April 01, 1999
Meetings & Conventions Market Watch Pricing April 1999 Current Issue
April 1999

Market Watch

Foretelling growth, companies invest eagerly in new facilities

By Sarah J.F. Braley

Despite rumblings of gloom in the hotel world stalled projects, complaints of shrinking capital, predictions of bulging room inventory one corner of the hospitality market is growing quietly: conference centers. The St. Louis-based International Association of Conference Centers is adding 12 to 15 property members each year, and between 1995 and 1997, according to M&C’s Meetings Market Report, the use of residential conference centers rose 20 percent.

This success can be attributed to simple economics, according to David Arnold, executive vice president of PKF Consulting in Philadelphia. “From a supply standpoint, there are only about 250 legitimate conference centers,” says the conference center consultant. “From a demand standpoint, surveys indicate that if conference centers were available in most markets, somewhere in the 10-to-12-percent range of smaller groups would prefer these facilities. It appears the demand greatly exceeds the supply.”

Many of those legitimate centers belong to IACC, which has 27 criteria a center must meet in order to join. These points focus on the center’s priority business, conference-room design, food and beverage services, technology and guest rooms. “One of the things contributing to our success is that some major hotel companies have gotten into our part of the industry without diluting the product,” says Tom Bolman, CAE, executive director and CEO of the association. “They are owning and/or managing IACC-approved properties.”

Although no one anticipates that conference centers will rule the meetings world “We’re never going to be huge because we’re a boutique market,” says Bolman these centers have a solid reputation for offering high-quality service, dedicated learning environments, and state-of-the-art technology and A/V equipment. And, in most instances, recreational opportunities like golf are either on property or nearby.

Driving the health of this niche are the following companies, which continue to seek out capital and invest in these centers.

Aramark Conference Center Management
Content to be managers and not owners, Aramark operates more than 70 conference centers worldwide. Of the 37 in the United States, about 20 belong to IACC, including the Xerox Document University Training and Conference Center in Leesburg, Va., whose director of sales and marketing, Wende Blumberg, is the current president of IACC.

Aramark actively searches for new management opportunities, adding seven centers since October: three university facilities, three corporate and one government site. “We have a huge amount of resources to apply, and we think it’s a great growth area,” says Rory Loberg, Aramark’s vice president of conference centers.

When the company takes over a facility, it works with the owner to decide what improvements need to be made and who will foot the bill. For example, Aramark just began running the conference center at the University of Villanova in Villanova, Pa. Projects already are under way to redo the sleeping rooms, remodel the dining facility and install T-1 lines.

Benchmark Hospitality
Based at the Woodlands near Houston, Benchmark manages 18 properties and has been in the conference-center business since 1980.

New development is a priority and is being fueled by the company’s recent partnership with Redstone Capital in Houston, which now owns 10 percent of Benchmark. This infusion of capital is helping Benchmark complete three projects: one in California’s Napa Valley, one at North Carolina State University and a facility to be named later.

Growth outside of the United States is next on Benchmark’s agenda. Asia is the company’s proving ground, according to chairman and CEO Burt Cabañas. “We are the only active participant in Asia, with properties under construction in Tokyo and Bangkok, and one up and running in Singapore,” he says.

Destination Hotels & Resorts
Although Englewood, Colo.-based Destination only has one IACC-approved property (the Inverness Hotel & Golf Club in Englewood, Colo.) and one that is applying for certification (the Tempe Mission Palms Hotel & Conference Center in Tempe, Ariz.), the company is reconfiguring its 21 properties to fit the IACC mold as closely as possible.

Destination, the hospitality arm of Lowe Enterprises, a real estate investment, management and development firm headquartered in Los Angeles, spent $11 million on the Tempe hotel, and renovations are under way, just beginning or planned for the majority of the company’s holdings.

President and COO Charles S. Peck says the company looks to pick up three to five properties a year. “But the best facilities are hard to find and acquire,” he says, “so we are currently working on two projects to build full-service conference hotels from scratch.” Peck says he expects one of those, in Southern California, to be completed this year, and ground-breaking for the second should take place in 2000.

Dolce International
“We have 12 properties right now,” says Andy Dolce, chairman and CEO of Montvale, N.J.-based Dolce International, which owns or operates such centers as the Tarrytown House in Tarrytown, N.Y.; Hamilton Park in Florham Park, N.J.; and the Frégate in Provence, France. “[We] plan to double our size over the next three years [and] end up with five properties in Europe and 19 in North America.”

Dolce aims to achieve this goal with help from AEW Partners II of Boston, which invested $200 million in his company in 1997. “We’re working on our next investment round, which will be about $250 million for acquisitions,” Dolce says.

This company also is taking a lead in the technology arena, replacing overhead projectors and 35-mm slide projectors with LCD panels in its complete meetings package. At most other conference centers, LCD panels still are offered only as an à la carte item.

In January 1998, the Promus Hotel Corp. of Memphis bought Harrison Conference Centers, combining them with its Doubletree Hotel and Conference Centers to form the Promus Conference Center Collection. Promus now has 11 IACC-approved centers nine Harrisons and two Doubletrees and two more of each brand in development.

David Stivers, senior vice president of Promus, indicates there is a distinct difference between the two brands. Harrison centers, where 80 percent or more of the business is group-related, are in more remote locations or in resort areas. Doubletree centers have more of an even mix of conference-center and transient business, and they will be developed in suburban commercial markets and occasionally urban settings.

All but two Harrison centers which are owned outright are under management contracts with Promus. “But we are actively looking to acquire properties,” says Stivers. “We want to grow the Harrison brand in key markets in the United States and grow the Doubletree product in those markets where it makes more sense to have a hybrid brand.”

International Conference Resorts
ICR, whose properties choose not to belong to IACC, more than doubled its holdings and its profits in 1998 and plans to add two or three centers in 1999. Among its seven facilities are the Scottsdale (Ariz.) Conference Resort and Cheyenne Mountain Conference Resort in Colorado Springs, Colo.

But ICR isn’t stopping there. The company has broken ground near Dallas/Fort Worth International Airport for a $60 million center scheduled to open in late 2000. It will sit just off the first hole of a new 18-hole Arnold Palmer public golf course. Overseas, a property is in development in Dublin, Ireland, called Killeen Castle, which will debut in 2001.

“The investment community is bullish on conference centers, and the meetings market is distinguishing them from hotels,” says ICR vice president of marketing Rob Parriott. “We’re obviously reflecting success in that by still acquiring.” ICR has obtained capital from Hartford, Conn.-based Cornerstone Real Estate Advisors, an arm of Massachusetts Mutual Life Insurance Co., and Dallas-based Olympus Real Estate Corp.

Parriott feels this market’s strength is its ability to react quickly as meetings become more and more last-minute. “Looking at hotels, you’re going to get higher pricing, whereas at the conference facility, it’s nearly the same price, whenever,” he says.

Marriott Conference Centers
Marriott has a specific plan for the properties it will add to its conference center-management portfolio: They will be new-build facilities in about 15 major U.S. markets, near major airports, each with 200 to 350 guest rooms, at least 100 square feet of meeting space per guest room and enough land for recreational facilities. These were the criteria the company applied when it decided to manage a new property opening this year, Kingsgate in Cincinnati.

Todd Sherstad, national director of sales and marketing, says the conference center group is looking at opportunities in Boston, Chicago, New York, California and Texas.

Marriott is relatively new to the market, deciding in 1997 to separately brand the conference centers it was managing. Any new facilities will join the 20 properties Marriott now runs (seven of which are proprietary corporate centers). “We look to have at least three new properties identified and up and running in ’99,” Sherstad adds. All Marriott centers meet IACC standards and belong to the association.

These two companies are dabbling in the conference-center world. Time will tell whether they become powerhouses in this niche market. Soon to be Doral: The Forrestal at Princeton Soon to be Doral: The Forrestal at Princeton
MeriStar Hotels & Resorts
Washington, D.C.-based MeriStar purchased the Doral trade name, as in the Doral Golf Resort & Spa in Miami and the Doral Arrowwood in Rye Brook, N.Y., neither of which the hotel company owns. The goal is to use the name to brand MeriStar’s growing stable of resorts, golf courses and conference centers. “Our research indicates that ‘Doral’ stands for a premium product,” says John Plunket, executive vice president of finance and development for MeriStar.

Club Resorts
This small hospitality company currently owns five properties: Barton Creek in Austin, Texas; the Daufuskie Island Club & Resort just off Hilton Head, S.C.; The Homestead in Hot Springs, Va.; Pinehurst in Pinehurst, N.C., and Mont-Sainte-Anne in Beaupré in Québec, Canada.

Although Barton Creek and Daufuskie Island are geared to small to midsize meetings, the company focuses on resorts rather than conference-friendly properties when buying. “I would not characterize our strategies as acquiring clubs that are purposely designed solely for conferences,” says Gerard Smith, executive vice president of marketing and communications for Dallas-based ClubCorp Inc., Club Resorts’ parent.

Still, about 75 percent of Barton Creek’s business comes from meetings. To encourage this trend, 12,000 square feet of meeting space is being added to its conference center, for a total of 28,000 square feet, and the number of guest rooms is being doubled to about 300. Similarly, 60 percent of the business at Daufuskie Island comes from meetings. A new conference center with 14,000 square feet of meeting space is being built there, and the 194 rooms are being renovated.


Pricing the Package Meeting costs at conference centers are lumped into complete packages that vary depending on the type of center a planner chooses. The average per person, complete meetings package (CMP) costs for 1997, as determined by Philadelphia-based PKF Consulting, are as follows. Executive conference centers $239 Corporate conference centers $160 Resort conference centers $265 College/university centers $172 Back to Current Issue index
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