LOS ANGELES — The politicized chill on business travel coming out of Capitol Hill and the Obama Administration this week has frosted leading travel and hospitality groups whose industries are seeing their revenues fall into a deep freeze.
Amid a crippling recession and a political environment hostile toward travel perks, corporate and meeting-related event travel have gone into hibernation — much of it based on fear. Airlines, hotels, resorts, conference centers, casinos, ground transportation companies, and travel-related hospitality services nationwide are reporting declines in visitors and clients. Representatives from these business sectors believe at least some of the downturn can be blamed on the collateral damage of posturing politicians bad-mouthing corporate travel overall as they excoriate a handful of high-level executives for lavish perks, bonuses, and amenities.
What’s more, many corporations that are financially sound and not in need of bailout funds are canceling travel, trips, meetings, and conventions out of an overblown fear of appearing lavish. In this spend-shy environment, staying put and teleconferencing have become miserly status symbols while corporate travel smacks of being insensitive and politically incorrect.
The U.S. Travel Association estimates that the business travel, meetings, and convention segment of the economy is $740 billion annually. The Departments of Labor and Commerce report that 200,000 travel related jobs were lost in 2008, and estimate an additional 247,000 jobs will be lost in 2009.
A major focal point of ire is proposed legislation by Sen. John Kerry, D-Mass., that would heavily regulate allowable business travel by companies that receive money from the Troubled Asset Relief Program (TARP), designed to bailout financially troubled companies deemed essential to long-term economic stability and recovery. It would prohibit recipients of funds authorized by TARP from sponsoring, hosting, or paying for entertainment or holiday events during the calendar year, or the next occurring calendar year, in which TARP assistance was received.
In the past week, the following industry groups have issued statements, e-blasted members, written Congressional representatives, circulated online petitions, and/or contacted media outlets: National Business Travel Association, the U.S. Travel Association, President and Meeting Professionals International, Taxi Limousine and Paratransit Association, LA Inc., and the Los Angeles Convention & Visitors Bureau.
Among chauffeured transportation groups, the Greater California Livery Association was first out of the gate with e-mails to its members, letters to politicians, and inter-industry correspondence. The GCLA also posted a proposed news report that is drawing comments and posts from operators.
GCLA President Alan Shanedling wrote a March 13 letter to Sen. Kerry that stated: “The intent of your legislation is laudable. The result is having a devastating impact on our industry. As you know all to well, in politics perception is reality. You would be amazed, and I trust dismayed, to learn of the impact your legislation is having on the California economy. Like your home state of Massachusetts, California’s economy is, in large measure, based on robust tourism. The dampening affect of your legislation is resulting in numerous cancellations of meetings, conferences, conventions, and trade shows.”
GCLA First Vice President Jonna Sabroff wrote a letter to Rep. Bill Pascrell, D-N.J., stating that Kerry’s legislation would be “catastrophic for the travel industry/meetings and conventions, as well as the major convention cities e.g. Los Angeles, San Diego, San Francisco, New York, Chicago, Atlanta, Las Vegas, Miami, etc. I would appreciate your suggestions about what we should do to stop this legislation as it will be catastrophic for the U.S. economy in terms of loss of jobs and revenues for the cities.”
The troubled travel industry and its effects on chauffeured transportation will be a hot topic tonight at the GCLA’s monthly meeting in San Francisco, where Shanedling and Sabroff will update members about the situation.
Two websites provide updates and resources on this issue: Meeting Industry Crisis Center and Meetings Mean Business.
Meanwhile, the National Limousine Association, the leading voice of the chauffeured transportation industry, announced a three-pronged strategy Tuesday afternoon that complements travel and hospitality industry efforts already underway.
NLA President Ron Sorci said the NLA has been coordinating with its Capitol Hill lobbyist, Louie Perry of Cornerstone Government Affairs, on the business travel issue. Sorci described the three-part strategy to LCT:
• The NLA fully supports the leading role of the U.S. Travel Association in assembling a consortium of industry groups to fight harmful legislation coming out of Washington, D.C.
• At its board meeting in Chicago on March 31, board members will consider a motion to officially become a dues-paying member of the USTA and to benefit from and participate in their educational efforts as well as help get the message out.
• NLA counsel Michael Morrone of Keller and Heckman LLP will compose a draft letter that can be personalized by members to send to their Congressional representatives and U.S. Senators. The draft letter, to be e-blasted from the NLA office to all NLA members, will specifically address the Kerry legislation and its effects on the chauffeured transportation industry.
Sorci has received consistent reports from operators in many major cities that their revenues are down 20% to 50%, compared to last year. While much of that downturn comes from TARP recipients cutting back or cancelling business travel, a significant amount also can be attributed to “non-TARP recipients who feel it’s politically correct not to be using luxury hotels and luxury vehicles,” Sorci said.
“If the legislation goes through, it will have a huge negative impact on where we head from here,” Sorci said.
Source: Martin Romjue, LCT Magazine