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Intelligence / 2.11.19

DMCs: Where Do They Sit On the Supply Chain?

Posted by SITE Foundation

By Rajeev Kohli, CIS, CITP, DMCP
SITE President 2016 and 2017

At the recent SITE Conference in Bangkok, I had the opportunity to lead a roundtable discussion on an interesting point of view – what does a DMC do. Do we supply? Or do we buy? Or both?

Now, this is not a new discussion and not one that has a straight answer. Being a well-established DMC myself, I have often struggled with the ‘perceptions’ and ‘prejudices’ of the food chain in our industry. I know there are so many others like me who feel the same.

I think it’s important for the industry to step back and accept the fact that when it comes to DMCs, one size does not fit all. No matter what role we fulfill in the incentive travel eco-system, they are not the same as you cross the world. When I was SITE President, I often had to explain that being a DMC in the United States and a DMC in India / Asia are two very different things. What we can do in our regions is very different. I am often puzzled why DMCs in traditional western markets put themselves down by refusing to provide services that can generate revenue.  And why Western buyers mistrust the capabilities of Asian DMCs that are able to do a lot more than they are used to getting in their home countries. Not that one is better or worse than the other, but the differences of every destination and culture allow for great differences in operating styles and roles.

I once wrote an article for SITE on what makes a good DMC. I have myself come across situations where my teams work has saved the relationship between my third-party partner and their end client. A good DMC adds value. A good DMC makes our client shine before the end corporate. A good DMC adds value by knowing their territory. Everyone accepts this. But that appreciation sort of stops when it comes to trusting the DMC partner in getting the best value on the ground.

I recently polled the 54-member countries of the global DMC alliance EUROMIC (which is the oldest DMC alliance in the industry) and estimated that our members collectively bought services in their destinations in excess of $250 million US (if not more). All on hotel, venues, transport and other services. That’s no small number and we are talking only of 54 DMCs. Think how much larger that figure is in the entire DMC universe.

I don’t think its fair to brand a DMC simplistically as a ‘supplier’, full stop. That is where the client makes a very big mistake in underestimating the relationships the local knowledge and the buying power of the DMC. The DMC does local buying throughout the year for multiple clients. They build long term relationships and friendships. A DMC drives the local suppliers through a learning curve on providing better service and experiences. They know that the restaurant which was amazing last time has gone down in quality or that what renovation work is going on in the streets that won’t make the visit as wonderful as it was last year. Small things that only local eyes would know.

And we can go on for hours how DMCs are the ones saving the day when something goes wrong. Our roles are seen as dispensable and even no different than a CVENT until there is an emergency. Until the moment comes where the only one that can salvage the situation is a ‘local’ with ‘extensive connections’. We seem to be only appreciated then. In a day and age where we are bombarded with health, natural and safety emergencies – in an increasingly unstable world – who wouldn’t want that local support? A client may bring in business to a destination only a few times. That relationship with hotels, venues or restaurants will always be transactional. Who do you think will hold the edge in trying to get things done? Get better access or just a better deal? In ensuring there are no surprises? The DMC of course!

Now, a third-party may say “hold on, you are only buying because I gave you that order. Without me you are nothing”. The flip-side of that is that the third-party is also only buying because the end corporate client gave them the mandate. So, what’s the real difference between a third-party buying services in a city directly or the DMC buying it for them? Simple, the money.

When several global chain hotels reduced commissions last year, the groans in the industry reverberated world-wide. Every third-party friend I knew in SITE not only expressed shock and disappointment but also concern. Now, that is how a DMC has been feeling for years. To be underappreciated and used only when convenient. This is what Marriott those global chains effectively did. Took a cold decision on saving money without adding any value to anyone but themselves. And damm the support they got from the third-party buyers over the years. Doesn’t feel very good, does it.

Let’s imagine a world where the DMCs suddenly evaporated. No more local knowledge, no more local connections. How would a corporate or third-party operate? By doing it themselves. And that means more people in their company are needed to do that work. So, more costs. The knowledge and research won’t come for free. Someone is going to pay. So, if the DMC community exists to fill a need, then the costs associated with that service are more than justified.

When DMCs are branded as simple order takers or delivery people, we really debase the experience that the community has for years in their destinations. It simply undervalues the contribution DMCs make in the development of their destinations. And that does hurt our feelings. Third-parties and corporates may hold an upper hand at bringing in business, but let it be known, the DMC community does not sit pleased at being treated as benchwarmer in the chain.

A good DMC as a partner is an advantage to be treasured. A strong DMC brings in a proven home base advantage in every way. Branding DMCs merely as suppliers undervalues the contribution they can make to ensure any project a super success. Next time you talk to your DMC, refer to them as a partner, as a colleague and see how different they will react to you.

DMCs are not just suppliers or buyers. DMCs take a plan and make it come true. DMCs are the magicians that make a destination come alive.

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