Remember when the CEOs of Ford, GM and Chrysler flew their private jets to D.C. to ask for bailout money? Regular readers of Bernays Sauce may recall our appalled reaction. As we said in that post:
It would also seem that their public relations advisors are either too "in the bubble" or too powerless to point this [the PR fallout of using private planes when asking for public money] out to their bosses. This kind of tone deaf handling of a crisis situation could very well be a nail in their coffin when trying to shore up public support for a bailout. These guys apparently learned nothing from AIG, where executives of the bailed-out-by-taxpayers insurance behemoth met at swanky resorts.
We all know now the terrible reaction and humiliation the CEO's rightly suffered for their boneheaded travel choices. It's unfortunate that their thoughtlessness may have done fatal damage to their companies, and by extension their employees and the overall economy.
A similar situation is brewing in the travel industry, where the boneheaded actions of a few may well cause serious harm to countless others. Take the aforementioned AIG, for example.
It would seem that the “AIG Effect” has caused serious collateral damage for the event planning, conference, travel and hospitality industries. An article in the Miami Herald illustrates:
In past years, partners of global executive search firm Stanton Chase conducted business meetings in South Africa during a long trip with their families that included a safari. They also enjoyed Sydney during a gathering at the Australian city's Ritz-Carlton.
But next month, the firm's partners will huddle at a Marriott in the suburbs of Nashville, chosen partly for its access to low-cost Southwest Airlines, says Mickey Matthews, a Stanton Chase executive. The firm is also overlapping meetings to avoid the expense of flying people out twice.
Today, "practical" has replaced "memorable" as the buzzword in high-end business circles. Companies are canceling splashy events and lavish business dinners or revamping the way they plan them. The new mood means drastic changes for employees who've come to expect five-star treatment, as well as hoteliers and travel planners who base their businesses on such meetings and incentive travel trips.
They've even coined a new phrase for the trend: "the AIG effect."
It comes from the embarrassing disclosure last fall that struggling insurance giant American International Group had spent about $400,000 on a retreat at a luxurious St. Regis resort and spa after taking an $85 billion federal bailout. After that, hoteliers saw mass cancellations or postponements of previously booked upscale trips and meetings.
Businesses usually cut back on luxury travel spending in tough times, but new image concerns raise additional worries, says Bjorn Hanson of New York University.
"There's not many companies out there that want to see their name on the reader board in a four-, five-star hotel nowadays," he says.
Geoff Freeman, U.S. Travel Association vice president, put it more bluntly in an interview with the online trade pub Travel Weekly: “We’ve become a target.”
He explained that President Obama’s public shaming of bad corporate actors has had a dampening effect on business travel by giving an angry public something tangible to heap their scorn upon. This leads to pressure on lawmakers who in turn lash out at the perceived "epidemic," thus continuing a cycle damaging to the industry.
We all need to help take the pressure off policymakers by doing a better job of cooling the public outcry [over perceived or truly extravagant travel spending], by explaining better the value of meetings and events. We need to help people understand who the real victims are if travel is cut. It is not the top executives.
We have to be better because elected officials respond to the calls they get. Also, companies that are taking government loans say they want help in reducing the risk [of bad publicity] when holding meetings and events demanded by their businesses.
Part of that public education effort is Keep America Meeting, a PR campaign started by the U.S Travel Association in conjunction with TBA Global, a privately-held agency that "creates nontraditional marketing and communications programs, events and meetings for high-profile businesses and associations worldwide."
Their press release lays out their case:
Two days after the U.S. Travel Association and industry leaders from key organizations issued guidelines for recipients of TARP funding, members of the meetings, events and incentive travel industries have banded together in a grassroots effort to draw attention to the important role meetings play in building successful businesses, as well as the vital role meetings, events and incentive travel play in the American economy.
According to the U.S. Travel Association, meetings and events are responsible for 15 percent of all travel-related spending, create nearly $40 billion in tax revenue at the federal, state and local level and generate more than one million jobs. Without the jobs generated by meetings, events and incentive travel, the current unemployment rate of 7.6 percent would rise to 8.2 percent and cost the average American household an additional $136 in taxes annually.
The campaign asks supporters to go to its website and sign an online petition. The petition signatures will be delivered by Keep America Meeting to the U.S. Travel Association and industry leaders from key organizations to fuel industry-wide efforts with the White House and the U.S. Congress.
The travel industry has moved swiftly to respond to this damaging public relations situation. However, it will take some mighty cool breezes to chill the white-hot fervor of Americans frustrated by the seeming impunity of “wealthy fat cats.” We agree with the Keep America Meeting strategy of educating the public about the jobs that will be lost—jobs held by “ordinary,” non-wealthy Americans.
Bernays Sauce has conducted interviews with business travelers and special event experts about the economy’s effect on travel. We’ll get into their take on this situation as well as cover some information on the value of meetings in our next post.
In the meantime, what do you think of the “AIG Effect” backlash and the efforts at damage control?