Individual Hotels Offer CMP

Stymied for months by some ironclad cutbacks in the corporate meetings market, individual hotels have introduced or are emphasizing daily inclusive per-attendee pricing packages to offer buyers cost certainty. In some cases, this practice may be attracting buyers back to hotels.

To be sure, luring planners back still appears to be an infrequent occurrence, but given the number of corporate meetings postponed, canceled or moved in-house from outside properties this year, any move toward increased hotel bookings would buck several trends.

The hotels' per-attendee pricing strategy—cribbed from conference centers that long have offered complete meeting packages covering just about every meeting expense—differs as to whether they include sleeping rooms, whereas conference centers' CMPs do provide sleeping rooms.

There is no clear evidence that this offering is becoming a trend at one particular chain or region of the country. It is apparent, however, that "Some hotels are beginning to offer special packages, with an all-inclusive price, except for guest rooms, to draw small meetings," said Bjorn Hanson, global industry partner for PricewaterhouseCoopers' hospitality and leisure practice. "Because of this, some corporations are shifting some in-house meetings outside to these hotels. It allows planners a set budget for a meeting, without all of the add-on prices, such as audiovisual needs, and lets them avoid having a meeting cost more than they anticipated."

The move comes after a ruinous first quarter for hotels, in which the percentage of canceled meetings doubled over the rate 12 months prior, PwC's Hanson continued. In addition, the number of meeting attendees decreased, the duration of many meetings decreased and the number of attendees staying for the duration of the meeting decreased.

The appeal of this program to hotels is that small corporate meetings, despite their size, usually are profitable because of food and beverage expenditures, Hanson said.

Though he hasn't seen a flood of hotels approaching him with new pricing proposals, Tony Pastor, site and contract specialist for New York-based McKinsey & Co., has noticed an uptick in the number of hotels willing to price in such a manner. Pastor successfully has requested this of hotels for a few years. "We have been able to get facilities to act and price themselves more like conference centers," Pastor said. "There's more willingness to do that."

But hotels, understanding of the fact that booking one meeting could lead to the opportunity to book more of that company's meetings, have accepted Pastor's terms. The all-inclusive package—in Pastor's case, the price includes sleeping rooms—allows McKinsey to address all pricing issues up-front, before the contract is signed, he said. Before the industry slowdown, Pastor said, many buyers focused heavily on guest room rates and airfares, but let food and beverage expenditures accrue with less fanfare. "It's symptomatic of the higher level of cost awareness," Pastor said.

However, another buyer said the practice still is rare, with only one hotel so far making an unsolicited offer of all-inclusive pricing—an offer that actually would have cost more than standard pricing. Others have agreed to reduce rates on signed contracts, though, to avoid cancellation, the buyer said.

While Marriott International has permitted its properties to negotiate per-person packages for three years, those packages may be taking on more prominence now, said Mike Beardsley, Marriott senior vice president of North American field sales. Marriott's packages do not include sleeping rooms, he said, because often the number of attendees is higher than the number of guest rooms required.

"I don't have the numbers but I imagine, intuitively, there's an uptick in the use of this," Beardsley said. "Budgets are so much tighter than they were a year ago, that buyers need cost certainty. With F&B, you never know."

Beardsley, though, said fears that a per-attendee price package ultimately would cost more than a standard, negotiated package—which some buyers have voiced to him—are "misguided. If this is to work, our approach needs to be that we're offering value, not trying to hide something," Beardsley said. "It's like a value meal at a fast food restaurant. You break it down; you realize there's value there."

Despite the fact that some corporations have decreased or eliminated external meetings, Beardsley sees per-attendee pricing as a tool to attract new business. "This could make a difference," Beardsley said. "This is a corporate recession, unlike the one in 1991, and the greatest falloff is in corporate business travel. Just like the airline industry is trying different things to attract business (BTN, July 16), we will too. It may not make or break the day, but it can help us get business."

Jerry Wayne, chairman of the board of Meeting Professionals International and executive director of sales and marketing of three Louisville, Ky., hotels, said he experimented with CMP-style pricing at Nashville's Opryland Hotel, where he spent 20 years in sales. "The concept has merit," Wayne said. "It makes all the sense in the world for both parties. For planners, every time around there can be different charges on the bill."

The Mission Inn Golf and Tennis Resort in Howey-in-the-Hills, Fla., last month debuted a true all-inclusive meeting package, including guest rooms and some leisure options as well. "We think we need to offer more than just lower rates, given that it is now a buyer's market and there are plenty of good bargains out there," said Michelle Purser, the resort's director of sales. "It's taking the conference center concept to the next level. With all-inclusive, planners know the up-front budget will be on target. Negotiations are a time-consuming process, and with corporate layoffs and downsizing, we think planners are wearing more hats these days."