The DMC Evolution: From Ground Operator to Global Partner

Destination management companies—or DMCs—are now a fixture in the special event landscape. The editorial team at Special Events has been so impressed with the scope and depth of the DMC industry that we started documenting the industry in our annual "25 Top DMCs" list, which showcases the work of the biggest operators in business.

For a history lesson in how this big business got its start, we turn to Chris Lee, DMPC, CEO of ACCESS Destination Services, for his take:

THE BEGINNING Sometime during the 1960s, as a response to meeting and convention planners’ desire for custom group leisure activities during their programs, a new business was born. Referred to as “ground operators,” they were mostly small entrepreneurial enterprises operating in a single destination. These local companies offered basic services including airport meet-and-greets, transportation, packaged tours, and recreational activities for groups.

In the 1970s, many of these early companies added customized activities, themed events, and spouse/guest programs to their services. The term “destination management company” was coined in the U.S. in 1972 by my father, Phil Lee (who founded California Leisure Consultants in 1969), to describe the expanded role the companies played as local destination and logistics experts.   

COMING OF AGE During the economic boom of the 1980s, destination management companies flourished, further expanding their roles in the meeting, convention and incentive travel industry. New DMCs were popping up everywhere, bringing competition into many markets. By the end of the decade, several regional and national DMCs had emerged. “A Cottage Industry Comes of Age!” proclaimed a magazine cover story at the time.

Then came the recession of the late 1980s and early 1990s, and with it came some major shifts. More companies were competing for fewer dollars. Organizations were forced to cut their meeting and incentive budgets. Other suppliers, such as hotels, decorators, and transportation companies, began offering similar destination services to DMCs. In another shift, some DMCs began traveling with clients from destination to destination.

CONSOLIDATION In the 1990s, we witnessed aggressive national expansion and “corporatizing” of the destination management business through institutional investment and venture capital. Mergers and acquisitions, joint ventures, rollups, cooperative marketing agreements, and even franchise offerings changed the face of destination management. All of this created a dynamic, competitive, and thriving industry where only the strongest survived.
 
FINANCIAL CRISIS The financial crisis of 2009 had another unprecedented effect on the meetings industry, and not just on DMCs. It was a “perfect storm” of economic, social and political scrutiny of corporate excess, namely travel and recognition events, leading to the sudden cancellation of thousands of meetings across the country. The "AIG effect" left companies hesitant to travel across the country for meetings for fear of ridicule in the press. Many DMCs and event planning companies struggled to stay afloat, and some were forced to permanently close their doors.

At ACCESS, we fundamentally changed the focus of our services during this time from meeting services to corporate social responsibility programs in order to continue to serve our clients, and we were fortunate enough to survive and even thrive as a result, but some DMCs are still struggling to recover today.

GLOBALIZATION ON THE RISE Since the recession, the meetings industry has become much more complex, with procurement, risk management and financial oversight driving much of the purchasing process. Large meeting planning departments have been scaled down, and it has become more difficult for corporations to manage multiple suppliers across the country. Clients have reported that it’s not efficient to have 20 to 30 independent DMC suppliers, and they would prefer to work with three or four national partners instead. At the same time, clients have said they prefer to work with locally owned and operated DMCs.

In the infinitely flexible language of the DMC industry, the term “global partner” has emerged. Flexibility in accordance with the client’s distinct needs is the very touchstone of the industry.

THE FUTURE So where do DMCs go from here?  
It appears that consolidation and globalization will continue; meeting planners and third-party group travel companies are paring down the number of “preferred” DMC partners they work with, and DMCs continue to align in various forms to offer greater economies of scale—through mergers and acquisitions, membership organizations, sales representation firms, franchising, and licensing.

The challenge for DMCs today is to give clients the best of both: the long-term security and stability of a single nationwide brand paired with personalized service and the commitment of a locally owned and operated DMC. So how do clients know they are getting the best of both?

Ask:

• Are you owner-operated?

• How long have you been operating in this destination?

• Can you offer a consistent level of service in multiple destinations, including contract terms and insurance coverage?

• Can you offer a worldwide partnership of qualified DMCs that can take care of me and my program needs in the future? How can I be assured of the caliber of these DMCs?

Chris Lee, DMCP, is partner and CEO of ACCESS Destination Services, having begun his destination management career in the early 1980s working for ACCESS precursor California Leisure Consultants in San Diego and Los Angeles. He is a co-founder and past president of the Association of Destination Management Executives, a contributing author to “The Guide to Successful Destination Management”, and the 2006 Destination Management Professional of the Year honoree