Leading conference center chains have reconsidered negotiating and marketing strategies in light of the growing role of procurement and new types of Internet sourcing in the meetings management industry. Conference center executives said they expect an influx of corporate management training events and are weighing potential changes in the manner in which they price as the overall national economy improves.
"Those that stay true to what a conference center is will have a pretty healthy year," said Mike Fahner, vice president of development for Aramark Harrison Lodging. "We see that in corporations there's pent-up demand for management training." Part of that increase in management training, especially among financial companies, comes from such new legal requirements as Sarbanes-Oxley, he said.
Benchmark Hospitality chief marketing officer Jack Schmidt predicted that meetings of more than 100 attendees would rise as companies seek to re-energize management teams by bringing everyone together to prepare for future economic growth.
"Companies, as they become both healthier financially and more confident of the future, are returning to a more normal business pattern, which includes a renewed commitment to training meetings," Schmidt said, adding that Benchmark expects a strong year for new sales. "We are optimistic that this year will present levels of profitability and volume that are much greater than they were last year," he said.
The structure of training meetings also has begun to change, Fahner said, to include shorter, more intensive programs with follow-up events. Joan Eisenstodt, president of independent meeting management firm Eisenstodt Associates, said she has not yet seen clients shorten events, even though they want to, and more clients want opportunities for networking and small breakaway meetings during larger events.
"The industry and meetings are catching up with what conference centers have always been about: smaller, more intimate, more experiential meetings," Eisenstodt said.
Conference center chains also have shifted the focus of their marketing to reflect the growing involvement of procurement departments on the meetings industry. Aramark has pushed its image as a "solution provider," rather than a commodity, Aramark Harrison Lodging president Rory Loberg said. Sales through the complete meeting package naturally can fit goals of meetings consolidation and tracking entire event spend, he said.
Added Eisenstodt: "Procurement is looking for the best way to save money on meetings. There is no better way than the CMP because you know exactly what you're spending."
Aramark has begun an initiative to identify segmentational prices within its complete meeting package to respond to procurement-based purchasing, Loberg said. Although the company will stand by traditional packaged pricing, it is working to help buyers know the cost of various services, he said.
Dolce International has given new flexibly to its pricing structure
(Meetings Today, Dec. 6, 2004), allowing new customers to purchase services without a traditional package of per-day, per-attendee pricing. Chairman and CEO Andrew Dolce said the move partly was a response to the growing role of procurement and the recognition that traditional sales methods, based on strong relationships with corporate meeting planners, are changing.
"It's hard when you want to build trust and a relationship with the end user and the customer. That customer is now shielded by procurement or third parties," Dolce said.
"The conference centers that do well are the ones that explain their pricing," Eisenstodt said.
Eisenstodt said that conference centers need to do a better job at "getting the word out" in the meetings industry and many leading conference center chains have initiated marketing drives and distribution initiatives aimed to capture new customers.
Aramark has invested $60 million over the past two years in upgrades at various properties and the expansion of the Princeton Forrestal Center in New Jersey. The Princeton center, previously the Merrill Lynch Conference & Training Center, in August 2004 was sold to a private investment group and Aramark was retained to operate and market the facility. As part of the expansion, 20,000 square feet of office space was converted into meeting space.
"Over the past couple of years, we've invested in a number of different properties, to make sure as we come out of the downswing, that we're up to par," according to Loberg.
Some chains have shifted marketing resources toward Web-based initiatives. Although customers have been slow to book directly through the Aramark Web site, Fahner said many customers go online to research properties.
"There are a great number of people that use the Web site and the online request for proposals process as an information-gathering tool," according to Fahner. "Once they get their short list of qualified places, they pick up the phone and want to talk to somebody."
Andrew Dolce predicted global account customers this year would begin to book properties directly through his company's Web site. Top clients will be given passwords, he said, and be able to book a center at a pre-negotiated rate. Some clients have begun to convert their online requests for proposals on the Dolce International Web site directly into contracts, he said.
"We'll still try to have a strong presence in the marketplace through advertising but we'll try to drive people to the Web site. It's the best way to be informed and to book," Dolce said.
Benchmark's Schmidt said the chain still is working on technology that will be able to immediately qualify a customer when they visit the Web site and said that online RFPs are "significantly higher" than last year. The Benchmark Web site also will be redesigned this year, Schmidt said, to be more of a resource tool for planners.
"We have begun to invest in our Web presence, more than just from a sales perspective," Schmidt said. "We're trying to make it rich in content, so we're building tools into this that will help planners build more effective meetings, not just view an online brochure."
The rebound in the conference center industry has been divided both by geography and customer base, said industry executives.
"Chicago is still very soft. Boston is slowly starting to come back and New York has come back pretty strong," Aramark Harrison's Loberg said
"The robust growth taking place in the Northeast is not spread through the country. Not from what we see," according to Dolce.
Finance, pharmaceutical, and Internet technology companies have been steady customers of conference centers in the past and will continue to have a strong need for training facilities this year, Aramark Harrison's Fahner said, but full recovery may not happen until other industries improve.
"Recovery will start hitting our meetings sector when companies announce profits, they start rehiring, they start bringing more people on so there is more need for training—which basically drives a lot of our business," Dolce said.
Jeff Farina, chief development officer for Benchmark Hospitality, last month began a two-year term as president of International Association of Conference Centers North America. Farina said there are marketing and educational challenges in the year ahead for the conference center industry, but opportunities have appeared as well.
"When you look at the upturn and patterns throughout the meetings market and then in the greater occupancies that are predicted for the hotel industry, it really does look like a great opportunity for conference centers," Farina said.
Farina, who has worked in the conference center industry for more than 20 years, said one of the goals of the organization is to reach buyers and promote value for conference centers in light of changing meetings management dynamics.
"IACC member venues, as have other meeting venues, need to continue to evolve their learning in the areas of procurement, electronic procurement, online buying and really the push of these types of sourcing to areas that are somewhat new to us," Farina said.
Procurement and pricing have been two main topics of discussion at IACC board meetings, said Geoff Lawson, former president of IACC North America.
"IACC is learning as much about procurement departments as procurement departments are learning about IACC," said Lawson. Lawson said IACC has had to adjust its education initiatives to focus on promoting the financial benefits of conference centers.