Travel Is The Ultimate Stimulus
The hospitality business has been the subject of a lot of media attention in the past month, and most of the news hasn’t been good. Both the Wall Street Journal and the New York Times published lengthy pieces detailing how lodging business is hurting, primarily due to the economic slump but also because of the insidious beast forever to be known as the AIG Effect. What started out as backlash to American International Group for scheduling an ill-timed $443,000 incentive trip for top performers right after it got a $90-billon government bailout has become a new perception (nay, misperception) that travel is un-American in these troubled times.
Corporate groups are frantically canceling or scaling back meetings and conventions to avoid any appearance of frivolous spending while the country is feeling the pain of recession. It doesn’t seem to matter whether the companies are public or private, are in line to receive bailout money or not; they’re all choosing to err on the side of restraint. Even some hotel and travel companies are retooling or deep-sixing their annual conferences.
Obviously, the fallout from this insanity is particularly intense for any hotel perceived as luxury or even upscale. One CEO of a small four-star chain told me his properties are gaining meetings business in part because none of them have the words “resort” or “spa” in their names. Marriott says in the past five months more than 30 groups have cancelled meetings at the Ritz-Carlton Half Moon Bay near San Francisco. This desperate attempt by companies to preserve their images by not meeting has taken an extreme toll in the Las Vegas market where a number of high-profile companies abruptly cancelled meetings rather than face the glare of negative press. The situation has even taken an absurd turn or two: Goldman Sachs reportedly paid a $600,000 cancellation fee to a Las Vegas hotel to move a technology conference to San Francisco. The irony, of course, is it’s probably more expensive to hold a meeting in San Francisco than in Sin City.
The sad reality is this ugly trend will probably last for a while, even months or years beyond a recovery in the economy and the hotel industry, when in fact everyone should be encouraging more travel, more meetings and even more dreaded “junkets.” Travel is the cleanest, most cost-effective economic engine in any society. One could even say it is the ultimate economic stimulus.
I did read a story in the Times I found uplifting and with at least an oblique connection to the hotel industry. The story quoted an Indian journalist who proposed open immigration from his country to the U.S. His argument: Indians who come to America work hard, save their money and innovate in whatever industries they choose to join. While hard-core protectionists scoff at this notion, its truth can be found in the U.S. hotel industry, where Asian-Americans have more than made their mark on the business. One could say without fear of contradiction that Indian hoteliers are largely responsible for the unprecedented prosperity and profitability the lodging industry has seen in the past 20 years or more. I have no doubt other immigrants from the Asian subcontinent or elsewhere could have similar positive impacts on other American industries. Perhaps that’s the long-term solution to our economic troubles.
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