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Does $32 for a box lunch sound like a good deal? Would you pay $4 for a bottle of soda? Is charging $150 per hour for a standard shuttle mini-bus or $200 per hour for a motorcoach considered reasonable pricing?
Mark-ups of 30-40%-plus on transportation and other services are common among destination management companies (DMCs) that act as middlemen between meeting planners and the many vendors needed for an event. In one case in Los Angeles, group boxed lunches were marked up 100% for a DMC client.
While DMCs have the flexibility to write their own deals with clients, operators note that DMC clients often pay a high premium for the ground transportation that takes attendees to and from airports and around town on tours and excursions.
After the recession of 2008-09 thrashed the business travel and meetings and conventions sectors, all parties involved focus more on costs. Meeting planners must meet tighter budgets while operators try to run their fleets more efficiently to salvage pre-recession profit margins.
Four basic approaches to securing meetings and conventions business are gradually evolving in the industry. These approaches, mostly technology-driven, enable operators to take on more of the functions required to plan conventions and meetings of all sizes, or at least provide superior transportation logistics. The ROI (return on investment) results in less cost to the client and lower overhead for the operator.
The four approaches are:
- Adopting complete front-to-end, turnkey destination management software;
- Using ground transportation software that drastically cuts the time to coordinate large numbers of vehicles;
- Helping DMCs and/or their clients save time and money through free spreadsheets and software, such as Google Docs.
- Acquiring or starting a DMC as part of a chauffeured transportation company.