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San Diego Hotels Experiencing Cancellations from the
 Newest Corporate Sin - Meetings and Events
By Penni Crabtree, The San Diego Union-TribuneMcClatchy-Tribune Regional News

March 6, 2009 - Public outrage over corporate bailouts has politicians taking aim at business trips and other perks enjoyed by free-spending executives on taxpayer dollars.

Unfortunately, it's not just ailing American International Group or General Motors in the line of fire.

Hotels, airlines, meeting planners and others that cater to conventions say Congress is demonizing all business travel, causing image-conscious companies to cancel millions of dollars in related business.

Locally, several hotels have had companies cancel events, citing "perception" issues. Among them is the Hotel Del Coronado, which last month sued a law firm over cancellation of a meeting that allegedly cost the resort a minimum of $486,549 in lost revenue.

The meeting backlash began in October after Congress learned that AIG spent more than $400,000 for a corporate getaway at a swank California resort, days after the company was rescued with an $85 billion government loan.

Other flashy business expenditures by recipients of funds from the Troubled Asset Relief Program were then revealed, leading lawmakers to propose legislation to curb spending that is deemed lavish.

Then, last month, an exasperated President Barack Obama, taking aim at bloated executive-compensation packages, warned: "You can't get corporate jets, you can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime."

As far as the beleaguered hospitality industry is concerned, those are fighting words.

This week, the U.S. Travel Association unveiled a "Meetings Mean Business" ad campaign designed to counter negative perceptions of corporate meetings and to remind politicians that the hospitality industry employs millions of mostly working-class, hourly wage earners.

"Want to lose one million more jobs?" says the headline on an ad running this week in various newspapers. "Just keep talking."

"We appreciate that during difficult economic times, businesses will cut back and look hard at all their expenses, including travel," said Geoff Freeman, senior vice president of public affairs for the USTA. "But what we are not prepared for is the U.S. government to tell people not to buy the product.

"It's a new Washington. Tobacco, liquor and meetings and events -- that's the newest sin, meetings and events," Freeman said.

A survey last month by Meetings and Conventions magazine found that while only 9 percent of 135 respondents work with or for companies receiving federal bailout money, 21 percent reported their companies canceled events as a result of the public backlash.

Jerry Morrison, a La Jolla hotel consultant, said that in the current climate, "conspicuous consumption is looked down upon."

"There is no question there is a feeling in the world that it's OK to travel if you stay at a Hilton Garden Inn but not at a Four Seasons," Morrison said. "The irony is that in bad times, the rates at a Hilton Garden Inn and Four Seasons might be relatively close.

"And if you can't get a great deal in Las Vegas these days, I'd fire whoever is arranging the business meeting."

Morrison said he is skeptical that companies are influenced much by politicians. Decisions to hold or cancel meetings are based on economics, and when image comes into play, the company's concern is usually how it is perceived by its employees, he said.

Still, one glance at the latest hotel occupancy numbers is enough to see why many in the industry are fuming.

During February, hotel room occupancy in San Diego was at 66.4 percent -- down 11.5 percent from a year earlier. Revenue per available room, or RevPAR, an important gauge of hotel financial health, was $83.56, a 17.5 percent drop.

Other cities fared worse. In New York, occupancy dropped 15.7 percent, while RevPAR fell 31.6 percent. In San Francisco, occupancy dropped 18.2 percent and revenue per available room fell 33.5 percent.

Although the sagging numbers reflect the stricken state of the economy, industry experts say the rhetoric out of Washington, D.C., doesn't help.

Popular business travel destinations such as Las Vegas, New York, Hawaii and Orlando, Fla., are particularly vulnerable, as are resorts with luxury brand names. Local hotel owners say San Diego won't fare as badly as some cities, in part because it has few major corporations with headquarters here. But the region is not immune.

Bill Evans, general manager of Evans Hotels, said the company's luxury resort, The Lodge at Torrey Pines, recently lost about $1 million in business after a Fortune 500 company called off a weeklong event.

The firm, which Evans declined to name, had not received TARP funding but feared any perception that it was not counting its pennies, he said.

"Some people are canceling for the right reason, because business isn't coming in and they have to manage costs," Evans said. "But to have other companies cancel because of 'perception' -- that they might get outed -- is beyond unfair because the meeting industry actually supports hard-working American jobs."

The Hotel Del Coronado took the unusual step of suing the law firm of Akin Gump Strauss Hauer & Feld after the firm canceled its meeting for next month. The law firm did not respond to requests for comment.

Todd Shallan, general manager of the Hotel Del, said the law firm indicated to one of the resort's salespeople that the cancellation was partly because of "perception."

"I'm not sure how perception applies to a national law firm that is very successful and has been holding meetings for dozens of years," Shallan said. "In our opinion, it's a contractual obligation."

While awaiting the case's resolution in court, Shallan said he's hoping politicians will weigh their words more carefully.

"The truth is that meetings are a great way to do business; they aren't boondoggles," Shallan said. "Congress is making a big mistake."

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Copyright (c) 2009, The San Diego Union-Tribune

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