'Boondoogle' image fears hit corporate travel

Washington DC
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Fear of damage to corporate reputations is making the US business-travel slump even more precipitous. Negative media coverage and congressional criticism of corporate meetings is creating "a paralysing environment", says Roger Dow, chief executive of the US Travel Association.

It comes as James Tisch, chief executive of luxury lodging company Loews Hotels' parent, said during an earnings call that Congress has "done a great job of killing the resort hotel business with the way they've criticised the number of financial firms for having conferences". He cited a further example that morning of another major investment firm cancelling an investor conference "because of the fear of being criticised by members of Congress".

Dow spoke as Wells Fargo placed a full-page advertisement in major US newspapers defending - but cancelling - all 2009 employee-recognition events. The bank received federal financial bailout money late last year, and so is subject both to congressional and public criticism and to proposed Treasury Department guidelines on meeting budgets.

It is those guidelines the US Travel Association is trying to head off with its own, less draconian code. The association, composed of eight travel and lodging groups, urged companies to adopt guidelines to identify a specific business purpose for events costing more than $75,000. They suggest no more than 10% of ­attendees at incentive-programme events be senior executives from the host company. Dow says: "How many large meetings are being cancelled because people are concerned about how they might be seen?"

Internal meetings are suffering the most, according to a new survey by the Association of Corporate Travel Executives. These meetings, often sales events or incentive awards, can take up as much as 40% of a company's travel budget, but are hardest hit by a relatively recent and dramatic fall-off in travel spending, ACTE executive director Susan Gurley says. She adds almost half of travel managers are attempting to re-negotiate their travel contracts with airlines mid-term.

Gurley says the trend is exacerbated by increasing interest in virtual meetings or teleconferencing among travel managers. A Gartner analyst, Steve Prentice, sees this alternative to flying as a real threat to the sector. It will grow enough over the next three years that "high-definition video-meeting solutions" will cost world airlines some 2.1 million seats a year by 2012. This new technology will cost the global travel and hospitality industry about $3.5 billion annually, Prentice predicts.

Click here for more on the recent fall in premium global demand