by Sarah J.F. Braley | March 01, 2007

Lansdowne Resort

Lansdowne Resort  is managed
by Benchmark Hospitality
but owned by a real-estate
investment trust, a new twist
in conference center relationships

Has the time come to rethink what a conference center is and does? Some industry insiders say yes, and the resultant changes could shake up this hitherto quiet corner of the meetings industry.

The definition of such a facility as promulgated by the International Association of Conference Centers has been relatively consistent since the organization’s inception in the early 1980s. Ideal for smaller meetings and long-term training, these properties tend to be purpose-built, using St. Louis-based IACC’s high-quality specifications, called the Universal Criteria (see “Gold Standards”), that mold not just the meeting space, but the catering, technology offerings and even the guest rooms.

Traditionally, conference centers certified by IACC belonged to one of two categories: residential, with an average of about 150 to 200 guest rooms, and nonresidential day centers offering meeting space only. Conference rooms, services and guest rooms were sold with an all-inclusive rate called the complete meetings package (which still is the norm, although some centers occasionally will break down the pricing).

However, several recent trends are challenging that focus, causing longtime proponents of the IACC concept to reconsider what the conference center of the future will look like.

“Capital funds have bought [many of the centers], so they’re now owned by pools of other people’s money,” says Dave Arnold, CEO East of PKF Consulting in Philadelphia and an industry adviser to the IACC board of directors. “These centers are being urged to go after as much nonconference business as they can to fill in the gaps. If we lose focus on the group business, we lose our advantage and become indistinguishable from hotel meeting space.”

Combining this trend with the rising popularity of the ancillary conference center -- IACC-approved meeting space connected to a hotel whose guest rooms have not been certified by the association -- might dilute the IACC concept of offering the ideal place to have a meeting, adds Arnold. “If it’s not the best place to have a meeting,” he says, “lots of things are at risk: the image, the complete meetings package. That concept does not work for the hotel world but is very necessary for conference centers.”

Owners are heard

While many IACC properties are branded or managed by companies such as Aramark Harrison Lodging, Benchmark Hospitality, Destination Hotels & Resorts, Dolce International and Sodexho Conferencing, an increasing scenario has equity owners in the background quietly pushing for return on their investment.

Based on his own research, Arnold contends groups such as real-estate investment trusts, which have been putting large amounts of money into the conference center segment, view the properties as profit centers that must produce more quickly than might have been expected by previous owners, who were more invested in the IACC concept itself.

But others in the industry don’t see the issue in such shades. “I don’t know of two financial institutions or groups that we deal with who have the same profile for what their returns are,” says Burt Cabanas, chairman/CEO of The Woodlands, Texas-based Benchmark Hospitality. “If you make money within reason, you will get capital that can support you.”

Even though Benchmark has opened some properties in the past two years that were strictly hotels, Cabanas says he has no plans to abandon the conference center concept around which the company has grown for more than 25 years.

“We want to continue to be a big boat in a small lake,” he says. “If we had to choose between creating a full-service conference center or a luxury hotel, we would do the center. We have built them, we have taken them over, we have found them in disarray and fixed them.”

Also sticking with what has made him successful is Andy Dolce of Dolce International. “We’re experts in the meetings business, and we like to perceive ourselves as a leader,” says the chairman and CEO of the Montvale, N.J.-based company. “We don’t want to abandon that.”

Still, Dolce acknowledges his company has to answer to a variety of investors in the 23 properties that make up the Dolce portfolio. “The dilemma is, if you’re an operating company and you want to grow in the open market, you’re going to have to have really good friends in the private equity business,” he says. “But those investors understand very clearly that if they don’t reinvest capital, they won’t get the price they want when they’re ready to sell.”