Package Pricing

Andy Dolce of Dolce International,
whose company runs the Skamania Lodge in Stevenson, Wash. has redirected his sales force to offer more flexible pricing to new clients.

Since time immemorial (or the 1960s, at least), conference centers have been known for offering all-inclusive room rates. Called the complete meeting package, or CMP (not to be confused with the professional certification), the room rate typically includes all meeting space, three meals a day, continuous coffee breaks, basic A/V (including LCD projectors) and gratuities.
    All member properties of the St. Louis-based International Association of Conference Centers adhere to this practice (plus many other requirements that are part of the organization’s criteria for membership). And centers rarely unbundle the CMP for planner clients, unless the piece of business is crucial for the center and there are no other groups competing for those dates.
    Yet, one conference center operator, Montvale, N.J.-based Dolce International, recently decided to back away slightly from the CMP concept. Is this a harbinger of things to come?

The concept
According to Charles Williams, who served as IACC’s first president in 1981, conference centers already were offering the all-inclusive meeting package in 1969 when he entered the business. At the time, he says, it was called the Full American Plan.
    “It was the thing that set us apart from hotels that had meeting space,” recalls Williams, who now works in commercial real estate in Northern New Jersey. Williams helped found IACC while he was employed at the Sterling Forest Conference Center in Tuxedo, N.Y. “Breakfast, lunch and dinner were included in the rate, as well as meeting rooms, basic audiovisual and two coffee breaks,” he notes.
    The complete meeting package works well for conference centers, which are purpose-built for meetings of 10 to about 300 people, because it helps them control costs in a way hotels aren’t able to. When a center is sold out for a meeting, knowing all the attendees will be in house for three meals a day allows the facility to manage supplies and staffing, while passing the economic advantages on to the planner. (IACC’s 313 facilities must get a minimum of 60 percent of their revenue from group business to maintain their membership.) 
    “Conference centers run at lower occupancy because meetings take place during the week,” says Dave Arnold, conference center expert and CEO, East Coast, of PKF Consulting in Philadelphia. “They have to get the people to stay on property for F&B to compensate.”

Dolce’s decision
Andy Dolce, chairman and CEO of Dolce International, announced in December that his sales team would henceforth be trained to push the CMP with existing clients but be much more flexible with pricing by offering a conference center’s elements à la carte for new clients in an effort to capture more business from hotels.
    Contrary to his colleagues’ opinions that he is making a drastic change to his properties’ business model, Dolce says, “I don’t think we’re veering away from [the CMP]. We’re offering flexibility for people who otherwise don’t use conference centers.” He cites six recent examples of new clients wooed by the more flexible package who, once their initial meeting was completed, asked how their actual costs compared with the package costs, then rebooked using the CMP.
    “The conference center industry enjoys a 10 percent share of the meetings market in the United States,” says Dolce, “and we fight over that 10 percent. We as a company can increase our share of the market not from taking business from our conference center competitors but from the hotel side.”
   Dolce aims to increase occupancy at his company’s 26 centers this year by 6 to 9 percent by targeting hotel users. “Our feeling is, if we can get people [into a center], they will see the value in the CMP.” He adds, “We expect we will take the lead, and the industry will follow.”

The CMP was not developed for “filling in weak periods,” says Burt Cabañas of Benchmark Hospitality, which runs Lansdowne Resort in Lansdowne, Va.

Industry reaction
But perhaps not so fast. There will be no temporary backing away from the CMP concept, at least in the near future, by Dolce competitors such as Benchmark Hospitality, based in The Woodlands, Texas, and Philadelphia-based Aramark Harrison Lodging.
    “The CMP is not a package developed by a hotel or resort for filling in weak periods,” says Benchmark chairman and CEO Burt Cabañas, whose company owns or manages 27 conference centers. “When you say you are going to offer the CMP, you are committing to a lot more capital expenditure up front than you would for a similar-size hotel, in terms of the infrastructure of the design and structure of the meeting space. You can’t decide in the middle of the game you no longer can do the CMP. You can’t decide just because you make toothpaste that all of a sudden you can shine shoes with it.”
    Cabañas, like Arnold of PKF, feels the challenge to conference centers comes not from factors such as pricing, but from the many property choices available to the planner. “In the $40 billion meetings market, there are hotels, YMCAs, resorts, conference centers,” Cabañas says. “That money gets split up according to the taste and desire of the meeting.”
Arnold adds: “The reason [a majority] of the market goes to hotels is because they want a hotel environment. The reason people go to conference centers is because they want that environment.”
    Conference centers, with their unique meetings-centric designs and business plans, are particularly well suited for hard-core learning, such as training. The fact that the campuses tend to be self-contained helps keep attendees in the meetings.
    “This is what a conference center is,” says Mike Fahner, vice president of Aramark, which owns two centers and manages another 43 IACC facilities. “We’ve zeroed in on operating outstanding properties for learning, where people come to get serious work done.”

Here to stay
The basic complete meeting package being offered around the country these days has hardly altered in the past 10 years, and planners are unlikely to see anything new soon. The most notable recent change was the adding of LCD projectors to the list of standard A/V equipment in 2001.
    In the meantime, conference centers have begun tailoring their F&B to better reflect current dietary trends, for example, but such flexibility is not required by IACC. “What happens is a tweaking in degrees,” says Fahner. “We’re not going to blow the whole thing up and rebuild it from scratch.”

BUSINESS ON THE UPSWING

The hospitality industry finally is back on its feet, and conference centers are coming back strong, according to Dave Arnold, CEO, East Coast, for PKF Consulting in Philadelphia.
    “The only element that still is not where it was is corporate meetings, so conference centers are lagging a little bit [behind hotels], but we think they will catch up this year,” Arnold says. He warns, however, that the renewed health in the market will mean higher rates, noting, “Once you get your customers back, you can raise your prices.”
    Now that meetings are taking place again, Mike Fahner, above, vice president of development and marketing for Aramark Harrison Lodging, says he’s seeing a return of leisure activities and team-building elements to conferences.
    “Organizations that had to be very lean now find they are in a growth mode again, with a whole cadre of folks with a pent-up demand for training,” notes Fahner. “As business begins to come back, it’s OK to talk about adding some fun that will bring some esprit de corps.”
Fahner also has noticed that clients are looking for ways to retain the strong people they have. “Adding fun is one way to keep that talent,” he says. “We’re even getting inquiries into traditional ropes courses again.” -- S.B.