Travel Industry: This Is No Time to Check Out
Efforts to Curb Corporate Excess Could Add to Sector's Pain
Friday, February 13, 2009; Page D01
Washington's attacks on corporate excess -- the private jets and trips to Vegas -- are prompting a backlash from the travel industry.
Hotel chains, jet makers and corporate travel managers say they are fearful that efforts to curb excesses by firms receiving government aid will only add more pain to an industry hit hard by the economic downturn.
"We've got to get away from the symbolism of corporate fat cats smoking a big cigar on a golf course and instead think about the symbolism of people meeting and thinking together and creating ideas and building their cultures," Marriott chief financial officer Arne Sorenson said yesterday in a conference call to discuss the company's weak earnings report.
President Obama has repeatedly urged Wall Street executives to show restraint if they expect government help. "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, " Obama said at a town meeting this week in Elkhart, Ind.
Those comments provoke a sharp response from the mayor of Las Vegas, Oscar B. Goodman, who said Obama's comments "reinforced the stereotype" that meetings in the city were wasteful.
"Tourism is a major industry and our lifeblood," said Goodman, who is fighting a city-wide unemployment rate of 9.1 percent. "My responsibility is to protect my constituents. I have to make sure everyone keeps their jobs, pays their mortgages and puts food on the table."
The tourism sector is not the only industry feeling bruised by Congress and the president. U.S.-based makers of corporate jets and parts, already stunned by the drop off in the business resulting from the global economic collapse, want the rhetoric in Washington to stop. They say their problems have gotten steadily worse since November when auto executives were excoriated on Capitol Hill for seeking taxpayer bailouts while flying pricey corporate jets.
"Most of us in the industry feel like we were victims of a drive-by shooting," said James Coyne, president of the National Air Transportation Association, an aviation lobby group. "We really haven't done anything wrong."
Rep. Todd Tiahrt (R-Kan.) said he spent last week trying to galvanize his state's congressional delegation and machinist union leaders to defeat legislation that would have forced companies receiving bail out funds to sell off aircraft.
Tiahrt's district is home to facilities that produce planes by Cessna, Hawker Beechcraft and Learjet, plus 150 machine shops that supply the industry. He said he expects job losses in south central Kansas to top 20,000. Among those recently put out of work was Tiahrt's nephew.
"We're already seeing some reduction in demand because of the economy," he said. "To compound it by having the government try to force the industry downward has not been helpful."
The rhetoric out of Washington is already altering travel plans. A prominent labor group this week attacked a banking and insurance association for scheduling a spring conference at the Marriott-owned Ritz-Carlton in Naples, Fla., where room prices can top $500 a night.
The dust-up led the Financial Services Roundtable, the banking group, to drop the Naples meetings, saying it would meet at a Washington-area hotel instead. Greg Denier, communications director for the labor group that lodged the protests, the Change to Win Federation, said the meetings were targeted because banks in the association were taking taxpayer bailout funds. He also cited a dispute over union-organizing legislation.
Such stories come at a time when many companies are pulling back because of the downturn. Marriott yesterday reported a $10 million loss in the fourth quarter of last year. In the previous year, Marriott earned $176 million in profit in the same quarter.
Chief executive Bill Marriott plans to speak with key lawmakers to plead the industry's case -- that business travel shouldn't have a negative connotation, especially considering the many hundreds of thousands of people employed in the industry, company officials said. After all, group bookings and business travel accounts for 80 percent of Marriott's business.
Hilton Hotels chief executive Christopher Nassetta has also said he is alarmed by events in Washington.
"We are deeply concerned about the recently announced restrictions and, through our industry associations, are actively engaged to ensure there is a comprehensive understanding about the benefits of the business of travel and meetings," Nassetta said.