In January, St. Louis, MO-based International Association of Conference Centers (IACC) released the results of a needs assessment and member satisfaction survey. It revealed that IACC members are particularly concerned with improving "the general awareness among potential customers about the key differences of conference centers and the benefits of using bona fide conference centers rather than competing meeting venues."
After years of hotel and resort investment in meeting space (if not entire conference center facilities and staff), dedicated conference centers are finding it increasingly difficult to distinguish their product. "The lines of differentiation have blurred over the past few years as hotels have tried to co-opt part of the conference center concept," admits IACC executive vice president Tom Bolman. "And there's no trademark on the name, so anyone can call his venue a conference center."
So the conference center industry finds itself in a tricky situation: how do you differentiate yourself in a highly competitive and product-rich marketplace? It's a divisive topic, and one in which the battle lines have been drawn primarily around the industry's hallmark: the complete meeting package (CMP).
APPLES AND ORANGES
The all-inclusive pricing structure of the CMP has long been considered the sacred cow of the conference center industry. But as the consolidation of meetings management has given procurement departments more influence in venue selection, the distinctiveness of the CMP has become a double-edged sword. "Our concern is that procurement departments really only look at the room rate," Bolman says. And that's a problem because the pricing structure at hotels and resorts differs from that of conference centers; whereas hotels' room rates include the cost of the guest room and nothing more, the conference centers' CMP reflects the total daily per-person cost of all meeting elements. "It is an issue for people in procurement departments who are not familiar with the concept of the CMP," says Sam Haigh, chief operating officer for Stamford, CT-based Benchmark Hospitality, which manages conference centers, hotels, and resorts. "You can't compare a hotel's convention room rate with our package price—it's apples and oranges."
While all conference-center industry leaders say they want to continue to offer the CMP, many have begun to talk openly about introducing new pricing flexibility. Andy Dolce, founder of Montvale, NJ-based Dolce Inter-national, announced in January that his firm would offer a la carte pricing as a means of increasing his business. "Conference centers have only 10 percent of the meetings market; hotels have the rest," Dolce says. "If we want to get new clients that are used to going to hotels, we have got to be more flexible. Pricing is one way to do that."
But Dolce is quick to add that his company is still "staunchly in the CMP for customers who understand that and like to buy that way." Far from abandoning the CMP, he says, "We're offering new customers what they're used to paying, not forcing a pricing strategy on them when they don't know what it's all about." Such sentiments are good news to planners like Sharon Marsh, who until recently was manager of corporate meeting services for Pleasanton, CA-based PeopleSoft. "There's a big chance I'll pick a hotel over a conference center because, in my experience, there isn't a whole lot of room for negotiation in the CMP," Marsh says. "It just makes things harder because the costs are all bundled together and no item prices are broken out."
Nevertheless, Dolce is currently the only voice suggesting the introduction of new pricing. "If we totally unbundle everything, we end up being a hotel, and we've never thought that to be the best idea," says Rory Loberg, president of Philadelphia, PA-based Aramark Harrison Lodging. Instead, many centers are adding variety in the elements of their CMP plan. "The CMP is not as concrete as it once was, in a 'Here's your package; take it or leave it,' sort of way," says IACC's Bolman, but he maintains that packaged pricing is essential to the conference center concept. "Many packages are being customized and modified, with allocations made for events off-property." Adds Haigh: "In the past, properties would not give credit for an off-site dinner, but now, giving those credits has become much more prevalent."
CAN'T TOUCH THIS
But not everyone endorses even this slightly modified approach. "We'll never unbundle the CMP—it's sacred," says Larry Zilz, vice president of Seattle, WA-based Columbia Hospitality. "We hear time and time again how much customers appreciate the ease of planning it provides." Rather than change his pricing structure to suit procurement departments, Zilz works with planners whose procurement departments have gotten involved in site selection to create presentations that explain the different pricing structures. "We worked with some planners who were being pressured by their procurement officers to use a hotel, so we did a competitive survey of the costs of one of their past meetings, outlining all that's included in the CMP and what was charged a la carte by the competition," Zilz says. "By showing that the hotel was more expensive, we were able to successfully convince the procurement department," and the meeting came to his facility. That company's procurement department was able to understand what Margaret Moynihan, who plans training and education meetings for New York, NY-based Deloitte & Touche, considers a primary benefit of using conference centers. Says Moynihan: "It takes the guesswork out of budgeting and planning."
But by and large, it appears that Zilz may be in the minority. "I don't know how many purists there are out there," says Dolce about centers that still strictly maintain a CMP, "but I'd suspect they're all doing the same thing [as us]; they're just not talking about it."