Exec. Mtgs. Still Deal W/ Perception Amid Mixed Demand

The market for buying space for corporate executive and board meetings remains in flux due to scattershot demand fueled by dueling trends: The general increases in corporations' collective desire to meet and increase meeting spending and the lingering sensitivity that corporations, especially public ones, have about perceptions of excessive executive perks.

The result is conflicting reports from different segments of the industry, with some hoteliers reporting increased executive board meeting demand and consequent price increases, while others note deep apprehension on the part of corporations to stage anything but reasonably priced, local, perk-free events for their senior management.

Though the financial performance of many corporations has improved of late, said Howard Goldberg, New York-based president of independent meetings management firm David Green Organization, most corporate executives still are exceptionally sensitive to perceived extravagance. That, less than actual economic conditions, drives executive board meeting site selection, he said.

Hoteliers hold differing opinions on the effect of corporate apprehension on site selection, largely in correlation with the level of service their properties provide.

"For a time, it was unfashionable to be anything but austere, but that is loosening," said David Gabri, president and CEO of Associated Luxury Hotels, a 70-property luxury and boutique chain based in Washington, D.C. Much of the effect beyond site selection, he said, is the level of amenities corporations are willing to consider as part of the executive board meeting. "This has enabled us to talk about the attributes of the hotel, be it the boardroom, food and beverage, golf course or spa," Gabri said. "Before, it was very much business-only; now, they're considering additions. It's not the most important factor, but it's a good augmentation. We think it's beneficial, given our portfolio."

Though The Broadmoor, a five-star resort in Colorado Springs, Colo., is well known throughout the industry as a high-level destination, director of sales John Washko said there have not been widescale defections to lower-price properties due to perception issues.

"Is business off because people hold events at properties with lower price points or that are perceived as less extravagant? That's difficult to say," Washko said. "It varies by industry type, but everyone buys value, not rate, and our value is commensurate with our price point. A board is looking for a certain amount of bonding, networking and conducting business. The atmosphere affects the achievement of those goals, and major organizations realize that the takeaway is important to long-term profitability."

However, Sandy Bauer, director of sales operations for the Hilton San Diego Complex, a group of southern California Hilton properties that includes the Hilton La Jolla Torrey Pines, Hilton San Diego Resort and Doubletree Hotel San Diego Mission Valley, said the avoidance of perceptions of luxury still are critical for corporations, an issue she said her properties skirt despite their high-level golf offerings. "We're still Hiltons," she said. "We're not like the Four Seasons or Ritz-Carlton, which are perceived by many as extremely extravagant."

Some corporations have tried to dampen perceptions of luxury by meeting at a nearby, regional property, David Green's Goldberg said, adding that "executive meetings still are staying closer to home and being held in the office as much as possible. A lot of corporations have their own facilities."

On the other hand, Associated Luxury Hotels' Gabri said corporations that will travel have broadened the geographic scope of destinations they will consider. "Executive board meetings are starting to move away from being held strictly on a regional basis, though they're not necessarily going to the glamour parts of North America," Gabri said. "There is an emphasis on choosing properties with quality meeting space."

Some executives who still prefer to meet offsite will hold board meetings in conjunction with another event, typically a sales meeting at a higher-end property, Goldberg said. "They can go to a high-level hotel or resort, bring in the board a day early, then do what they want," he said. "They don't have to be so tight as to where they go." Conference centers lately have proven popular, he noted, due to the high levels of privacy and service typically offered.

Once executives decide to hold their meetings offsite, though, they are willing to spend money and laden the event with amenities, Goldberg said. "Once they decide they can do it, then they really do it," he said. "If the guy at the top says, 'Let's go,' then they go. There's not a lot of negotiations with the property, and they don't dicker."

Current demand for executive board meetings—which Goldberg called "mediocre," but the hoteliers said was, at worst, holding steady—and resultant pricing is still difficult to characterize on a broad scale.

"We're seeing about the same amount of demand as we historically have, though the booking window is shorter," The Broadmoor's Washko said. On the whole, Washko noted prices for those events have changed little, though that can vary. "It can go either way," he said. "If there's a hole or more availability, it will bode well for buyers as we adjust our strategy. Yet, if you're buying the last rooms of the house, especially given the types of rooms these meetings usually book, it potentially will be more expensive."

Gabri said pent-up demand has driven a level of new meetings business as corporations reconsider the level of financial success needed to increase travel and meeting spending. "I believe corporations have re-indexed what 'good' means regarding profitability," he said. "They're willing to start with new basis points and get back with business as it was."

"They are back in business and traveling again," Hilton's Bauer said. "That business has sputtered since 9/11, but we're getting a lot of requests, though not at the frequency as before then. Companies that used to meet four times annually may do so twice now." Bauer acknowledged that some costs have increased lately as a function of increased demand, though she stressed flexibility. "We find experienced meeting planners are aware of the costs involved," she said.

Corporate executive board meetings are a critical segment for The Broadmoor, Washko said, so much so that the resort has created four staff positions dedicated to managing the booking and staging of those events.

"A lot of corporations handle these meetings differently than other meetings," Washko said. "Often, it's planned by the personal assistant to the president, chief executive officer or chairman, and that might be the only event that person plans all year. It presents some upside and some challenges. We can get decisions made very quickly, but that person usually has a lot of other responsibilities and assignments."

Frequent dealings with nonprofessional meeting planners, Washko said, do not necessarily translate into better financial deals for The Broadmoor, as the resort offers a short-form standard executive board meeting contract light on attrition, cancellation and food and beverage attrition language.