Dolce Int'l Softens CMP: New Customers Allowed To Avert Typical Conference Center Pricing

Conference center chain Dolce International will abandon industry protocol and offer new corporate meeting customers the option to avoid the traditional complete meeting package style of per-day, per-attendee meeting pricing, its CEO told Meetings Today late last month. The move is a significant departure from conference centers' time-honored defense of the sanctity of CMP pricing and comes in response to a slow rebound in corporate meeting volume, due in part to continued competition from hotels.

"It's almost sacrilegious, but we're going to try and be a little bit more flexible in our pricing," Dolce chairman and CEO Andrew Dolce said. "We built an industry on the complete meeting package. We'll do about one million room nights this year, and the CMP represents about 60 percent of that."

Dolce said the chain would like to increase 2005 occupancy by 8 percent to 10 percent from 2004 levels, which can be gained only through the attraction of new customers, who may be hesitant to commit to a CMP. "We have a major focus on being more flexible in our pricing to attract that business, to get them in the door," Dolce said. "We're unlocking dinner. We're offering a variety of venues for dinner, both on our properties and off our properties, to bring them in there. We're using that strategy to try and build occupancy next year."

Despite the significance of the move and the potential implications for the future of the CMP, Dolce said it was necessary to lure new customers from competing hotels and stated his belief that, contrary to conventional wisdom among other conference center executives, hotels have learned how to better manage corporate meetings business and will not neglect the segment, even as its traditional base of corporate transient business improves.

"It's a significant change, but it's required. My personal feeling is that hotels aren't going to give up on meetings like they have in the past," Dolce said. "They've learned to manage it effectively at a high rate and not necessarily discount."

Other conference center industry executives said they have not adjusted the philosophies of CMP pricing, nor do they share Dolce's opinion that hotels will continue to be significant corporate-meeting competition.

"The CMP still is sacrosanct, from our perspective," said Jack Schmidt, chief marketing officer at conference center chain Benchmark Hospitality. "It provides the basics of what customers use at a meeting, and it's how we deliver it. We always push the CMP first. The only time we won't is when we're unlikely to sell out all guest rooms and the customer is adamant that there be no CMP."

Schmidt said Benchmark will turn away corporate meetings business during high-demand periods because of objections to CMP-style pricing. "We continue to be comfortable with that," he said. "There are high-demand periods in which we do not need to compromise the CMP. We confidently sell the CMP during those times. It always is fairly and competitively set."

"I know that my competition now is more inclined to sell day-meeting packages and room rates," said Mike Fahner, vice president of marketing and development for Aramark Harrison Lodging. "We'll only break the CMP if we have to. Customers have to convince me that they'll get more value. We have a lot of anchor customers who use us a lot and like the CMP because it takes out room-rate haggles. Also, our national sales team is not getting a lot of pushback on the CMP. It offers good value."

Fahner also predicted hotels soon would shift their focus away from selling to corporate groups. "There's been a subtle shift during the past three years of hotels recognizing groups to maximize their revenue per available room," he said. "As corporate transient business comes back, they will move away from the conference-center experience, and that is good news for us."

Benchmark's Schmidt, too, posited that hotels will wean themselves off corporate meeting business. "One year ago, every hotel with a meeting room was in the meetings business," he said. "They weren't capturing transient business. Since that is returning, they need meetings customers less. They were buying those customers from us, and planners were getting meetings dirt-cheap. As their demand improves, they will not sell at that price point. They're still available, but at a higher price."

As such, Schmidt said, a dollar-to-dollar comparison of a CMP-priced meeting to one with standard hotel pricing today would reveal little difference. "We are consistently not outpriced when you consider the value proposition," he said. "If we are, then they are giving away their product for less than they need to."

Corporate meeting buyers differ on the merits of CMP pricing. Some laud the budgeting certainty the cost structure provides. Others oppose it and charge that cost exceeds value.

"Conference centers can be nice, but expensive," said Mike Doran, senior director of administrative services at Schering-Plough Corp. "It's smart that Dolce is doing that, because that pricing always was something that scared me. You end up paying more than what you've used."

Doran said the existence of CMP pricing was never enough of a reason to avoid booking a conference centers, but added that it sometimes played a part in his site-selection decision making. "It wouldn't steer us away, but it could be a negative differentiating factor," he said.

Novartis executive director of business support services Paul Tomaszeski said his firm negotiates annual, CMP-based contracts with conference centers. "It depends on what the CMP price is, but we're pretty comfortable with it."

Andrew Dolce said one reason certain buyers dislike the CMP is the rise of procurement initiatives and departments involved in the meetings management process.

"It's hard for a procurement person that really doesn't understand the difference to look at a CMP at three-hundred-something dollars and a hotel rate at 170," Dolce said. "We're going to be really careful about what we're presenting."