The New York City metropolitan area's conference center industry is rapidly approaching pre-Sept. 11 levels of interest, activity and profit, propelled by increased corporate demand and a hotel industry turning its attention to high-yielding transient room nights instead of meetings.
"Beginning in late 2004, the market turned around nationally, and that certainly paralleled what happened and continues to happen in the conference industry in the New York City metropolitan market, with demand booming," said Dave Arnold, Philadelphia-based CEO of the eastern region of PKF Consulting.
"Even though there is an array of conference centers in the New York area, there aren't enough to satisfy demand. Consequently, scuffling centers, which had been at the mercy of demanding, price-wrangling groups for several years, are back in control," Arnold said.
Hotels again are concentrating on the benefits of $500-per-night rooms because demand dictates they can, Arnold said, leaving more meetings available to conference centers.
Acknowledging that "turnaround is fair play," he said, planners must be much more flexible in conference center negotiations because, based on soaring demand, booking windows now are open sooner, growing from just three to six weeks to three to six months. High demand in Manhattan also means some displacement of meetings to outlying conference centers—"a good thing," Arnold said.
Dolce International senior vice president of operations Dan O'Malley noted a shift in the booking window along with several other significant changes at the conference center chain.
"Corporate group demand is increasing, so we are seeing increased occupancies in all of our metro New York properties with revenues and profits up dramatically, and an anticipated 2005 profit jump of 10 percent over 2004. With demand up, groups are booking sooner and booking more weekend meetings," Dolce's O'Malley said.
Since demand has spiked, certain business is being turned away, O'Malley said. "Yes, with demand in place, we can afford to do that, especially if the group is wrong. Could be a hockey club, for example, or some other group that might conflict with or even disrupt a corporate meeting," he said.
Dolce still uses the complete meeting package style of per-day, per-attendee pricing, O'Malley confirmed, but it can be modified for new groups because, in time, 90 percent of them realize it is a better deal, he said
(Meetings Today, Dec. 6, 2004).As for hotels, O'Malley said, "they'll always be competitors," but they're now back to focusing on selling guest rooms.
"With everything in New York up, including room rates, hotels know room nights can make them the most money," O'Malley said.
"Life is good. In fact, life is really good," for New York and its metro-area conference center industry, said Mike Fahner, vice president of development for Aramark Harrison Lodging.
Aramark Harrison is doing well, Fahner said, but with a presence largely 45 to 60 minutes from the streets and sidewalks of Manhattan, doesn't have groups "standing in line," as is the case in the city.
"Still we're in a high-growth mode and hosting Fortune 500 companies, such as pharmaceuticals and financial firms, our old and now resurfaced strength. However, we welcome all customers because a small company can become a Fortune 500," he explained.
Groups are trying to negotiate exit clauses as a way to manage possible down-the-road risk, Fahner said, as booking windows are further out than they've been for some time.
"On price, we're sticking to our CMP model, which is proven to make it easier for planners to justify return on investment and value to their purchasing departments," he said.
Competition from hotels in the New York conference market still is there but isn't what it had been in recent times, Fahner said, as hoteliers continue to move away from their forays into the conference arena, and revisit more traditional transient business and leisure traveler bases.
Jim Bullock, regional vice president, sales and marketing for Benchmark Hospitality International said "demand is up considerably in the New York City metro market, with revenue per available room up, requests information and requests for proposals up 300 percent and site inspections up 60 percent, respectively, in the last 12 to 18 months.
"Corporate America has come back," he said. In light of that circumstance, Benchmark is "in a position to turn it away," pushing it instead to either weekends or offseasons.
New demand means booking windows are at six to nine months now, with less than 90 days out no longer viable, Bullock warned.
Hotels, which have been trying to be "all things to all people," Bullock said, are getting back to serving their basics—individual business travelers and leisure guests, with conference centers doing the same for corporate meetings.
Benchmark is constructing The Heldrich, a 250-guest room, 26,000-sq.-ft. conference center set to open in New Brunswick, N.J., in March 2007.