Sourcing the right venue for an event or meeting can be a time consuming business, a resource that most organisations, public or private, simply do not have. Venue-finding Agencies seem to offer a solution but do they offer best value? The claimed benefits certainly point in that direction: extensive knowledge, saving time on searching and negotiation, great buying power, and of course no fee for the service. It is reported that venues can attract up to 70% of their business from Agencies, so what is the catch?
‘No fee’ is a persuasive argument but we must acknowledge that Agencies earn their income from commission paid by each venue. ‘No fee’ certainly does not imply ‘no cost’! Indeed, the commission paid to Agencies can be up to 22% of the value of the business, together with additional incentives such as free rooms. Does this matter in the larger scheme of things – well, yes it does!
As an organisation using a Venue-finding Agency, you will be provided with a shortlist of venues purporting to represent the very best match for your event; the best facility, the highest service values and the right price. But is the recommendation best for you or best for the Agency? The truth is you simply do not know!
Without transparency over what commission is being paid, organisations should always be inquisitive about the offering. Smaller, independent venues frequently struggle to match the size of commission offered by the big venues and chains, however, they often deliver better rates, better quality of service and a more personal approach. But, with the current system, if small venues are not willing or cannot afford to deliver a larger commission, they will not be considered by the agent and their proposal will not be presented to you, the client, for consideration. It could be just what you are looking for.
Simply put, it would appear that agencies are more interested in higher value bookings with higher commission rates rather than obtaining best value for their clients. The lower the price to the client, the less commission the agent will earn.
Does the same argument apply to accredited venues? Gold Accredited Venues with the MIA or members of Conference Centres of Excellence deliver a quality guarantee, which should add to their value when being considered by agencies. However, do agents really care about the quality of the venue they put their clients, or do they pay it lip-service because they are motivated by commission levels?
So, how can the industry offer a better, more transparent and fairer system? Looking elsewhere for examples proves very illuminating. The Financial Industry, back in 2011, recognised that it needed to enhance consumer trust in its pricing. Changes adopted a year later now mean that clients are safe in the knowledge that recommendations being given are based on genuine professional consideration and professional opinion.
What the Financial Services Authority (FSA, now the Financial Conduct Authority) did was to ensure that consumers were sheltered from the minefield of hidden commission. It is now time for the Event Industry to follow in the footsteps of the FSA and emerge as a regulated profession. Events and meetings are big-spend items for organisations, and consumers who use professional venue-finders should ask for, and expect, the same protection.
In my opinion, the current system of concealed commission is not offering the best service to clients. It produces lack of clarity, inflated costs and recommendations that simply offer the best ‘kick-back’ and not necessarily the best quality.
The Event Industry has real value and we should follow in the footsteps of the FSA and present costs with absolute clarity, transparency and honesty. As professionals, we should have the confidence to put the price up front, emphasise the service offered and genuinely consider the quality and value of the offer from all venues submitting, including independents.
Smaller venues will often use up a lot of their sales resource in submitting agency proposals for which, without knowing, they will never even be considered because their commission rate is low, even if, as is often the case, their proposal is the most competitive.< Back