Philadelphia-based Aramark Corp. plans to increase transient and leisure sales because of "flat" meetings demand at its Aramark Harrison conference center properties, according to the head of the company's newly combined division of conference centers and parks and resorts management businesses. The shift
concerned some sources who said the industry may be missing an opportunity to gain a greater share of the meetings market and is in danger of losing its core customers.
Aramark last month announced the integration of the company's conference center business with its parks and
resorts business. The combined divisions will retain the conference center brand Aramark Harrison Lodging. Bruce Fears, who was executive vice president of the parks and resorts division, has been named president of the new division. He said there would be greater emphasis on leisure business at Aramark conference centers next year.
"Our group market has been flat and our transient has had significant increases," Fears said.
Though a report issued in May by
PKF Consulting indicated a strong rebound in the conference center industry
(Meetings Today, June 6), Fears said Aramark properties would shift the business mix in favor of transient. Even if the market does rebound, Fears said, combining the conference center business with parks and resorts would help protect against future loss of demand.
"We've gone through some up and down times after 9/11 and any time you can increase your client base and not just relying on one type of customer, it broadens your reach and helps protect you on the downside," Fears
said.
"The International Association of Conference Centers as an organization and conference centers as a brand within the industry have suffered from a lack of identity. The more they dilute that and the more hotels begin to do [complete] meeting packages, the more they
don't have a brand," said Joan Eisenstodt, president of independent meeting management firm Eisenstodt Associates.
Eisenstodt said conference centers shifting toward more leisure business raises an "immediate red flag." The benefits of a conference center
are its per-attendee, per-day style of pricing, a dedicated meetings environment and a dedication to standards, she said, and if conference centers lose those qualities as they reach for more revenue streams they could lose their core business.
"For me, it's a huge concern," Eisenstodt said. "It sounds like it's going to have to be an education process of the importance, the purity, and why among buyers there is such a love of them and why we don't want them to be less pure."
Eisenstodt said that flat demand for a
conference center is the nature of the industry. "Conference center demand is always flat," she said. "Conference center demand is never more than 7 percent to 10 percent of the entire market."
"I think everybody is starting to water down the brand, and that has been my fear
because they're repositioning it in a way I think is negative," Eisenstodt said. "That's where Aramark has to be very careful in the way they do this."
Tom Bolman, executive vice president of the International Association of Conference Centers, said he found Aramark's
decision to combine the two divisions "surprising" but said many IACC member properties have decided to increase leisure and transient business to generate revenue. IACC requires members to maintain at least 60 percent of business in
corporate meetings of 25 to 75 attendees.
"All commercial conference centers are doing more non-conference business than they did in the past. The best ones know how to handle that business so it doesn't intrude in any way on the conference business," Bolman said.
Bolman said he doesn't expect Aramark to abandon the industry. However, at first glance, he said, the parks and resorts division has little to offer the conference center division.
Aramark's competitors said meetings business is on the rise. Steve Giblin, president of the Americas of Montvale, N.J.-based
conference center chain Dolce International, said the decision last year to soften complete meeting package pricing
(Meetings Today, Dec. 6, 2004) helped to increase projected profits for the year by 25 percent to 30 percent. Dolce's year-over-year revenue per available room growth was 14 percent in the second quarter of 2005, he said.
"We are doing
more leisure transient, more business transient, but really a lot more group business at our properties than we've ever done before. We feel it's coming directly out of the hotel community," Giblin said.
Sam Haigh, president and COO of Benchmark Hospitality
International, said the company increased its percentage of transient business after 2001 when the conference business "fell off," but as the industry picks up, Benchmark has refocused on meetings. "For 2006, we expect the shift in our
properties to continue toward more conference business, not less. To some degree this will be at the expense of transient business, just due to availability," Haigh said.
Haigh said more transient business does not weaken the conference center brand identity. "It will strengthen rather than weaken the concept," he said. "Over time it will diminish the 'institutional' stigma of the conference center brand, broaden the appeal beyond training meetings, and create a more viable business model."
The focus of Aramark's parks and resorts business has been business-to-consumer marketing, while the focus of the conference center division has been corporate sales, Fears said. "Being able to overlap those two customer bases, from a marketing and sales standpoint, is
going to be very powerful," he said.
Corporate meetings make up about 10 percent of business at parks and resorts, and leisure sales make up about 10 percent of conference center demand. The conference center business can benefit from a greater concentration on leisure, he said.
"We have a lot of holes at certain times, like the weekends," Fears said. "We have a lot of dead time at the conference centers."
Aramark-managed parks and resorts also can benefit from targeting business customers, he added. "We'll continue marketing our bread-and-butter business at both of those, but it will give us a chance to increase meeting business at the parks as well as leisure business at the conference centers," he said.
Combining the two divisions also will give Aramark Harrison Lodging a more national presence, he said, as most conference centers are located on the Eastern half of the country and most Aramark-run parks are located in the West. "We'll be able to have a coast-to-coast presence," he
said. "That's something that we haven't been able to do yet."
Fears reaffirmed Aramark's commitment to complete meeting package pricing, and said similar package pricing may be adopted at the company's parks and resorts. "Everybody's looking for the fully
inclusive package. There's some things we are doing at the conference center business that we can transfer to the parks," he said.
Fears has been involved in the park management industry for more than 30 years, and has worked for Aramark the majority of his career. Though he has had limited experience with conference centers and corporate meetings management, Fears said he is planning to become involved in IACC as he learns more about the industry.
Rory Loberg, former
president of Aramark Harrison Lodging, will stay with the company until he retires at the end of the year, Fears said.
Fears plans to inspect each of the more than 50 conference centers in North America and determine which need further investment. The company invested $60 million during the past two years in upgrades
(Meetings Today, Feb. 7).