DMCs are torn over charging fees for incentive proposals to prevent opportunistic clients from stealing ideas and going direct to suppliers
As incentive budgets become increasingly squeezed amid intensifying competition and a sluggish global market, DMCs are seeing a rise in prospective clients who request for tour and incentive proposals only to go straight to suppliers in a bid to cut costs.
While not a new issue to the travel trade, this trend is further compounded by the growing ease of access to suppliers via the Internet, which increases the likelihood of clients harvesting ideas from DMCs and then organising their own travel programmes.
Proposals to counter this prevalent issue were discussed during the 2014 annual general meeting of euromic, a Europe-focused association of 36 DMCs, in Cairo, Egypt earlier this year in January.
Ideas mooted included charging for proposals and shifting DMCs’ emphasis away from packaging products to becoming travel consultants who charge a fee for their services.
Gloria Spotti, executive vice president of Events.com, said her company had been successful in charging clients a conceptual fee at the proposal stage and recommended other travel specialists to follow suit. “If a client wants us to develop a programme for them, why should we do that for free?” she questioned. “It costs us time and money.”
DMCs generally like the idea in principle, but many believe their clients would not stump up the fee, a view reflected by those on the demand side of the process.
David Sand, CEO of Uwin Iwin Incentives and former president of the Society of Incentive Travel Executives, said he had yet to see a DMC requesting payment for a proposal and added that specialists who started to do so would likely lose business as a result.
Echoing Sand’s sentiments, a senior buyer from a major international company in the US, commented: “I feel for the DMCs. We always work with them in an upfront way and would not take their ideas, but I can’t see the idea of paying for proposals working.”
At the same time, the trade in Asia faces similar problems and most travel specialists struggle with finding a solution that protects their company without deterring new business.
A senior executive at a Bangkok-based DMC, who requested anonymity, said it was possible to sniff out and deter prospective clients who were likely to use the request-for-proposal process as a free ideas grab. “There are ways of dealing with these clients; we will spend very little time on the proposal and ramp up the costs so they will be priced out, or tell them there is insufficient room capacity for their needs,” he said. “But we can’t just turn the business down.”
He added: “The problem is responsible clients end up footing the bill for those who take our ideas.”
Just as Sara Merino, director of sales and marketing at Spanish Heritage, shared that some clients request for a London-based programme only to go direct to suppliers because they think “England is so close they can do it themselves”, travel firms in South-east Asia are seeing such trends too.
Exotissimo Travel Thailand MICE manager, Tim Upchurch, said: “Some markets have no problem of getting us to do the work while having no intention of doing business. This is not always about stealing the ideas, sometimes they just need another proposal (for presentation) even if they have pretty much decided they want to go to a completely different destination.
“Singapore is probably the worse (for ideas theft) – it’s a cultural thing. They want to organise everything themselves. We don’t really see this from other markets like Hong Kong or Vietnam,” he added.
Upchurch said the problem was relatively rare with longhaul clients “who really see the value in what a DMC adds”, and rarer still with corporates who were much more willing to accept a consultancy plus service fee approach.
One additional problem with regional clients who are less opposed to taking the specialists’ ideas for free is that they are often part of a global company that may generate significant business for a DMC. “If we upset the Singapore office, we risk upsetting the global head office and it’s just not worth it,” he said.
When asked about the likelihood of incentive houses and regional clients paying for proposals, Upchurch replied: “They wouldn’t wear it. A Singaporean client certainly wouldn’t pay for it.”
Likewise, Hans van den Born, managing director of Diethelm Travel Thailand, said the company was also experiencing the same problem. While he would like to charge for proposals, it is unlikely to happen not only because clients would not support the move, but also due to a lack of solidarity among DMC players.
“I certainly won’t be the first to implement it (charging for proposals),” he said. “You may think you have an agreement with your colleagues, but you can guarantee that if most companies start charging there will always be someone who stops charging to get more business. Then you all have a problem.”
