April 01, 1999
Meetings & Conventions Market Watch Pricing April
1999
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.
Harrison/Doubletree
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.
Up-and-Comers
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
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.
S.B.
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
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