on or could have put on an extravagant incentive trip, there seems to be some tightening up among some of them.

“Some have also become a little bit more cognizant of safety, both in destination selection as well as not having their entire sales force or management team all on one plane,” she added.

And once an agency lands a booking, there are additional concerns.

“The three main things are meeting space, audio-visual and food and beverage,” said McClure-Mysza, noting that Montrose handles about 100 business group trips a year ranging from 10 to 15 people to as many as 2,000.

“For corporate meetings and incentives, you become an event planner, blocking out meeting space and understanding everything down to how rooms are set up,” she said. “And that all makes a difference & Sometimes it’s a big puzzle putting together everything and working around existing events at the property.”

Bruce Tepper, vice president of travel industry consulting firm Joselyn, Tepper & Associates Inc., notes that in this market, agents generally buy at net prices that then allow them to establish profit margins ranging from 12 percent to 20 percent when adding in all the services that are needed for such customized events.

“That’s where the money is,” he said. “Those services include designing creative theme events, handling food and beverage service, providing audio-visual equipment, decor, speakers and entertainment, setting up customized tours, parties & Your job can go far beyond the role of the traditional travel agent if you want it to.”

McClure-Mysza said a key is determining pricing upfront, including what to charge for an agency’s service since, generally, food and beverage, meeting space and audio-visual components are non-commissionable items at hotels and can account for about 50 percent of the total budget.

“You make your money on your hotel rooms and maybe air and ground and off-site events,” she said. “You spend a lot of time taking care of that.”

There are a growing number of suppliers that can help agents cater to the market, however. In the past several years, airlines, hotels, car rental companies and cruise lines have dedicated divisions specializing in business and group travel.

American Airlines has developed its Business ExtrAA program for small businesses to manage travel and still earn reward points. Continental, AirTran, British Airways and Northwest also have developed small- business group travel programs.

Starwood Hotels has launched Meetings in a Moment designed for single-day business group attendees/ meetings. Using the online tool, agents and planners can book small-business groups of up to 25 people directly online, securing meeting rooms and ordering food and beverages, as well as audio-visual equipment at 2,300 North American properties.

Hilton Hotels also launched an online group booking tool e-Events Small Group Product that allows groups of five to 25 rooms to be booked based on real-time inventory. The service offers instant confirmation with no requests for proposal and the ability to manage guest lists.

Groups with fewer than 25 attendees represent 60 percent of all sales leads at Hilton, according to Bob Brooks, vice president of e-sales for Hilton. And small groups also represent the fastest-growing market segment for the chain. Brooks estimates 4,000 meetings will be booked through the tool this year.

“Demand has been high for group booking functionality that puts more ease and control in the hands of the small-function organizer and attendees,” said Bob Dirks, senior vice president, sales strategy and development for Hilton Hotels Corp.

Princess Cruises recently expanded the number of amenities travel agents can offer to group bookings. With six new choices, the groups program now includes a total of 41 amenity options including bottled water in cabins, souvenir mugs and free Internet access.

For agents, an overlooked source of help can be destination visitor and convention bureaus. The Denver Metropolitan Convention & Visitors Bureau, for example, offers free group-planning assistance from arranging accommodations and free venues to recommendations on transportation and dining options. It can also help with itinerary and program planning, offers free visitors guides, destination planning guides, brochures and coupon booklets.

“Small-business group travel seems to be getting a lot more attention now,” said Dan Morgan, sales and marketing director with The Eastman Group Inc., a travel technology provider that has developed customized group-travel software applications for the industry.

While Eastman has specialized in custom applications, it currently is developing a booking engine for an off-the-shelf desktop product.

“The key [with group travel] is to be able to whether in GDS or directly with vendors use software that can always communicate with that block-user interface, updating and communicating through the back end with that inventory source,” he said.

That is increasingly crucial as Corporate Meetings & Incentives recently noted a survey in which more than 40 percent of respondents said they expected their budgets to increase this year.

The survey also found a significant shift toward outsourcing program logistics, with 32 percent of respondents saying they planned to use independent meeting/incentive companies, up from 19 percent last year.

“For SME customers, their time is the most important asset,” said Sharp. “Cost is important to SME customers, like everyone else, but their time is their most important asset. So quality and service are right there. SMEs are probably your most loyal market segment.”

Tepper said the buying decision for this market often is driven by the wow factor more than the price. But experts say price remains a factor, and that’s where agents can excel.

“Online tools are no substitution for negotiating a contract,” said McClure-Mysza. “It usually takes two or three calls negotiating before you can really get your rates down ... For example, for an 800-person meeting, we had hotel rooms originally priced at $129 that eventually we got to $89.”

Morgan said software also can aid the process and help agents compete with a growing number of online sites such as Groople.com that are vying to directly lure group travel bookings.

“I think that we’re going to see control of group travel moving more into the hands of consumers themselves,” he said. “For agencies, the key to staying competitive overall & is with an overall system-integrated package that can communicate with legacy systems as well as all the new technology coming out.”

McClure-Mysza said Montrose uses its own internal databases and several specialized systems to ease the process as it continues to seek repeat and new business.

“The first step is to reach out,” said Sharp. “[Small businesses] can start seeing some success in where planners and agents are saving them time and this is a solution that really works. They don’t have the time to shop around on a regular basis.”

Experts say almost every business, trade organization or association is a prospect for meetings and incentives. Small-business group travelers can be found among leisure clients who hold influential positions within their professional positions.

“We just had a group & [after] a client booked a Hawaii trip for his family,” said McClure-Mysza. “He works for a large IT company headquartered in India & they just requested an 800-person meeting from us.” Experts say any organization with employees, dealers, distributors or members with a product or service to sell and competitors in the marketplace is a candidate for incentive travel. But it requires a new outlook and a willingness to customize and handle details that are often demanded by high-end luxury travelers.

One of those key details for business travelers is staying wired: A Travel Industry of America survey found nearly 70 percent of the 36.9 million business travelers in 2002 brought along a cellular phone on a past-year business trip and about 25 percent brought a laptop computer.

“One thing that is really important is staying connected to business,” said Sharp. “PDAs, laptops that’s an area agencies can help & wireless service is very important.”

Ultimately, catering and being an expert on such specific needs are at the core of capitalizing on the small-business group market.

“For us, it is a growing market ...” said McClure-Mysza. “The challenge is to understand each account, from the agency standpoint, and to understand their needs.”