With a few good years under its belt, the conference center industry has enjoyed another profitable year. Days of declining budgets, smaller meetings and groups staying closer to home—a period when fun seemed unfashionable—are drifting further into the past.
The bottom line seems to be that hotels with dedicated conference centers, built to high standards for meetings and learning, generally outperform traditional hotels with meeting space. However, since meeting planners are facing a sellers’ market, the pressure is also flowing the other way, big time.
Scrutinized by procurement departments, corporate America has become smarter in its conference-space buying. And with budgets flush, it is increasingly demanding value for money—pampering for its people, memorable culinary experiences, luxurious spas, and flat-screen televisions, plus Wi-Fi everywhere—along with a top-notch meetings environment.
The Race Is On
The rush to upgrade properties continues, with major hospitality industry brands such as Starwood, Hilton and Wyndham jumping into the dedicated conference center market.
“True conference centers are definitely more profitable,” says Tom Bolman, executive vice president of the International Association of Conference Centers (IACC).
St. Louis-based IACC is at the core of the conference center industry in the small to mid-size meetings market. Last year, the group celebrated its 25th anniversary—25 years of promoting its own brand of bona fide conference centers it contends translates into more productive meetings and learning.
Its 200-plus North American member properties—hosting an average group size of 75 or fewer people—range from upscale resorts and university facilities to day centers without accommodations.
Although structurally different, they are all certified by IACC and adhere to its standards.
IACC’s “universal criteria” requires all certified properties to include a professional staff, a business center, and rules covering acoustics, lighting, furnishings and equipment, extending to ergonomic chairs, non-glare tables, hard writing surfaces and tackable wall surfaces. A minimum of 60 percent of event space must be dedicated purely to meetings.
Properties must also offer the CMP (complete meeting package), which includes lodging (except for day centers), three meals, refreshment breaks, 24-hour meeting room access, and basic audiovisual equipment.
Bundling such components accounts in no small way for the hospitality segment’s profitability. And business is up.
“Training is the bread and butter to most members, and we’re seeing more series training programs,” Bolman says.
In recent developments, IACC has produced a ‘seal of approval,’ which members are installing on their websites, and has expanded its international reach with a chapter in the Netherlands.
Bolman talks of the challenges in getting across the IACC difference to meeting planners.
“We were never able to trademark ‘conference center,’” he says.
For many organizers of meetings the confusion remains over what an IACC conference center actually is.
“I think of it as a product with many flavors. A conference center could be in a commercial building or it could be in a hotel, but it provides a total meetings experience,” says Neil Pompan, IACC’s 2007 president and CFO of Easton, Pa.-based EMCTotalSolutions, a meetings management company.
James Mahon, IACC’s global director of marketing, sees a continuing trend of hotels transitioning to offer conference centers.
“Developers want to get it right, and they want to do it by IACC standards,” Mahon says.
He gives examples of hotels that have built or remodeled existing meeting space to IACC standards in recent months: Sheraton Denver West, Wyndham Miami Airport and Hilton Hasbrouck Heights in New Jersey.
Wyndham Miami Airport, for example, built a 16,000-square-foot executive meeting center as part of a $20 million facelift that also included the renovation of its existing meeting space; thereby promoting itself as the “first purpose-built, full-scale IACC-approved facility in South Florida.”
Outside the Big Box
Some hotels have found innovative ways to expand into nearby commercial spaces with the help of companies such as EMCTotalSolutions, a hotel consulting company.
“So often hotels find they don’t have enough meeting space to support the rooms and are unable to expand,” says Jody Wallace, president of EMCTotalSolutions. “To be competitive, they are going next door and converting commercial space to IACC standards. It can be done quickly, is less expensive than building, and will bring results. I think it is brilliant.”
EMCTotalSolutions is currently consulting three suburban-branded hotels located in East Brunswick and Somerset, N.J., and in metro Detroit. Work was slated to start on the projects in the first quarter, with completion scheduled by late spring or summer.
New conference properties continue to be built from the ground up.
Notable last year was the June unveiling of Dolce International’s Zermatt Resort & Spa nestled in the Wasatch Mountain Range in Midway, Utah. It features 226 rooms, 126 villa suites and 64,000 square feet of indoor and outdoor meeting space, including the IACC-certified Matterhorn Conference Center with more than 28,000 square feet of space.
Dolce, a major player in the conference center market with more than 20 properties worldwide, also took over the management of the Ashman Court Conference Center & Hotel in Midland, Mich., formerly operated by Marriott. Plans are under way for a $20 million renovation that includes the construction of a new corporate leadership facility at the hotel.
As part of a renovation and expansion, Dolce’s Aspen Meadows Resort in Aspen, Colo., will open a new $15 million, 22,000-square foot conference center in March.
IACC’s 2007 conference will be held in April at a new conference hotel that has yet to open: The Heldrich in downtown New Brunswick, N.J., managed by The Woodlands, Texas-based Benchmark Hospitality International.
Set to debut March 1, the $110 million hotel will feature 248 guest rooms, a health club, a restaurant, and 24-hour in-room dining, along with 25,000 square feet of meeting space, including a 7,360-square-foot ballroom and 21 conference rooms.
Hal Powell, Benchmark’s regional vice president, sales and marketing, says the property has been well received.
“Advance sales are strong, there is great interest by pharmaceutical companies, and we’re doing a lot with Rutgers University. It will be a home run for sure,” he says.
Benchmark was involved in the project from the beginning.
“It’s the best of both worlds,” Powell says. “It combines a fantastic luxury hotel with a conference center, with business meetings during the week and leisure and weddings business on weekends.
“This drives higher revenues,” Powell continues. “We could never have built a hotel with a sophisticated meetings environment to IACC standards without the leisure business.”
Each March, Benchmark, which operates more than 20 hotels, resorts and conference centers, comes out with an annual hospitality trends report.
For 2006, trends included healthier travel and meetings budgets—business was back; corporate training and planning for future growth is surging; and companies were gravitating to higher-end properties.
On the demand side, service expectations were at a peak, Wi-Fi was perceived as a necessity, and the hottest trend was spas, which customers increasingly demand, along with the flat-screen televisions, luxurious bath soaps and superior linens that are becoming the norm in today’s hospitality industry.
“For us, the booking pace is up slightly from a year ago,” Powell says. “Larger groups are now booking farther out again, and we’re now seeing more national meetings being booked.”
A number of Benchmark’s properties now offer spas. Last year, the company opened a full-service spa as part of a $60 million expansion and renovation at Lansdowne Resort, its meetings property near Washington, D.C.
Denver, Colo.’s Inverness Hotel and Conference Center, one of Denver-based Destination Hotels & Resort’s six IACC-certified conference center properties, in November unveiled a full-service spa with 22 treatment rooms.
Steve Sackman, Destination Hotels & Resort’s regional director of sales and marketing, says that 2007 is shaping up to be a good year, with companies taking a more comprehensive approach to series training.
“Training is as strong as ever,” he says.
Almost two years ago, the company acquired two standouts in the conference business: Hamilton Park Hotel & Conference Center in Florham Park, N.J., and Tarrytown House Estate & Conference Center in Tarrytown, N.Y.
Hamilton Park, Sackman says, spent $4 million on renovating meeting space last year, and Tarrytown, which includes two historic mansions, completed an $11 million renovation project.
The company also manages Tempe Mission Palms Hotel and Conference Center in Tempe, Ariz., Estancia La Jolla Hotel & Spa in La Jolla, Calif., and Skamania Lodge, outside of Portland, Ore.
EMCTotalSolutions books 150 conference centers, most of which are IACC certified.
“Conference centers do it right,” Wallace says. “They provide for exceptional meetings and provide great food and beverage.”
Less Restrictive Package Pricing
A major issue in recent years has been the CMP—all the typical meeting package inclusions for one price per person—which Wallace, like others in the industry, sees loosening up.
“Most customers want it. They want one price,” she says. “Hotels are also doing more and more packaging, but we’re also in a world of customization.”
She finds that properties are becoming more flexible in negotiating when, for example, a group wants to go off-site for a dinner that is already included in the CMP price.
In its annual conference center trends report last year, PKF Consulting reported an increased willingness by conference centers to unbundle the CMP rate.
The study, produced in conjunction with IACC, also found that conference centers with lodging enjoyed a “tremendous” increase in revenues and profits in 2005, with resort and corporate conference centers showing the greatest gains.
During 2005, total revenues for such lodging facilities increased 13.7 percent while profits grew 39.2 percent. In its report a year earlier, it reported that 2004 was a turnaround year, indicating the continued growth year after year.
“One element of the industry’s success in recent years has been the increase in institutional ownership of conference center facilities,” said Dave Arnold, CEO-East for PKF Consulting, in the report.
Hospitality consultant Mike Fahner notes another trend in recent years: Companies like Merrill Lynch and Xerox have got out of the conference center business.
“Universities have been filling the gap,” he says.
Durham, N.C., for example, has seen two university conference center expansions.
Paul J. Rizzo Conference Center at the University of North Carolina, operated by Aramark Harrison Lodging, last spring completed an $18 million expansion, doubling its number of guest rooms from 60 to 120 and doubling its conference space from 10,000 square feet to 20,000 square feet.
The 271-room Washington Duke Inn & Golf Club at Duke University unveiled a new 7,000-square-foot executive conference center in September 2005, completing a two-year, $25 million renovation and expansion that also added 100 guest rooms and other new meeting space, bringing its total meeting space to 30,000 square feet.
“We’ve seen lots of fads, like ‘extended stay,’ and every hotel has to have a conference center,” Fahner says. “But if you need to learn, there is nothing better than an approved conference center.
“Meeting planners feel that they can focus on their attendees and learning,” he continues. “They don’t have to worry about meals and coffee breaks—I hear that time and time again. As one meeting planner told me, ‘I don’t have to worry about running the hotel.’”
Fahner, who heads IACC’s marketing committee, has been holding focus groups—four last year—out of which came the ‘seal of approval’ project.
One was for planners who had never heard of IACC. He recounts one participant saying she was not interested in IACC, but upon hearing about the quality of IACC properties, declared that that was the type of property she wanted.
“We are trying to understand the evolving needs of customers,” Fahner says. “How do you continue to meet the needs, what kind of services do they want?”
He believes that IACC properties are well positioned for the future.
“Companies are competing to attract top talent, the Gen Xers and Gen Yers, who are used to multitasking with their iPods, with the TV in the background, and have a need for wireless Internet,” Fahner says. “Conference centers have the flexibility—they can deliver, and they can do it in spades.”
