Click Here to View the Executive Summary and Focus Groups
Click Here to View Perspectives of DMCs
Click Here to View Perspectives of Meeting Planners
Click Here to View Comparison of DMC and Meeting Planners Views

In this Section

 2.1. Focus Group 

2.1.1. General Issues in DMC Business 

2.1.2. Key Competitors of DMCs 

2.1.3. Strengths 

2.1.4. Weaknesses 

2.1.5. Opportunities 

2.1.6. Threats 

2.2. Survey Findings 

2.2.1. Sample Characteristics 

2.2.2. Business Characteristics 

2.2.3. Business Model and Partnering with Meeting Planners (MPs) 

2.2.4. Additional DMC Business Characteristics 

2.3. SWOT Analysis 

2.3.1. Strengths Rated 

2.3.2. Weaknesses Rated 

2.3.3. Opportunities Rated 

2.3.4. Threats Rated 

2.1. Focus Group 

2.1.1. General Issues in DMC Business 

A total of 10 DMC representatives participated in our focus group and telephone interviews. All DMC participants were female and their age varied between 30s and 70s. One half of the DMC participants had completed undergraduate studies and the other half held a Master’s degree. On average, these participants had over 15 years of work experience in the DMC business. The first half of the focus group gave the respondents freedom to talk about their own experience in dealing with MPs and their understanding of the industry. The participants agreed that the industry had been seriously affected by the recent economic recess.

They observed that the national and international economic downturn forced the meeting planning industry to eliminate DMC services from their outsourcing portfolio. Therefore, the DMC industry had to experience a significant decrease in profit margins. However, the year 2014 was a turning point in that DMCs started seeing their revenue grow slowly and getting more last-minute projects. Since every destination has its own charms, DMC services vary widely depending on the location of the business. Therefore, MPs can expect more diverse services across the different destinations throughout the US. Despite the fact that DMC services have existed in the market for a long time, DMC representatives feel that the industry still lacks recognition and knowledge about DMC services and they feel the necessities of raising the visibility of the importance and availability of DMC services. Table 2.1 summarizes the key results of the focus group discussions on general issues and trends relevant to the DMC business. 

 2.1.2. Key Competitors of DMCs 

The DMC participants identified the Internet (i.e., Internet intermediaries), convention and visitors bureaus (CVBs), other DMCs, meeting
planners, and some local vendors as their biggest business competitors. Apparently, the Internet and CVBs are considered more serious competitors than other DMCs. While MPs could be a business partner to DMCs, they are also considered a competitor along with other local vendors providing similar services such as transportation and reservation services. 

 2.1.3. Strengths 

DMC professionals reported that their biggest strengths were their ability to provide MPs with a one-stop shopping convenience and save
time allowing MPs to focus on other issues to make their events more successful. DMC services can also guarantee buying power (i.e., ability to negotiate for the better prices) and local expertise. In addition, DMC services can help MPs in managing risks by providing MPs with due diligence and updated destination information on a real-time basis. Overall, the DMC’s strengths are built on its local knowledge and business networks for sourcing necessary services promptly. A future marketing strategy needs to highlight its complementarity to any meeting business staged by MPs, thereby reducing MPs’ perceptions of it as a local competitor. 

2.1.4. Weaknesses 

DMC professionals identified the DMC business’ vulnerability to economic recession and seasonality is one of the biggest weaknesses. Furthermore, DMCs understood that the business has low barriers to entry, high in marketing dollars, low margins, and price transparency in the online environment are the detrimental aspects of DMC operations. Also, lack of communication among DMCs, lack of education and awareness of DMC services are some other weaknesses identified during the focus group discussion. In general, the DMC business seems to have quite challenging business conditions both internally and externally. 

2.1.5. Opportunities 

Despite some weaknesses the DMC business has, DMC professionals observe that more and more new tradeshows open up potential business opportunities for DMCs. By staying involved in legislations, networking with other DMCs, and being a part of DMC consortia, DMCs can cultivate more business opportunities through connections within the industry. In addition, DMCs, especially those in famous tourist destinations, can foresee more business opportunities due to the continuous efforts made by destination governments (e.g., adding more tourism resources). DMCs also acknowledged the importance of well-managed social media as a potential way of publicizing their names and of getting more new business opportunities. DMC professionals seem to rely heavily on technological development and local governments for new business opportunities. 

2.1.6. Threats 

Due to low entry barriers, DMCs are facing an increasing number of new competitors such as hotels and transportation companies. Technological development can be a double-edged sword, because poorly managed social media can also undermine the DMC business. Technological advances and prevalence of vendors’ service and price information allow MPs to contact vendors directly, making DMCs work in a harsher business environment. Similarly, technological development make increasingly more communications take place via email or text messages. Relying heavily on email and text communications may increase the chances of having miscommunication. Finally, DMCs think that lack of education about DMC services (industry wise) is another threat to them. It seems that technological development brings both opportunities and threats by creating new businesses as well as inviting new competitors. DMCs will need to navigate new technology carefully to their advantages. 

 2.2. Survey Findings 

2.2.1. Sample Characteristics 

A total of 148 DMC professionals participated in this survey electronically, at a response rate of approximately 10%. Of these, 54.7% were females and the average age of the respondents was 46.64 years (median = 46). The majority (56.6%) had a college degree, followed by 28% holding a post graduate degree. and in terms of the education level, 56.6% held college degree and 28.3% completed up to post graduate degree. Slightly more than 76% of the respondents had more than 10 years of DMC industry experience, while less than 5% had been employed in the DMC industry for the past two years. See Figure 2.1 for more information. 

2.2.2. Business Characteristics 

Almost 76% of DMCs had been in business operations for more than 10 years, while only 4% started their DMC business in the past two years. Approximately 67% of DMCs were employing 25 or fewer employees and about 20% hiring more than 50 employees. Only a very small fraction (3%) was self-employed in the DMC business. About 46% of DMCs were independently owned and was part of a national or global consortia, followed by about 21% classified as multi destination private and/ or corporate owned and 17% as independently owned in a single location. The number of DMCs handling either fewer or more than 30 events in the past 12 months was about equal; about 15% were handling more than 50 events in the previous year. About one out of 10 DMCs reported an annual revenue in FY2013 of more than $10 million, 21% $5.1 - $10 million, 26% $2.6 - $5 million, 16% $1.1 - $2.5 million, and the rest (27%) less than $1 million (see Figure 2.2). 

 2.2.3. Business Model and Partnering with MPs 

As shown in Figure 2.3, more than a half (54.2%) of the DMC respondents reported that their DMCs had gone through the major business model changes over the past 3 years. Those DMCs which mentioned that the main reason for the business model change was because of the new competitors (22.9%), cost transparency (15.7%), and Internet access to destination information (14.3%). Other reasons of making business model changes included (1) expansion to the second markets, (2) becoming a part of the larger DMC consortia, (3) downsizing, and (4) mergers. We also asked DMCs whether they would encourage to use MPs’ services. To this question, the majority (81.5%) mentioned no particular preferences in using MPs’ services. Around 65% of DMCs had been working with more than 10 MPs in the last 3 years, while a small fraction (4.5%) had worked with no MP in the same period. Finally, DMCs indicated that they collaborated with MPs on about 49% of DMC businesses and projects on average. 

 

2.2.4. Additional DMC Business Characteristics 

To explore whether there were noticeable patterns in DMC business characteristics and models, we cross-tabulated a few sets of questions. First, we crossed business mode with the number of employees as shown in Table 2.1. One noticeable mode is that a large number of DMCs were independently owned as part of a national or global consortium and they were hiring mostly 25 or fewer employees.

Table 2.2 reveals that the type of DMC business models has no particular implication for the number of events conducted. For independently owned, single location DMCs, however, the number of events processed tended to be smaller. 

As shown in Table 2.3, there seems to be no particular type of DMC business models in favor of revenue generation. Regardless of the business model, the majority of DMCs were generating an annual revenue of more than $1 million, although no independently owned, single location DMC reported to have earned more than $10 million in FY2013. 

Regardless of business models, most DMCs tended to collaborate with multiple MPs, most frequently with more than 10 MPs (see Table 2.4.). A very small fraction of DMCs had no business collaboration with any MP. 

In Table 2.5, we find a general pattern of a positive correlation between the firm size and revenue, as expected. That is, as the number of employees increased, so did the annual revenue tend to, even if an exact statistical test could not be done due to some zero values in cells. 

As we also expected, the number of events processed by the DMC tended to correlate positively with revenue generated. Thus, an increasing business volume measured by the number of events hosted tended to bring about increased revenues, as reflected in Table 2.6.

 

2.3. SWOT Analysis 

During the focus group discussions, DMC representatives were asked to rank order top 5 items within each S. W. O. and T. factors when we presented the summary of the discussion to the group. These highly ranked SWOT factors were evaluated by the survey participants for more generalizable results, on a 5-point scale anchored with 1=strongly disagree, 2=disagree, 3=neutral, 4=agree, and 5=strongly agree. Each factor was provided with an option of ‘Not Applicable’ for the respondents who could not rate that factor for any reason. The SWOT evaluations can be viewed as a self-analysis into their own internal and external business conditions of DMCs. In the figures below in this section, the entries are the mean scores based on the 5-point scale. 

2.3.1. Strengths Rated 

The most highly “self-rated” strengths of DMCs related to DMCs’ capability to guarantee event quality and client satisfaction and their in-depth knowledge, expertise, and networks. While highly rated on the scale and thus of high strength, DMCs’ ability to handle local legislative issues was rated lowest of all factors examined. In general, the DMC respondents agreed with the strengths of the 10 presented factors in relatively small variations in rating scores (Figure 2.4). 

2.3.2. Weakness Rated 

The DMC respondents showed more different opinions about their own weaknesses. Of the 12 factors presented, DMCs’ susceptibility to the national economic condition emerged as the most serious weakness, followed by their lack of collaboration with other DMCs for mutual success. Although the focus group participants suggested some factors like low marketing budget and lack of creativity caused by reliance on the same vendors as critical weaknesses, the survey participants tended to disagree with them. Generally, there seems to be a tendency that DMC survey respondents acknowledged their weaknesses more reluctantly as shown in relatively low rating scores across all factors (Figure 2.5). 

2.3.3. Opportunities Rated 

We presented nine opportunities highly rated by the focus group DMC participants for evaluations by the survey participants. The DMC survey respondents rated their ability to offer creative programs as the most promising opportunity, followed by more promotional demonstrations and presentations, more client education about availability of DMC services, and developing online and social media technologies. They, however, disagree with the elimination of some DMC services as an opportunity (Figure 2.6). 

2.3.4. Threats Rated 

The focus group identified eight imminent threats facing DMCs and we asked DMC survey participants to rate each of them. They agreed most strongly with the threat that many unethical MPs obtained information from DMCs and then contacted vendors directly. However, when asked whether their DMC was struggling to survive was a threat, they disagreed (2.11). They generally remained neither disagreed nor agreed with the other six threats (Figure 2.7). 

 

Click Here to View the Executive Summary and Focus Groups
Click Here to View Perspectives of DMCs
Click Here to View Perspectives of Meeting Planners
Click Here to View Comparison of DMC and Meeting Planners Views

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