Does this sound familiar?
What is the price for X? Does that price include Y and Z? Well... it depends on if you do A, B, or C.
Do you not have a package rate? Oh sure! We take the total cost of all items you reserve and divide it by the number of people you expect.
Say what? So what if my final count is lower? Or higher? How is that a package rate?
Let's start at the beginning.
What is a Package Rate?
A package rate, or Complete Meeting Package (CMP), provides a single price point predetermined to encompass specific items and services, as its title suggests.
Simply, a CMP is a "package plan that incorporates all elements of a meeting: conference rooms, guest rooms, three meals a day, continuous refreshment service, conference support services, and basic A/V equipment. In non-residential conference centers, this package typically includes conference rooms, lunch, continuous refreshment service, conference support services, and basic A/V." (Emphasis is mine)
Everything is packaged together and tied up with a pretty bow.
Chances are many use what they think are package rates. But what they are calling packages is so far out to sea you can't even see land. CMPs are not taking all the rates reserved, adding it together, and dividing the total up by the number of people.
Here are a few tips to get back on track and row toward the creation of a CMP pricing structure as you enjoy your cup of coffee.
1: Should you create a CMP?
I know this sounds silly, but it is an honest question. If your department handles only one part of conference services, say meeting space, then a per participant package rate probably won't work.
2: What will the CMP include?
When looking at what to include, ask yourself several questions:
- Do your groups have an average length of stay? My guest groups were usually on-site for 2 nights, so I started there. You might go with 3 nights, 1 night, or 5 nights.
- What do you want to include in your rate? Look at what your guests ask about. Prior to CMPs, when quoting rates I was always asked if the housing rate included meals. As mentioned above, what about refreshments? Folks love their coffee and tea. I looked at all of this when creating the rate.
- Will your price include meeting space set up? Mine did, but I did not rely on auxiliary services or unions for room set up and take down. If you require an additional fee for set up, you might consider adding it in, especially if it is a set fee.
- If packages include meals, how many will be included? I do know there are many of you out there who handle catering outside of conference services. If you have decided to create a package rate without meal service, obviously this step will not apply. I went with 5 meals. Four was typical of groups staying 2 nights, but I started with 5 to be an overachiever. Hey, the only way to hear no is if you ask. You might make your package a daily rate that includes 3 meals (dinner, breakfast, and lunch - in that order).
3: Tiers work for pricing as well as cakes.
Don't think your pricing has to be just one rate, but then have options for every possibility; that defeats the purpose of a CMP and is impossible to predict.
Remember, easier, not harder.
Tier rates, as well as company type rates, are a great way to address multiple possibilities. In my previous life in conference services, we had 3 kinds of company rates: corporate, non-profit, and internal. Within each company type, we had 4 tiers depending on the housing reserved. Within each tier, there were 3 rates: Adult, Youth, and Child. I did group some of my buildings together in a tier: a room in my top building was the same as a single room in my second best building.
4: What will the CMP price be?
Great. You have a list of what you want to include, a framework if you will. Now, what will the price be? This can actually be the easy part. Add it all together. So lodging for one night, three meals, and a meeting room will equal this rate. And done.
Remember the note about set up fees? Be sure to include it here. Package pricing should make life easier, not harder. Include all static fees a group could incur; it will shorten your processing time in the long run.
5: What will be your internal guidelines?
Wait! We aren't finished yet. Be sure you have set policies and guidelines for staff, because you know there will be that ONE group that doesn't want 3 meals, they only want 2. How should your staff handle that?
The best tip I ever received was to back out any rates at the wholesale price.
So a group wanted to drop a meal, what was that meal worth wholesale? I would not back out the rate at the a la carte price, but at a wholesale rate of $5 per person per meal.
The reverse also applies. If you set up your rates for your average guest stay, what will your staff need to add to the cost for stays over your average? If your staff are not able to adjust rates, you will need to brainstorm what the process will be.
Again, easier, not harder. The point of a CMP is not to load your system with every possible pricing option, but your most common and adjust from there. What do 80% of your guest groups do?
6: Establish your external Terms & Conditions.
Be sure you have set up terms and conditions. You probably have a cancellation and guarantee policy (if not, that is a discussion for another day).
Never fear, there will be a guest that can't make it to your site by 6PM for dinner, so could you just adjust your rate for that one person? This is a slippery slope and defeats the purpose of package rates.
Think about it: When you register for a trade show or industry event, do you contact the hosting group to whittle down your registration fee to remove those sessions you know you won't go to? Or do you just pay the fee? When going to a movie, do you ask for a reduced rate because you won't watch the previews or use the bathrooms? Never be ashamed of your pricing and stick to the contracted rates.
7: Take a hike... now that you have the time.
There will be bumps in the road as you get started. You will refine pricing and package inclusions. But it is your business; do what is right and makes sense for where you are.
And find time for a hike with all the free time CMPs give you. Or sit on a beach.
When it comes to launching your new structure, you will probably be surprised at how smoothly it will be. Implementing our new CMP pricing was a lot easier than I had imagined. Because I was giving my prospects an all-inclusive price, there was little grumbling. My long-time guests did not see a drastic change and they appreciated one price and the simplicity of their final bill.
And always be sure to publish what your price includes, down to the walking paths on your property. After all, the rate they are paying provides them access to this.
Take time and think it through.
In my system I set up one- and two-night single and double occupancy package pricing for each housing tier for adults. I also had packages for youth (10-17) and children (2-9) at each housing tier for each company type.
What CMP pricing allowed me to do was:
- Empower my staff: With guidelines, they were able to adjust the rates when a guest group wanted a longer stay or to remove an item. I did not have to calculate out each time what the rate would be.
- Our rates and billing were consistent from staff person to staff person and group to group.
- Our guests also knew what to expect; pricing and billing were straight forward. The group leader received a predictable final invoice with simplified pricing. Did you have 125 people at this rate? Yes and we're done. Gone were the days of justifying my final counts.
- My proposal/quoting and billing process shortened drastically. After pulling in my original proposal, I could quickly tally each price (adult, child, youth, double, single, etc) and simply plug in the new numbers. Much less time than counting the number at each meal, then each housing price, and so on. And there was never a recalculation to the per person package rate when group numbers changed. The CMP was the contracted rate and that was that.
- Forecasting became much more accurate. By requiring groups to have a guarantee rate of 80%, my boss was able to more accurately see whether or not we would meet our budget and where we needed to increase marketing efforts.
If you struggle with invoicing and find it is one of your more time-consuming tasks, CMPs provide one possible solution to help in this productivity eating area.
Setting up CMP pricing can be a long task with many possibilities and decisions, but the effort was worth it.