Veronica H. Moore, president of Association of Fraternity/Sorority Advisors, speaking at the 2014 AFA Recognition Luncheon in Nashville. Credit: Greek Yearbook

Since the Great Recession and the increased challenges it brought to the task of planning association meetings and conventions, more and more associations have opted to employ association management companies (AMC) to handle the day-to-day job of facilitating meetings of all shapes and sizes.

It’s not just short-staffed small associations who need the sophisticated services AMCs can provide. Even large associations with in-house planners call on AMCs to help handle the overwhelming demands of hosting a major event with many moving parts requiring complex planning and execution.

Most association management companies offer both full-service and à la carte business models. And major AMCs do not consider other AMCs their primary competition when it comes to planning meetings. Their most common form of competition is independent meeting planning companies.

“The real distinction between an association management company and a meeting planning company when it comes to planning meetings for the association market is that we understand the process from within the process of how an association is run and managed.” — Phelps Hope

But for associations, there is a critical differentiator, says Phelps R. Hope, CMP, senior vice president of meetings and expositions at Kellen Company in Atlanta. “The real distinction between an association management company and a meeting planning company when it comes to planning meetings for the association market is that we understand the process from within the process of how an association is run and managed,” Hope says. “And that means we understand the connectivity of what we do to the rest of the management functions of the association, versus a standalone meeting planning firm, which only really focuses on the fundamental elements of a meeting. But they don’t necessarily understand how that function might affect the association’s membership or overall mission or governance.”

Given that critical factor, the Chicago-based North American Association of Food Equipment Manufacturers (NAFEM) has been fiercely loyal to their AMC — SmithBucklin — for the last 33 years, says Deirdre Flynn, NAFEM’s veteran executive vice president. Its biannual trade show draws 550 exhibitors and more than 20,000 attendees. SmithBucklin, with offices in Chicago and Washington, DC, offers full-service management and outsourced services to trade associations, professional societies, technology user communities, industry consortia, charitable organizations, corporations and government institutes. Flynn says the expertise of SmithBucklin has been essential to the steady growth of the NAFEM trade show over the past four decades.

“NAFEM started its trade show in 1973,” Flynn says. “And over that time, it has grown from a net 55,000 sf of exhibit space to net 330,000 sf. And participation has grown from 200 companies to 550 companies. So because we are an every-other-year show, and trade shows are unique in terms of planning, we looked to an association management company, because they have the talent and expertise to manage trade shows. They have also done it for other associations and professional societies.”

Until 2002, SmithBucklin managed all of NAFEM’s operations. But then the association converted to an independent model with its own management team, but kept SmithBucklin onboard for meeting planning and management services.

“For a trade show that only happens every other year, you do not need a full-time staff year-round to manage that process,” Flynn says. “Even if you tried, you’d have trouble keeping the talent level and expertise at the level of the latest trends and best practices in terms of what trade shows are doing. And it’s also difficult to maintain an internal staff that has the marketing and other related skills that a good association management company has.”

So it makes fundamental and obvious sense in such a scenario to outsource event planning to a major AMC. “And by doing that, you get a company that has specific expertise in that area and which has people who do nothing but multiple trade shows of every size and scope every day, and are used to bringing citywide meetings like ours to major destinations and convention centers and managing the logistics and exhibitors,” Flynn says. “And that final capability is especially important for us, because our members are our exhibitors. Usually it’s the other way around and meeting attendees are your members.”

Veronica H. Moore, president of the Fort Collins, Colorado-based Association of Fraternity/Sorority Advisors (AFA), agrees that the staff experience and credentials of an AMC deliver a key benefit for associations that lack the resources to replicate them on a day-to-day basis.

As a result, since 2011, Moore has worked with Synergos, an association management company also based in Fort Collins, Colorado.

Synergos has a lot more staff capacity to do things that it would not be easy for us to do internally,” Moore says. “Our prior structure was to have an executive director and administrative assistant run the conference. And that’s just two people. So the rest of the functions we needed would be staffed by volunteers. So the difference now is that we have a group of professionals who work in the meeting planning industry every day and know the trends and have the skills to really put on a great conference. The real difference for us is that now we are able to have a high-functioning conference. And that means our attendees benefit from the way the meeting is planned and executed by professionals. And that also includes the marketing and public relations services that support and promote the meeting.”

In pursuing the services of an AMC, Moore helped deliver a major innovation by creating an AMC from scratch.

“After board-level discussions, the business model we ultimately chose was to become a client and an owner of Synergos,” she says. “We were in the position of being able to see not only how our meeting would be improved, but also how the central office would operate. We now have a lot more general initiatives come out of our office, too, because we also have the staff capacity to be able to do more things when it comes to running the association.”

AFA restructured itself to have its newly created AMC oversee and manage day-to-day operations across the board, with Moore and other board of director members overseeing operations. The association now co-owns Synergos with the Association of Fraternal Leadership & Values, whose CEO assumed the top post at Synergos.

Cost-Effectiveness and Value

In addition to staff credentials and capabilities, another important benefit of using an AMC for meeting and event planning is bottom-line cost-effectiveness, Flynn says.

NAFEM uses a flat fee for services basis, which means they know exactly what they will pay and precisely what services they will get. Hotel commissions then accrue back to NAFEM.

SmithBucklin also handles exhibit space sales and floor management. “But we’re fortunate in that our exhibit space doesn’t really need to be ‘sold,’ ” Flynn says.

SmithBucklin also manages the configuration and management of meeting space for all educational and general meeting sessions. The company also works with NAFEM management to create meeting content, then manages its execution. That support also helps make the event cost-effective, Flynn says, because to perform those functions in-house day-to-day would be highly time-consuming and expensive for a biannual trade show that also aspires to meet the highest possible standard of content delivery.

Very much related to the general notion of cost-effectiveness is the aggregated buying power of an AMC, Hope points out.

“Because we’re buying hotel services for meetings for 130 associations, not just one, we have brand representatives at all of the hotel companies, and we can leverage that buying power on behalf of all of our clients,” he says. “That means we can get deeper discounts and better concessions. It also means we’re able to minimize liabilities and maximize revenue opportunities. And those apply to all of an association’s vendors, from convention centers to audio-visual companies to destination management companies to ground transportation providers.”

And, he adds, that kind of buying power and leverage are especially important now that the proverbial pendulum has swung back to a seller’s market. That means the negotiating power of an AMC, based on its total volume of annual business, is more important than ever.

Flynn agrees that SmithBucklin’s buying and negotiating powers are high on the list of the benefits of NAFEM’s longstanding relationship.

“Those factors are among the key reasons we leverage their abilities,” she says. “SmithBucklin works with every major city that NAFEM would look to potentially in order to place the show. They have knowledge of what works and does not work for us and our members. They do all of the hotel and convention center negotiations. And because of the number of meetings they do each year, they have longstanding relationships with all of the hotel brands and the convention centers in every major destination where we’ve ever hosted a show. They also have longstanding relationships with the destination management companies and special events vendors, production companies, decorators — all of them. So, while NAFEM’s name appears on the contract, all of the successful negotiation that we get happens because of the buying power of SmithBucklin. And what we get from that is good value and extremely good service from the cities we go to as a 20,000-attendee event.”

Moore seconds Flynn’s opinion that the relative buying power and sourcing expertise of an association management company is another key benefit of the business model.

“And it would be very expensive for us to replicate that kind of expertise internally with full-time employees if we wanted to,” Moore says. “From our discussions as we planned our strategy, not only did we want the best people we could find to do those jobs for Synergos, but we also wanted people that would make those kinds of decisions for us so we did not have to do it on our own. We want to spend our time thinking about the strategic direction of the conference, not the logistics and planning.”

Wendy Budin, president of the Eastern Nursing Research Society (ENRS) in South Orange, New Jersey, finds the buying power of an AMC particularly important for her relatively small, 1,000-member association, which uses Fernley & Fernley as its AMC. Founded in 1886, Philadelphia-based Fernley & Fernley is billed as one of the most distinguished association management companies in the nation.

“We’re in Washington, DC, this year for our annual conference,” Budin says. “And Washington, DC, is a very expensive destination. But because of the buying power of Fernley & Fernley, we were able to get very good hotel rates. And that has helped us get strong registrations and be confident that we will have good attendance.”

The Contract Conundrum

Yet another vexing issue for many associations, especially small ones with limited staffs, is contracting with hotels, convention centers and other venues. AMCs typically have contract negotiation skills that are superior to the internal staff of the association.

“We have a Kellen hotel template,” Hope says. “So when we book a hotel — and it doesn’t matter what the brand is — we use our contract. And all of the hotel brands accept our contract. So if you join forces with us, you get the benefit of our contract, which is obviously written to give the maximum benefit to the association. We feel that in today’s market, hotel contracts are weighted too much to their benefit. But we also offer what we consider a fair contract. But it is written to deliver maximum benefits to the association.”

Kellen introduced its innovative contract template in 2008, at the height of the global financial crisis and just as the meeting industry meltdown commenced. And it has continued its toughest negotiating tactic ever since.

“We do not sign contracts that have an attrition clause,” Hope says. “We negotiate contracts that do not have attrition clauses. It will have protections for both the association and the hotel under a new clause called ‘group room block performance clause.’ And that clause is based on performance through the life of the contract. So if we’re booking a meeting two years out, we have contracted check points within that time frame where both parties sit and identify the influencing factors that are impacting that agreement at any given time leading up to the meeting. “And as part of that process,” Hope says, “we talk about whether the competitive set for the hotel still exists in the same way. We address whether the overall quality of the hotel is still the same. We review whether the association meeting industry is still as healthy as it was when the contract was signed. We talk about the state of the association’s membership and whether room block pickup at the previous meeting was there. And if there is an influencing factor of any kind that might have a negative impact on the outcome of the meeting, then we might give back some rooms the hotel can then sell. But the hotel is getting those rooms back 18 months out or 12 months out or nine months out. We’re not waiting for a more standard cutoff point in a standard contract.”

Given Kellen’s success with that tactic, Hope says he is surprised that so many associations are once again signing contracts that have attrition clauses.

“During the financial crisis, there were no attrition clauses,” he says. “But then everyone eventually went back to using them. But we said, ‘What, are you an idiot? Why would you sign an attrition clause?’ The industry needed to come up with something new. And that’s what we did. And we have not had a single problem with our approach since 2008, because of the intelligence and professionalism we brought to the issue.”

Making the AMC Decision

For associations that have not previously used an AMC, but are beginning to investigate hiring the right company, Flynn offers some simple advice, based on her experience.

“It’s all about a customer service match,” she says. “The association has to understand who your members are and what your overall goals are. But outsourcing helps an association executive focus on more strategic issues and not be mired in the day-to-day meeting management so much. And that then allows you to have a better and more strategic vision of where you want your event to go and to help direct that, but have people with particular expertise do the day-to-day planning and event management. But in the end, it’s all about the customer service you get. And the kind of relationship you have based on your goals.”

And in her case, with a major citywide trade show that uses the country’s biggest convention destinations, Flynn says there is a clear and distinct reason to use an AMC.

“For an event of the size and scope of our show, combined with the fact that it only happens every other year, if we managed it in-house and did not have access to as many people as we do by outsourcing it, everything else we do as an association would come to a standstill,” she says. “The show is a huge part of what we do as an association and very important to us financially, but we need to be able to have a broader focus and rely on SmithBucklin to manage a show we could never realistically manage on our own. Even if we wanted to do that, we wouldn’t be able to do anything else. And that would not serve our membership very well.” AC&F