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The "AIG Effect" Hits the Miami Hotel Market Hard

By Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

March 4, 2009 - After the 9/11 attacks, vacationers were afraid to fly and South Florida hotels suffered. Now, the region's top industry faces another phobia, but this time it's well-paid executives leery of jetting off to glitzy destinations.

With Washington outraged over junkets by companies receiving federal bail-out dollars, even stable businesses don't want to seem lavish with their travel and entertainment budgets. That has led to a wave of scrapped conferences across South Florida at a pace not seen since the post-9/11 travel crisis.

"A third of the business we went into the year with has canceled," said Howard Karawan, the top executive at the Fontainebleau Miami Beach. He said public-relations concerns were to blame more than cash-flow problems, since the scrapped meetings were costly to the firms.

"They're paying cancellation fees to us and to the airlines," he said.

Though an issue since AIG first got called out for a pricey California retreat days after an $85 billion rescue by Washington, the backlash over corporate travel now has the hotel industry on a crisis footing.

On Wednesday, the travel lobby unveiled a more pugnacious tack with a "Meetings Mean Business" ad campaign.

"Want to lose one million more jobs?" states the headline on an ad produced by the U.S. Travel Association. "Just keep talking."

The "AIG effect" hits the Miami market particularly hard, given its reputation as a lavish destination with some of the country's highest room rates. Meetings account for 15 percent of hotel bookings throughout South Florida.

"We've worked so long and hard to have a sophisticated and upscale destination," said Miami-Dade tourism director William Talbert III. "Here we are -- and it's being portrayed as not acceptable to meet in this kind of destination."

The new campaign tries to link the backlash to unfair media coverage of alleged corporate wrongdoings, and instead touts the working-class paychecks behind the $101 billion meetings industry.

To that end, the travel lobby will launch a nationwide search for what association President Roger Dow called "our Joe the Bellman" -- a nod to the celebrity status of Joe "The Plumber" Wurzelbacher earned in the presidential campaign as a working-class icon.

Dow contrasted the ill will he sees facing the travel industry to the atmosphere after the 2001 attacks, when President Bush urged Americans to not let fear keep them from vacationing.

'After Sept. 11, you could stand up . . and say: 'Travel. It's good for America. It's patriotic,' " Dow said in a conference call with travel executives. "This is different."

A recent survey by Meetings and Convention Magazine found more than 20 percent of companies that have not received bailout dollars have canceled events "due to recent media and political attention."

Though aimed at congressional critics, the "Keep Talking" slogan could be read as a jab at President Barack Obama, who told a town hall audience on Feb. 9 that executives "can't take a trip to Las Vegas or go down to the Super Bowl on the taxpayers's dime."

As they ricocheted through the media, the comments crystalized the public-relations woes facing the travel industry. Las Vegas Mayor Oscar Goodman demanded an apology, and the travel lobby urged leaders in Washington not to increase the attacks.

"You're seeing a feeding frenzy right now. It's perilously close to becoming a witch hunt," said Geoff Freeman, senior vice president of public affairs for the U.S. Travel Association. "The economics are doing enough damage [to the travel industry]. The last thing you need is political pressure that compounds the economic problems."


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