SMMP INDUSTRY UPDATES & MCAFEE CASE STUDY...1-Business Travel News, the "2012 Strategic Meetings Management Study," 2 - CWT Travel Management Institute 2010, 3 - Strategic Meetings

Business Solutions Group

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SMMP INDUSTRY

UPDATES & MCAFEE

CASE STUDY

Susan Dupart Kevin Iwamoto, GLP & GTP

Senior Director, VP Industry Strategy

Global Travel, Meetings,

Corporate Card & Mobility


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WHAT WILL WE TALK ABOUT TODAY?

• Meeting trends and forecast

• Why are companies focusing on meetings?

• Strategic Meetings Management Case Study - McAfee


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TOP TRENDS FOR 2013

Consolidation

• Growing consolidation of Business Travel and M&E spend to negotiate better deals

• Increase in consolidated M&E policy for greater savings and risk mitigation/Duty of Care

Savings & Compliance

• Driving air and ground transportation savings is travel managers’ top priority for 2013

• Improved communications on policy – Travel 2.0?

• Optimizing hotel spend by mandating the use of preferred hotels

Source: CWT Travel Management Institute

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Business Solutions

48% of corporate T&E and meeting pros say their firms’

procurement departments are involved in meeting

management.

Corporate Meetings & Event industry was approximately

$360 billion in 2010

Meetings represent 9% of the average organization’s total

budget

36% of companies have strategic meetings management

programs in the US.

1-Business Travel News, the "2012 Strategic Meetings Management Study," 2 - CWT Travel Management Institute 2010, 3 - Strategic Meetings

Management: A Handbook of Emerging Strategies for the Next Generation of Meetings and Events Management, Aberdeen Group 2012, 4 - 1-Business

Travel News, the "2012 Strategic Meetings Management Study

THE MEETINGS INDUSTRY: A BIG INDIRECT SPEND CATEGORY


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INDUSTRY PRESSURES

Data & buying fragmentation for buyers, revenue streams and distribution channel changes for suppliers

Continued pressures on outsourcing travel and meetings

Economy & the price of fuel

Rapid advancement of social media and technology

New and younger workforce and ways to transact business and communicate


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TRENDS & FORECAST FOR MEETINGS & EVENTS

RFP volume and bookings accelerating

Shorter booking windows – planning taking place in a tighter window

Risk Mitigation More Crucial

Suppliers are being selective and exerting more control

Social, Virtual & Mobile Transforming Event Management


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Fees

• Carry-on bags

• Checked bags

• Overweight bags

• Snacks

• Blankets

• Seat upgrades

• Premium seating

• Wifi

CHALLENGE: ANCILLARY FEES GROW

Airline Example:

$36.1B Projected in 2012


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Fees* • Early check-in

• Mini-bar restocking

Fitness center

• In-room safe

• Luggage storage

• Energy surcharge

• Valet parking

• Porterage

• Resort

• Internet & phone

CHALLENGE: FEES GROW

Hotel Example:

$1.95B projected in 2012

“Most fees and surcharges have incremental profitability of 80 to 90 percent or more.” – Bjorn Hanson


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North America 4% rise in avg.

meeting size

6.5% hike in

per-day attendee

cost.

CHALLENGE: UNEVEN GLOBAL MEETINGS

FORECAST

3% decline in avg. meeting size

6% drop in per-day attendee cost.

EMEA

Source: Carlson Wagonlit Business Travel Forecast


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STRATEGIC MEETINGS MANAGEMENT

policy process

control people

Strategic Meetings Management (SMM) is a disciplined approach to managing

enterprise wide meeting and event activities, processes, suppliers and data.


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SMMP – REGISTRATION/APPROVAL OF MEETING

Supplier advantages: Highly qualified

meeting proposals Corporate gains: Company-wide

visibility via central calendar

Annual savings ranging from 1.6% - 3.9%

Approval workflow

audit trail (i.e. SOX) Annual savings ranging

from 1.2% - 2.8%


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Supplier advantages: Automated lead response Leads reach right person Integration with CRM system Preferred supplier programs Corporate gains: Driving preferred supplier

usage Improved leverage from total

spend accuracy for negotiating rates


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SMMP – SOURCING / PROCUREMENT


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Supplier advantages: Automated room lists Corporate gains: Quality of event Improved marketing of

event and sessions Automation of many

manual tasks Annual savings ranging

from 1.1% - 3.2%

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SMMP – PLANNING / EXECUTION


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SMMP – PAYMENT / EXPENSE RECONCILIATION

Supplier advantages: Fast payment Reduction in billing

and invoicing costs Corporate gains: Integration to financial

systems Separate real time

meetings and T&E spend analysis



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COMPONENTS OF MEETING CARD

PROGRAM

One card issued per meeting

Declining balance card or monthly card limits can be set based on estimates

of the highest expected amount of monthly charges

Can be used to pay all suppliers, including hotels, ground transportation,

signage, restaurants, on-site fees, etc.

Can be opened early to pay for deposits and closed after all event invoices

have been paid

Transactions can be reviewed and approved on-line within three days

Transactions can be reallocated to other cost centers within the same

country

AP pays the card balance directly and internally bills designated cost center.


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PAYMENT METHOD COMPARISON

Meeting Card Program Purchase Order

Can be opened and ready to accept charges within 7-10 days

Standard payment terms for paying suppliers is 45 days

One meeting card can pay many different vendors

Traditional PO process requires separate PO be opened for each vendor

No minimum transaction amount Minimum PO transaction amount

Reduces number of payments AP processes—one payment to card company per month for all transactions

AP processes separate payments for each vendor

Suppliers who accept corporate card will already be set up in payment system

Supplier must register and submit tax documents in order to be added to company’s payment system

Reduced internal processes Multiple approvals required


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PAYMENT METHOD COMPARISONS -

CONT.

Meeting Card Program Corporate Purchasing Card

Can be used for traditional meeting vendors such as entertainments, florists, etc.

Many traditional meeting vendors are blocked on individual CPC cards

Limits are determined by each meeting’s unique budget

Individual CPC cards may not have a high enough limit for traditional meeting expenses


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SMMP – DATA ANALYSIS / REPORTING

Supplier advantages: Evaluate market share Compete and optimize

lead management Corporate gains: Central reporting

database and dashboards

Real time enterprise-wide accuracy



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Technology connects all the puzzle pieces: Automation

Delivers efficiencies

Drives common standards

Sourcing Mature, consolidated marketplace

Automates processes

Centralizes data

Visibility Improves visibility to meeting activity

Reduces/eliminates paperwork

Compliance Supports/enables pre approval

Reporting capabilities from the meeting level to the enterprise level

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SMMP – TECHNOLOGY


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COST SAVINGS EXAMPLE CompanyTraining Summit - $4,188.92 / 8.48%

Reasons for lower than average cost savings

Peak season in Ocean City, MD

Rooms currently going at rack rate of over $300 so hotel would not lower group rate at all from

first quote

Most hotels in Ocean City won’t take groups during peak season

Risk Management Items We Were Able to Secure

· Better Cancellation Clause

· Better Attrition Clause

· Resell Clause

· Rebooking Clause (100% of cancellation/attrition fees can be used for another

program within 12 months)

· Rights of Termination (Force Majeure)

· Insurance/Indemnification

· Overbooking

· Hotel Cancellation

· Renovation/Construction


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CENTRAL RESOURCE – BETTER VISIBILITY

Start with “Sourcing Only” option – full service would be available

Employee owns meeting content and management of program

Visibility to cancelled programs and cancellation penalties

Centralization provides ability to re-use cancelled space

Cancellation of 2 programs within two weeks = $46K

⁃ Advisory Council

⁃ PM Leadership Offsite

Master Calendar

Provides pipeline visibility into future meetings and events to ensure no overlap

Proactive vs. reactive for strategic decisions (cost reductions)

Provides visibility to global events (APAC Kickoff)


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HOW DID MCAFEE SUCCEED? Creation of Global Governance Team

Executive Finance VP’s from all Geo’s

Meet quarterly to propose new initiatives

Global Travel Dashboard

Pulls travel data from AX, expense reports, SAP, Hyperion, providing better

travel data

SMMP

⁃ Identified cost savings, better global visibility

⁃ Definition of “Meeting”

⁃ Creation of Global Meeting Policy with approval guidelines while ensuring

cultural/Geo specific’s

⁃ Creation of meeting contract template to ensure McAfee required T&C’s are

included prior to final negotiations

⁃ Develop easier payment vehicle, reducing Sourcing and AP processing time

⁃ Phased rollout plan

Level 1 Level 2 Level 3

Service Level Description

• Maximum 3 properties sourced

• Standard availability report

• No space mapping

• 25 room nights or less

• Maximum of 2 meeting rooms

• Contract negotiation / client consultation

• Close and final turn over package



• Space mapping for one property

• 26-100 room nights






• Space mapping for up to 3 properties





Fee (per meeting)

Note: The meeting level is the highest level based on any one of the specifications. For example, if room nights are less than 25 but meeting rooms are greater than two, then Level 2 would apply. Hotel Commissions: Room rates will be negotiated commissionable and will be applied as “net off master” as a credit on the master hotel bill.

Sourcing & Contracting Service Levels and Pricing

Meetings Services

Services provided by

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Level 4 Level 5 Level 6

Service Level Description





• Meeting rooms as required



• Maximum 12-15 properties sourced







• Maximum 15-20 properties sourced



• 500+ room nights




Fee (per meeting)

Billing: Once the venue contract is turned over to the McAfee meeting owner, the meeting owner is responsible for all vendor payments directly. Fees noted above will be billed directly to the meeting owners upon completion of the sourcing work.

Cancellation Fees: In the event any program or request is cancelled prior to contracting, a cancellation fee of $250 for Levels 1-4 and a $500 fee for Levels 5 and 6 will apply. If the meeting or event is cancelled after being contracted, the full sourcing transaction fee for the designated level is still applicable.

Sourcing & Contracting Service Levels and Pricing

Meetings Services

Services provided by

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QUESTIONS?

Documents

SMMP INDUSTRY UPDATES & MCAFEE CASE STUDY...1-Business Travel News, the "2012 Strategic Meetings Management Study," 2 - CWT Travel Management Institute 2010, 3 - Strategic Meetings