Winging It: Travel-industry woes go beyond airlines

The Philadelphia Inquirer (MCT) - The travails of the airline industry, brought on by the economic woes affecting us all, have received much of our attention recently. But it's not the only part of the travel business that's suffering.

Now, urged by travel-industry leaders, the White House has stepped in to recommend that Americans hit the road.

In droves, companies and other organizations have been canceling meetings, sending fewer salespeople out on the road, hosting fewer customer dinners, and withdrawing plans for reward trips to resorts for their best employees. U.S. hotel occupancy in the first quarter is likely to slip below 60 percent, a money-losing level for most lodgings.

The retreat from travel means a vast number of empty hotel ballrooms, conference centers, and restaurants, which in turn is resulting in layoffs for hundreds of thousands of workers in the hospitality business.

The biggest players in the travel business have teamed up to try to stop the bleeding, which they say has been exacerbated by politicians and the media bashing the lavish spending of companies that have received bailout funds.

The U.S. Travel Association, an umbrella group for the industry, says that thousands of meetings and events had been canceled in just the last few weeks because of the firestorm of criticism of Northern Trust Corp., a Chicago bank, and other recipients of federal aid.

Northern Trust, as part of its sponsorship of a professional golf tournament in Los Angeles in late February, spent hundreds of thousands of dollars on parties and gifts for those who volunteered to help with the event. American International Group Inc. and Bank of America Corp. have been blasted for similar spending. Northern Trust, a profitable bank, received $1.6 billion in TARP funds.

Given the near-depression atmosphere in the country, it's hard to know how much travel has stopped because of the economy in general, and how much because of political rhetoric and news reports about a few bad actors. But there's no doubt that it's easy to scare businesspeople into hunkering down right now.

In Philadelphia, no large meetings or conventions already scheduled have been canceled, but "people are nervous," said Jack Ferguson, executive vice president of the Philadelphia Convention and Visitors Bureau. "Instead of going to a hotel for a meeting, they're saying, 'We'll just do it in our boardroom and roll in lunch on a cart.' The true victims as the hospitality industry loses money are the hourly employees, the desk clerks, the waitresses, housekeepers, janitors, and bellmen."

In Washington, Northern Trust's behavior brought a demand from Democrats in Congress that the bank repay the bailout funds. President Obama has criticized other aid recipients.

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Northern Trust has defended its spending, saying that no bailout money was used for the golf tournament and that it would consult with federal regulators about repaying the funds it received.

Geoff Freeman, senior vice president of the U.S. Travel Association, said the legislators' attack on the banks' spending had "paralyzed the marketplace" by creating the impression that all spending on business travel was wasteful.

"Meetings and events have real value," he said. "It's not all about boondoggles and junkets. You end up spending a lot of time in windowless conference rooms."

The travel association and other industry groups started a "Meetings Mean Business" campaign that pushes back against what they called the "political demonization of business meetings and events." The campaign's Web site is www.meetingsmeanbusiness.com.

The groups emphasized that they want financial institutions that have received aid held to a higher standard than other private-sector companies are, with the recipients reporting how they are spending the public's money.

By last week, the industry's campaign appeared to be helping change the atmosphere. Obama invited more than a dozen of the travel executives, including the chief executive officers of every major U.S. hotel chain, to the White House to hear their plea. The industry leaders also met with 10 members of the Senate to press their case, Freeman said.

On Friday, Obama spokesman Robert Gibbs, answering questions from the White House press corps, said the president has tried to make it clear that he was not critical of all travel, meetings and events _ just some of those staged by banks using bailout funds.

Freeman added that the industry "couldn't be any more pleased" with the White House's support overall for the travel business, including legislation pending in Congress setting up a fund to promote the country as a place that welcomes foreign visitors. The Bush administration didn't support the legislation, he said.

As I reported last summer, the proposed Travel Promotion Act would pay for the effort using a $10 fee collected from all foreign visitors entering the country who don't already have to pay for a U.S. visa.

"The president appreciates the power of travel," Freeman said. "We think we have an ally in the White House."

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© 2009, The Philadelphia Inquirer.