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Are Third Party Planners All They’re Cracked Up To Be?

February 12, 2014

 

Yes and no! Last week we talked about what third party planners are and what kinds of services they provide. But now that we know who they are, we need to explore why they are becoming so prevalent in the hospitality industry.

Why Do Meeting Planners Use Third Party Meeting Planners?

It’s not always obvious why meeting planners use third parties and, at times, it may frustrate you to have another party in the negotiations. But it all comes down to their ability to provide help.

In order to understand, let’s put ourselves in meeting planners’ shoes. Meeting planners are tasked with dozens of duties including (but not limited to!) coordinating the budget, marketing and organizing registration of the event, making travel arrangements, managing all logistical event details,  determining objectives and requirements of the event, and more. Selecting the hotel to host the meeting or event is just one small part of what can be a big task! Meeting planners want:

  • To Save Time: Planners tend to feel that RFP (request for proposal) creation is too time consuming, despite its importance, and therefore want to delegate some of the work to third parties in order to make time for their other tasks.
  • To Save Money: Many planners feel that third parties with past hotel sales experience have a better understanding of what a hotel can and will negotiate on… in other words, they speak the same language. They don’t waste time trying to negotiate on terms that neither party can agree to, but they often serve as “protector” to their clients, securing them the best deals possible. What’s more, since third parties tend to have a vast network of established relationships with vendors and venues, many planners believe that third parties can leverage this fact to book more business and negotiate better terms.
  • To Make Money: Yes, some organizations actually make money when they use a third party by taking advantage of Revenue Share Agreement. This is when a third party shares some or all of the 10% commission they charge the hotel. In many instances, it’s a 50/50 split and sometimes it’s given back to the organization in its entirety!
  • SMMP / Procurement: Meeting planners are sometimes required by their procurement division to work with certain third parties as part of their Strategic Meeting Management Program (SMMP). To learn more about SMMPs and how they impact hotel sales, check out our other blog post or download our SMMP How-To Guide.

The bottom line is that meeting planners use third party planners to make their job easier. Stay tuned next week for a step by step guide to working with third parties!

 

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