'AIG effect' difficult for hotels to overcome

The Record (Hackensack N.J.) (MCT) - Steve Rudnitsky can cite lots of good reasons for companies to have meetings at off-site locations: They motivate employees and build unity without the everyday distractions of the regular workplace.

But, as Rudnitsky has discovered after six months on the job, getting companies to invest in off-site meetings can be a tough sell in the middle of a recession, especially in the age of AIG. He took over as president and chief executive of Dolce Hotels and Resorts, the Montvale, N.J.,-based hospitality company, in September, just as the lingering economic slowdown was accelerating.

American International Group Inc. is the biggest benefactor of government largesse in recent months, receiving $173 billion in bailout funds.

In September _ long before the insurance giant generated criticism for big bonuses for executives _ it spent $440,000 for an all-expenses-paid weeklong trip to a posh resort and spa in Monarch Beach, Calif., for some of its top performing agents.

That brought a "scolding" from President Obama, criticism from Congress, and what has become known in the industry as the "AIG effect." It put an immediate kibosh on such business gatherings, even those at less expensive locales, such as many of the 23 properties operating under the Dolce umbrella.

"There's no question our locations are far more prudent and politically correct than the kind in the AIG scenario," Rudnitsky said.

But with the negative spotlight on AIG, "other major corporations jumped on the bandwagon and canceled meetings," Rudnitsky said. "It sure did have an effect on us."

Since AIG, bookings are down at Dolce, and some that are coming are staying for less time, he said. "Everybody is off double digits."

As a result, Rudnitsky predicts "very anemic numbers" for the first quarter of this year and thinks the slowdown could extend into the first or second quarter of 2010.

But rather than wait for a recovery, he has taken a page from the federal government's playbook by launching the company's own economic stimulus _ lowering some prices for advance bookings to attract new business.

"Days of the $500 bottle of wine are gone," he said.

"Given the nation's ongoing economic challenges, bold action is warranted to support our meeting clients," Rudnitsky said.

"Our practical locations and focus on results-oriented meetings provide a fiscally responsible formula for bringing people together to achieve their business objectives."

The package is available at participating Dolce properties in North America through Dec. 31 for functions booked by March 31.

The effect goes beyond Dolce, which is why the industry is fighting back.

Last week, the U.S. Travel Association launched a "Travel Means Business" marketing campaign to counter what the trade association's president says is an attempt by politicians to turn the travel business "into a political punching bag."

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And the Las Vegas Convention and Visitors Authority ran a full-page ad last week, extolling the fact that "serious business is done here every day," even though the city "is more fun than any other place on the planet."

"With their political rhetoric and short-sighted legislation, Congress is sending a message to recipients (of federal stimulus funds) and every other business that Congress doesn't want those meetings to happen," the travel association says in a print ad.

"The results are predictable. Thousands of companies _ not just (stimulus) recipients _ are cancelling their meetings out of fear. For every meeting that is cancelled, jobs are lost _ it's that simple _ and it's happening all across the country."

"The overwhelming majority of business meetings are not for senior executives _ they are for top salespeople, high performing employees and valued customers and business partners," the travel association says. "Business gets done and companies grow because of these meetings and events."

That's the gospel according to Rudnitsky.

Employee gatherings away from the everyday distractions of the office break down artificial barriers, he said.

"Meetings are the glue that can bring people together, to re-energize everyone to achieve objectives for the company," Rudnitsky said.

"Training is the central component for staying effective, to keep everyone sharp and updated on products and services," he said. "Meetings should be encouraged."

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