Men with a vision: Sebastien Tondeur (MCI) and Padraiac Gilligan (Ovation)

Rules need exceptions: Conglomerates don’t work… but Virgin manages to operate successfully banks, radio stations, and trains. Event agencies and PCO’s don’t manage to successfully get international…but MCI has 29 offices. And now, after its integration of the Irish DMC Ovation (and its high-profile boss, Patrick…), MCI wants to bring that successful international model to the traditionally very local DMC market.  

What changed for Ovation after the purchase by MCI: did your activity change, did your customer base change, did lose some agencies as clients?

The answer to all is yes. We changed from being a local DMC to being a DMC operating at a global scale. This changed everything, including how you approach customers, how you address customers, which customers you address. We are able to offer a global proposal to businesses trying to operate at a global level. You are potentially working with a corporation on a strategic basis, offering a global execution and delivery as opposed to defining how you can work together on a single destination. You are working with corporations which have their own in-house planning team as opposed to corporates who go through a agency. Some agencies have decided to stop working with us after the acquisition by MCI, others have stayed with us.

Why did MCI buy Ovation?

We have five lines of business: PCO, AMC, Meetings, DMC and soon Performance Improvement. We decided that we couldn’t develop the leadership structure of all at the same time. We know Patrick and his team for a long time and the reason why we got them in was not to develop business in Ireland, but to develop the DMC activity internationally. They lead and fully manage this whole line of business. Today MCI is in 29 cities, Ovation is in 13. We have grown MCI to a lot of  places. Use the system, use this infrastructure to develop a strong international DMC network

Did you need a DMC? Is it that different from your other agency activities? 20 years ago it was impossible to find a restaurant in another country… today it is quite easy. What is the specific know-how of a DMC today?

It is still about local knowledge. But the local knowledge is not sufficient anymore. With globalisation, companies are looking for a local delivery. They want access to local knowledge through a single point (therefore a global player with can help internationally).

Disintermediation: some corporations are consolidating their in-house teams which then don’t use agencies any more, and just need DMC’s in places where they organise their events. Then the agency is gone. The other way is that the company outsources its event activity to an agency, which then tries to do as much as it can locally, without always using a DMC. Between MCI and Ovation, we cover both these cases.

DMC’s is still a very local industry, at least in Spain. Is it still the case internationally, will it change??

NH started in Spain and then went international. Jumeirah started in Dubai and then expanded. We learned that, as in many industries, customers want consistency of service wherever they go. Companies do not want to have to explain their ways of working, their needs… when they go to Barcelona, and then again when they go to Athens or Shanghai, to a new DMC each time. They want consistency in the relationship. This trend will go on. Hotels are very global, MCI started this global model as an agency, and it is what we also want to offer as a DMC with Ovation.

 About 30% of our business is done with clients who use more than two of our offices, which means our business is really going international. We will see that in other industries: bus companies, limousines, audiovisuals… The consistency of quality of service that a international provider offers is very attractive for companies, whose business is international today.

¿What is that strategy today?

For the moment it is still very based on financial discussions: a procurement manager is interested in focusing more business on one partner will get better conditions. But progressively it will move to other parts of strategy; it will have a lot to do with brand, consistency of how the brand is presented internationally, and quality of service. It will even be about a more strategic destination selection. Today, no strategy operates at that global level; it is what we will do.

Payment: are we moving away from commission and towards fees?

We have a very flexible pricing model. We can bill pure fees, based on the time we spend organising the event, and pass any commission to the client. On the other side is the traditional model whereby you mark up prices and/or get commission on the services. And you have anything in between?

Is any of them better… maybe the fee model, as is often said?

As in any service industry, the fee model is ideal. And that is where we would like to be. The problem is not many corporations are ready to value your time as much as they value theirs…

S: As in the rest of the MICE industry, I think it is only about what the client feels comfortable with. We found out that sometimes, when we explain all the time we spend, show timesheets, some clients say “no, let’s go back to the old model”. They don’t always grasp it.

A client asked us to be transparent on a project recently. It was 500 people for 2 evenings: one dine-around and one single venue. When they saw the fees for the dine-around, they said “this is way too much”. But for a dine-around for 500 people, you are talking about 10 restaurants, so you have to visit 20, try their menus, coordinate everything; it is a lot of time which the client was not aware of. He thought we just took the list and booked, but there is a lot of on-site work.

I don’t think there is a trend in pricing model. There is just a trend towards consolidating business in fewer providers or agencies to get better conditions, better strategy, better planning, more consistent quality, and lower price. .

What would a travel agency say?

You can’t be good at everything. There is a sea of difference between a travel agency or tour operators and a DMC. One is mostly B2C and the other one is exclusively B2B.

What is the core competence of MCI?

We are in the B2B (business to business) and in the B2E (business to employees) business. We deal with anything which has to do with a company wanting to communicate in a live environment to employees, suppliers, press, business clients. We are changing agents. If you want to change people (your sales teams, your distributors…), you have to do that in an event, with a live experience. Communication groups are good for B2C (business to consumers), they have a lot of research about consumers, about how to sell to them, about market trends. The events these groups organise today are mostly B2C, helping a mass market brand offer an experience to consumers, setup a sports tournament… This is not our core business.

But event agencies have a strong knowledge of event production. Can you be providers for communication groups, produce the events for them?

Yes, that could be.

Any plans?

We have today a performance improvement practice (sales channel motivation, employee reward program).We are finalising an acquisition and like with Ovation, we will launch a global performance line of business.

DMC’s often complain that it is hard to get access to strategic information about the event: type of group, objective, past events…

I sympathise with them. Some agencies are very cautious, and see the DMC as a threat, and give them the minimum information and treat them as pure logistics provider. There is a paranoia in some agencies, driven by fear about their place in the value chain. Some agencies on the other hand are very open and see the DMC as a partner and approach the client together, as a team. This is obviously better, for the DMC perspective.

We are probably more oriented towards the corporate market, rather than agencies, and you get more strategic information.

You see this disintermediation as a clear trend?

Absolutely. It has been going on since the Internet made information so readily available, and broke the classical “chain of command”. A corporation who wants to find out what they can do in Vietnam can find a lot of information on the Internet. Also the development of procurement has put pressure: a procurement manager sees there are two levels of intermediaries wonders if he can take away one layer. In some cases the agency or incentive house is taken out, in some other cases it is the DMC. It can be either one.

How is the market?

No one knows. We saw some cancelations and some postponements of programmes, but nothing dramatic. As a group, we were planning 10% growth in 2008 and we will have a flat year (no organic growth, our only growth will be due to acquisitions). We think 2009 will be flat again, which, given the current climate, is not bad.