Although misinformed anti-corporate travel rhetoric is starting to subside in Washington, the media is still bent on keeping the controversy alive. Months of damaging negative press – often inaccurate – continue to haunt the meetings segment of the hospitality industry, which employs 2.4 million Americans and generates $240 billion in spending and $39 billion in tax revenue.
A great example of this is a local CBS affiliate’s implication that Caltrans employees lived it up on state funding at a luxury Palm Springs resort, which was hosting the American Association of State Highway and Transportation Officials convention Oct. 22-26. The report asserts that the trip violated non-essential travel banned by the State, but buries the fact that the trip was approved as an exception because it has been proven that these types of conferences not only foster collaboration, idea-sharing and generation, but provides an opportunity for California transportation officials to network with federal transportation officials and open up millions in federal monies for California road projects.
Although Caltrans had a reasonable answer, the station blew it up by implying that Caltrans misspent taxpayers money. They sent a producer undercover to film employees at the luxury resort, implying that Caltrans was echoing the misdeeds of the TARP companies that started the whole anti-meetings rhetoric. What reporters don’t realize is how the industry works, and I suspect they don’t care because the truth isn’t sexy.
The truth is that in general, even so-called upscale resorts offer government rates that match the agency’s allotted per diem budget – well below the hotel’s normal overnight rates, as well as group room night discounts, as an incentive for meeting planners to choose their hotel. So staying at a nice hotel doesn’t necessarily mean there is any wrongdoing. And, in this case, the goal was to secure federal funding, which the State of California sorely needs as well as the opportunity to discuss other key issues affecting the industry, such as advocacy, transportation’s role in global climate change and performance management strategies. The convention generated an economic impact of approximately $1 million to the Palm Springs region.
As chair of the U.S. Travel Association, I would like to set the record straight again about why business travel like this Caltrans meeting is not only legitimate, but also vital to our state and country’s bottom line. A recent Oxford Economics USA study shows that for every dollar spent on business travel, companies realize $12.50 in incremental value and $3.80 in profits. Just a 10 percent increase in business travel spending will increase our gross domestic product (GDP) by between 1.5 and 2.8 percent. More importantly, despite advances in technology, conference calls cannot replace the value of face-to-face meeting. In a recent survey of senior executives, 81 percent of respondents admit to sending e-mails while on conference calls, and 75 percent acknowledge having side conversations.
Over 70 percent of customers either require or prefer in-person meetings, and the same percentage sees travel as important to customer retention. Business travelers surveyed estimate that nearly 40 percent of their prospective customers are converted to new customers with an in-person meeting, compared to an average 16 percent conversion rate without an in-person meeting. Business travelers also report that meetings, events and incentive travel positively impact: morale and job satisfaction (79% each), job performance (77%), status within the firm (71%) and compensation (68%).
Although White House encouragement of business travel is a good sign, we still have a long road toward recovery. Fifty-two percent of respondents to a recent Meetings & Conventions magazine survey said that the mass-media backlash against meetings has influenced their companies’ decisions to hold events. With only 20 percent of the hotel market reporting, meeting and event cancellations exceeded $220 million for January 1 through February 28, 2009, alone. As meetings and events decline, local communities – nearly all of whom are dependent on visitor tax revenue – struggle to pay for essential services such as education, public safety and social services. As the largest economy in the U.S., California is particularly vulnerable. With $36 billion in annual business travel revenues, California will be one of the most affected states if our meetings and events segment continues to decline over the long term and, of course, push unemployment rates up even further.
To help CEOs, the U.S. Travel Association recently recommended a clear meetings and events policy that supports legitimate business and helps keep Americans employed. I urge corporate and government leaders in the Golden State and beyond to learn the facts about how appropriate corporate travel is part of a sound long-term business strategy. Go to www.meetingsmeanbusiness.com to learn about the ROI of corporate travel and to access tools to educate policymakers, opinion leaders, companies and especially the media on this important issue. Let’s stop the rhetoric – keep America meeting and therefore employed!