Conference center chains are taking steps to attract and retain their core clients—corporate meetings that often involve training and technology—as hotels cut rates deeply to shoehorn themselves into that niche.
In June, managed services giant Aramark Corp. bought the 11-property Harrison Conference Centers chain from Hilton Hotels Corp. for about $49 million
(Meetings Today, June 3). Aramark, which already operated about three dozen corporate, university and public conference centers, has moved quickly to integrate the chains' properties, rebranding the combined offerings as Aramark Harrison Lodging and reorganizing its sales force accordingly.
The acquisition ratchets up competition with such other full-service conference center chains as Dolce International and Benchmark Hospitality. Aramark officials said the company is committed to dedicating the resources of its $9 billion organization, including its variety of price points and service-level offerings, to secure corporate meetings.
"Harrison brings things we need," said Aramark Harrison vice president Rory Loberg. "They serve a high-end market, have sales and marketing expertise and a strong brand. Harrison needed stability, so this fixes all points."
Yet, these still are slow times for the hospitality and corporate meetings industries: Although conference center executives said their properties are not faring poorly, there is not a limitless pool of business available. Many standard conference center clients, including the pharmaceutical industry, have weathered the meetings slowdown better than most, but the landscape still is in flux.
"The pharmaceutical industry is a moving target," said Aramark Harrison senior vice president Jack Kealey. "Much of their business is based around product introductions or mergers and integrations, so there's always ups and downs. Telecom is weak, but they're still meeting. Accounting is still strong, but those companies are changing the way they do business. Banking and financial companies made a comeback in the first quarter, but they've slowed down and are growing at a slower pace."
The meetings that still are being held are under the throes of a trend that has gripped the whole hospitality industry: shorter lead times than practically anyone has ever seen. "Companies are waiting until their quarterly earnings reports to book," said Andy MacLellan, vice chairman and COO of Montvale, N.J.-based Dolce. "We're finding one-to-two-week lead times for large corporate groups, which leads to an interesting dynamic. We must be nimble in terms of allocating space, because it's as short term as I've ever seen it."
However, officials said the short-term trend is not having a major impact on the negotiating climate, as the impetus for shrinking lead time isn't the desire of buyers to wait until they can get a better deal, it's to ensure the meeting will be held.
"They're not really looking to negotiate," said Jack Schmidt, vice president of sales and marketing for Benchmark Hospitality. "They're looking to walk in an hour before the meeting starts with the rooming lists in their hands. A lot of this short-term business isn't about negotiating another $10 per head off the price, it's about whether we can handle what they want to throw at us, but we are poised to handle it."
Conference center executives always have pitched their offerings as superior fits to hotels for some corporate meetings business, given the level of technological capability and the complete meeting package style of per-day, per-attendee pricing. But hotels, struggling for business, have reached out to corporate meetings buyers and are negotiating aggressively for the same types of business, in some cases, offering CMP pricing themselves
(Meetings Today, Sept. 24, 2001). Aramark Harrison's Loberg acknowledged that hotels are succeeding with this strategy, to an extent, but predicted it wouldn't work in the long term. "The CMP in the ballroom doesn't work," Loberg said. "People will experiment, but those who know conference centers will stick with conference centers."
Aramark Harrison's industry competitors agreed. "Hotels are trying to make inroads and they are doing so through price," Schmidt said. "Essentially, they are buying that business and they have been successful. We will not combat that by dropping our rate. We will retain our pricing integrity so when buyers receive a different experience, they'll be inclined to realize what they're missing. We can't cut price without cutting services, and we won't do that. It's not the point."
In essence, the executives said, they don't find it necessary to compete directly with the hotels. "The hotels aren't going to keep hunting down 40-person meetings," Kealey said. "Their sales force is not made for that. Our competition is the Dolces and the Benchmarks of the world."
As the competitive set changes, though, many in the conference center industry are pleased to see Harrison no longer owned by a hotel company. "It helps the integrity of the niche," Schmidt said. "The only one left now is Marriott, but they haven't picked up or built any new conference centers. It's not something they grow. It will be interesting."