PROFITS SOAR FOR CONFERENCE CENTERS

While 2005 was a good year for the hotel industry, it was a spectacular one for the conference center segment of the business. According to the newly released Trends in the Conference Center Industry study, revenues for the segment increased last year by 13.7 percent, while profits soared by 39.2 percent.

PKF Consulting publishes the study in conjunction with the International Association of Conference Centers.

While the news is certainly good for these properties, the business is undergoing some changes, notes David Arnold, CEO-East of PKF Consulting. Most notably, says Arnold, there has been an increase in institutional ownership of conference center facilities, a generally positive trend that also presents some challenges for the segment.

“An interesting dilemma is brewing within the conference center segment,” says Arnold. “The pressure is on to produce short-term profits to meet the needs of institutional owners with five-year exit strategies. This differs from the industry traditionalists who prefer to stick to their strict principles over the long run in order to preserve the unique competitive advantages of being an IACC-certified conference center.”

The report noted a growing revenue contribution from non-conference demand sources. In 2004, about 69 percent of all guestrooms occupied in conference centers were booked as part of a conference package. Last year, that share dipped by nearly two percentage points, reflecting an increase in business from non-conference leisure and transient sources.

“Care should be taken by these owners not to jeopardize the golden goose of conference business specialization for the sake of short-term gains,” says Arnold.

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