Both corporate meeting buyers and hoteliers this year have pushed to a new level of prominence the complete meeting package style of per-attendee, per-day pricing that encompasses all meeting charges, popularized by and once the exclusive province of conference centers and cruise ships.
Buyers and sellers, though, have different motivations for embracing this style of pricing. The growing emphasis on procurement-based strategies in site selection and meeting purchasing has led some corporations to seek a bottom-line total of costs for a given event before it begins, offering some level of cost certainty. Hotels can offer the CMP to better challenge local conference centers for lucrative corporate executive board meetings. Also, as meeting packages include onsite meals for attendees, it guarantees a certain level of business for the hotel's restaurants.
There is some disagreement among both buyers and hoteliers as to the true value of meeting packages. Buyers who dislike conference center pricing likely won't pursue such pricing at hotels either. Those buyers generally contend that the packages reflect a higher cost than if each amenity were priced separately and that individual attendees get charged for amenities they may both want or use. Some hotels also prefer to price each option exclusively, while others have created standard packages available for any group to use.
The most frequent use of meeting packages appears to be for corporate day meetings without any room nights. Buyers note that some properties have developed packages for only this type of event.
"The first thing I ask hotels is whether they offer a CMP, and most will have one or they will customize one for us," said Robin Buzzeo, corporate travel manager at Taro Pharmaceutical Industries Ltd., an Israeli company with U.S. headquarters in New York. "I think the hotel side is doing more of it, particularly those in areas where there are conference centers. The hotels need to compete with it so we can create better budgets. Audiovisual services, technology and coffee breaks can add quite a bit to meeting spending, and we want to look at the bottom line."
Though lately most hotels either have standard packages or will create one, Buzzeo said they will not always present packages as negotiating options upfront. "They may not offer the package if you do not ask," she said. "I use it as a negotiating tool, especially for day meetings."
When applicable, Buzzeo said she prefers to negotiate in complete meeting package fashion, adding she's not surprised the pricing method's prevalence has grown.
"It helps us lock up the deal, and it guarantees revenue for the hotel," Buzzeo said. "I'll tell them upfront that if I can get the entire meeting expenditure into my budget, then it will be a done deal. I'm very pleased with it. It works whether you're planning a meeting for 10 attendees or 110."
Most buyers dabbling with using CMP pricing for hotels will do so only at certain times, while still negotiating in traditional styles when applicable.
"We've been successful with it at preferred hotels where we have a campus nearby, including in Los Angeles, Dallas and Massachusetts," said Greg Herrera, senior supply chain specialist, travel for Waltham, Mass.-based conglomerate and defense contractor Raytheon Co. "We reached out to them and showed them that the executive conference center package works, and they have embraced it."
Herrera said he'll only take the CMP approach with Raytheon's existing roster of preferred transient hotels, and only with those properties that are large enough and have the appropriate services necessary to host corporate meetings. Beyond that, there are benefits for both Raytheon and its preferred properties, he said.
Raytheon, which currently operates a largely decentralized meetings structure, often will include three daily meals and a coffee break, as well as room rate, in its CMP negotiations with hotels. "It's simple, it keeps costs in line and it's competitive, good pricing," Herrera said. "We can drive more business to our preferred properties, get additional room nights for us to leverage in negotiations and it lets us control the meeting. Hotels also get additional food and beverage revenue."
Though Raytheon has concentrated its efforts on larger, preferred hotels, other buyers have noticed an increase in CMP offerings from properties other than convention hotels.
"We've seen it out of larger, conference hotels, but now I'm noticing more and more smaller hotels doing so," said Sheri Bonsall, manager of corporate travel services for Warren, N.J-based Chubb Group of Insurance Companies. "Not a lot of hotels are saying no."
Bonsall will negotiate meeting contracts with hotels that include CMP packages or standard pricing, she said, depending on the needs of a given event and the included services and amenities of the offered complete meeting package. Also important is the relative value of the particular complete meeting package in relation to Chubb's negotiated transient rates, she said.
Additionally, Bonsall said not every hotel has the organizational ability to wrap their services into a bundled package. "A lot depends on the hotel's internal structure," she said. "It depends on how integrated their side of the house is between sales and food and beverage and audiovisual."
Introducing a CMP package to compete with conference centers for executive board meetings, however, offers a hotel no particular guarantee of successfully swaying the buyer, or the buyer's attendees. "Some hotels want to compete with local conference centers for higher-level, executive meetings, but usually it doesn't fly," one buyer said. "Our executives know what they want, and they want to sit in the ergonomic chairs of a conference center. Plus, there can be difficulties with reporting, when we have internal metrics we compile and measure by room rate, not as a combined package."
Though increasing corporate meetings demand has led to diminished discounting on many amenities, including room upgrades and food and beverage service, said Hyatt Hotels Corp. vice president of sales operations Fred Shea, many hotels have become more likely to negotiate in CMP fashion.
"We've very recently had conversations with our hotels regarding this," Shea said. "We are seeing more of that, and our hotels probably will offer some type of competitive all-inclusive. We can price like that."
Hyatt is particularly likely to agree to such deals in cases when business can be driven to onsite hotel restaurants, Shea said. He attributed that partly to the growing influence of procurement departments and philosophies on corporate meetings management.
"Purchasing people are paying more attention to meetings, and controllers like the one-size-fits-all approach," Shea said. "This pricing can do a better job of offering that."
Other hoteliers, though, have not seen any great groundswell of support among meeting buyers for complete meeting packages.
"I've not been made aware of too much more of it, though there have been some incidents," said Tom Chevins, senior vice president of sales and marketing for Omni Hotels. "Most buyers still want traditional pricing, with their room rates separate."
However, Chevins said, given the long-running industry trends of shorter lead times for corporate meetings
(Meetings Today, March 29), there is a time and a place for hotels to offer CMP pricing.
"There is an opportunity for us to really address the issue of speed," according to Chevins. "Planners have less time, and, as far as packages can make life simpler, there is some value in doing it. These are discussions we have with buyers from time to time."