A third party planner can be described in a couple of ways:
An independent meeting or event professional provides event or meeting services for a third party, meaning a corporation, a non profit, a educational institution or an association, as an outsourced vendor.
Or, another definition created by a group of meeting industry peers describes the broader business perspective of third party planners:
Independent meeting professionals are small business owners, individuals or third party representatives that are contracted to assist, in whole or in part, in the arrangements of client meetings, events, conferences and/or exhibitions.
They may be self employed and/or operate a division within a company specifically designed to administer various facets of design, planning, strategic consultation, support services and/or logistics for meetings, conferences and/or exhibitions.
A couple of examples of third party planner applications follow:
The meeting department of a major association based in Washington, D.C. regularly hires a third party to handle the details of an annual awards banquet held during the annual convention. The third party is responsible for inviting the individual award winners, the evening logistics and production, handling RSVPs separate from the convention’s registration process, ordering flowers, de´cor and the actual award plaques, and scripting the evening’s schedule.
The head of the meeting department is thrilled with the consistency of the third party and saves on staff expense. He only pays for the specific service: the awards banquet.
A fortune 500 company has a complete meeting, travel, and event department. However, the senior VP of marketing is budgeting for a single sales and marketing retreat for his senior managers and has retained a Third Party, separate from the negotiated agreements within the organization, to manage the site selection process. The third party is responsible for managing the process, identifying the audience, prospecting destinations, soliciting venue avail ability, and negotiating a value based contract. The cost of this service is covered by a commission paid by the venue to the Third Party. This is a specific service that the Independent will provide.
These are two, very different, examples of services provided by a Third Party Planner; with two separate pricing models, yet both represent qualified, legitimate business within the meeting and event industry.
Third party planners’ types and Services
The services that third parties perform range from managing small parts of an event (task or service specific), to the full service deliverable: ‘soup to nuts’. Many organizations that have a small staff, choose to outsource their meeting or event services rather than hire and bring these services in house.
Full-service meeting or event planners are hired by their client organization to take the complete meeting from the very beginning, determine goals and objectives, to the end, the thank you letters and budget reconciliation.
In the case of task or service specifics, the third party planner may be contracted to perform a piece of the meeting or event. For example:
- housing only
- site selection only
- sponsorship development or fundraising
- theme development
- menu planning/beo development
- on site management
- sports activities, tours, and recreation
- agenda planning; program development
- exhibit management
- facilitation or training; or fundraising.
Often, a Destination Management Company (DMC) is hired to perform specific pieces of a convention, like tours, spouse events, or other items specific to their city. They often have the best contacts in the city, can arrange for the best price and provide the greatest insight into the destination to which you’re traveling.
As such, in international waters, a Professional Congress Organizer (PCO) can perform those same services for you.
Why clients hire third parties?
There seem to be two reasons that organizations outsource a meeting. They do not have the talent within the organization to deliver the specific services needed; or the current meeting or event department is overwhelmed with other responsibilities.
In either scenario, a third party planner is a great resource because they will have the skills necessary to step in and get the job done. And yet, are not a competitive threat to the in house planner.
How third parties charge for their services?
When one begins to create a budget for outsourcing meeting or event functions, there are a few guiding formulas that will assist in creating a framework for these costs as follows:
2. Service fees
a. Per project
3. Cost of hiring an employee
It is helpful to run the numbers in a number of ways to gain a complete picture and help you make the best decision.
Under a commission structure, a hotel pays the third party up to 10% (or more during value seasons) for the guestroom revenue generated by a meeting. Commissions are not usually paid on other revenue brought to a hotel or conference center, such as food and beverage, audio visual, or entertainment.
For example, if you have 75 attendees staying at a hotel (each in a single room) for 3 evenings at $150 per night, the total guestroom revenue paid to the hotel will be $33,750. (75 * 3 * $150 = $33,750) The hotel could pay $3375 (or 10%) in commissions to your meeting management company.
Practices on accepting commissions vary among third parties. Some companies will not accept commissions under any circumstances. These companies feel strongly that clients may question their objectivity if they accept commissions. They believe that clients might think that they negotiate contracts with the vendor that pays the best commission, not the vendor that gives the client the best deal. Some companies reduce their fee to the client by the amount of the commission. These companies see commissions as a way to provide extra savings to their clients, while still making a fair and reasonable profit. A third group of third parties views commissions as a way to increase their revenues, and accepts the commission in addition to the client’s fee.
Regardless of the compensation structure, have a complete discussion about fees and commissions with the third party and their vendors. As with any enforceable contract, agreements about commissions such as when they are paid and to whom should be in writing. And it is fair to discuss commissions and rebates from all of your suppliers. Asking a third party if they are compensated from any other sources.
Service fees are as straightforward as they seem the client organization compensates the third party directly for its services. Service fees follow no standard formula, but there are several options as follows:
A la carte pricing. Based on your Request for Proposal (RFP), each service is given a price.
Single price. The entire scope of work is covered in a single price.
Retainer. The third party is paid a fee to guarantee that they will be available whenever the hiring organization needs the services.
Service contract. Negotiate (based on an RFP) individual services that can be purchased over the course of a year. This contract is renegotiated each year, NOT each meeting.
3. Cost of hiring employee
The last option is to consider what it would cost in terms of your own time, energy, and salary, to manage this event yourself, or to hire a third party for your staff.
Standard human resources formulas would consider the following as an annual cost: