It took a little longer, but the hotel seller's market has finally hit the conference center niche. There's no question that occupancy rates are up, and this is clearly being reflected in room rates.

Conference centers are also experiencing skyrocketing growth in revenue and profits. In 2005, total revenue for these centers, according to PKF Consulting of Atlanta, which publishes the annual Trends in the Conference Center Industry, was up by 13.7 percent, while profits grew a stunning 39.2 percent.

The driving force is the improvement in corporate bottom lines, says Mark Woodworth, executive vice president of PKF Consulting. “Corporate profits continue to grow, and as a result, companies have been increasing their meeting budgets and what they have been willing to spend on all types of meetings as a whole.

“Conference centers took longer to recover from the 2000-2001 recession and the aftermath of 9/11,” he adds. “The reason is that … the [initial] recovery was consumer-based; leisure-oriented travel began to kick back in first. But in the past two years or so, corporations are driving the recovery, so now we're seeing conference centers achieve increases greater than the hospitality industry as a whole.”

According to the most recent Trends report, average room rates in conference centers went up by 5.1 percent from 2004 to 2005, while occupancy rates increased an average of 6.1 percent. Woodworth expects to see equally “decent” increases into 2007, although he predicts that “the rate of improvement is going to diminish. We are getting close to the peak [of the seller's market]. We may begin to feel more resistance to the overall level of price increases.”

Good Times

In the meantime, conference centers are experiencing some halcyon days.

“We're doing extremely well,” says Nancy Lindemer, sales manager for the Babson Executive Conference Center in Wellesley, Mass. Lindemer says business at Babson was up 15 percent for the first half of the 2006-2007 fiscal year.

Even with a seller's market, Lindemer says, “The basics haven't changed. We continue to operate off what the client needs. What are the objectives of the meetings? What are the dates? What kind of meeting-room usage do they need?”

The complete meeting package, a bundled price for room rate, meals, and services, is still “the standard unit of measure,” she says, adding that there is always some flexibility in the negotiations. “If we're using a CMP, but a client wants to do a dinner off-site one night, we can certainly facilitate that.”

Keri Pearlson, PhD, a research director with Concours Group, a business consulting and professional services company based in Kingwood, Texas, runs a leadership development program and uses conference centers more than 10 times a year. Because she provides volume, Pearlson says, Babson “will work with us on rates.”

“Volume still speaks,” Lindemer says. “And that's what a lot of organizations do by going through their purchasing departments. They're negotiating better rates by negotiating in volume.”

The Pacific Palms Conference Resort in Industry Hills, Calif., is also seeing substantial revenue growth — in the double digits in the past year, according to Michael Swyney, sales manager. He agrees that volume deals, such as series meetings, have the upper hand in rate negotiations, but adds that having date flexibility, or requesting additional services, can help. For example, because Pacific Palms is a resort conference center, by adding golf to a package, the planner can knock down the price of a round by 20 percent to 30 percent.

“We have these extra options so clients can look at us and say, ‘Great, we can leverage this.’”

Let's Get Creative

Faced with escalating rates, the more flexibility — and creative negotiating — a planner can demonstrate, the better. Lindemer has a client who contracted with Babson for up to eight meetings, without getting specific dates, while agreeing that if the meetings produce a certain amount of revenue for the conference center, Babson will cut its rates. “They get lower rates. We get a guarantee on revenue,” says Lindemer.

“When I can provide the volume, people are more than willing to work with you,” says Jessica Boyce, a meeting and event planner for Milford, Mass.-based Waters Corp., a maker of analytical equipment and software used by pharmaceutical, biochemical, and industrial industries.

One issue Boyce faces in negotiating with conference centers and other venues is that she is Waters' first dedicated planner and is in the initial stages of centralizing the company's meeting functions. Along with the other tasks associated with meeting consolidation, she has a paucity of information on Waters' history with its vendors. Waters' headquarters probably books about 30 meetings a year with local conference centers, and Boyce is still learning how that business has broken down in the past.

“I'll sit down [with a conference center representative], and while Waters is well-known, and the [conference center] knows we can provide some business, we really don't know the full volume of business,” says Boyce.

She also says that she won't be afraid to use prevailing local hotel rates as leverage. With a variety of hotel options available in her area, if she has a more attractive room option at a hotel but would like to hold the meeting at a conference center, “Why can't I leverage the hotel room rate against the conference room rate?” she asks. “Let's meet in the middle.”

A Relative Bargain?

Conference center room rates might be on the rise, but in relative terms, they look like a real bargain.

According to a report presented by Smith Travel Research at the 2006 International Association of Conference Centers annual meeting in Colorado Springs, Colo., despite the industry's healthy occupancy rates and room rate increases, those numbers have not come close to the levels achieved during the economic boom of the late 1990s.

The Smith Travel Research report found that the average conference center occupancy rate of 57.8 percent (for the 12-month period ending February 2006) was 5 percent less than that reached at the end of 2000. And the 12-month average room rate, as of February 2006, was $3 less than the average 2000 rate. Take inflation into account, according to Smith Travel Research, and conference centers would have to increase rates by an average of $30 just to meet those 2000 rates.