Travel Industry Must Respond To Critical Test or Face Consequences - United States Travel Association

Bill Lupfer — Fri, 06 Feb 2009 18:00:00 GMT

Dear Travel Colleague:

Our industry is in the midst of extraordinary times. I hope you will take the time to read what the U.S. Travel Association is doing to address today's challenges and how you can help.

Overview

As the nation continues to suffer from one of the worst economic upheavals in our lifetime, the travel industry is facing its own challenges.

We saw in the aftermath of 9/11 that times like these can result in fundamental, long-term shifts in regulation, consumer behavior and overall perceptions. As the industry's trade association, we are prepared to optimize the operating environment as best we can and guard against trends that could affect your ability to do business.

Post-9/11, the travel industry was caught in the middle of a paradigm shift. At that time, accessible travel was viewed to be in conflict with our national security needs. Public attitudes turned against international travel to the U.S. and new regulations quickly followed. As a result, the U.S. share of global inbound travel dropped dramatically, with an accumulative loss of more than $113 billion in travel spending in the U.S. and an average loss of 194,000 jobs each year.

Almost eight years later, our industry still has not fully recovered.

Today, we are at the leading edge of another potential sea change, this time focused on meetings, events, incentives and other forms of business travel. We are at risk of seeing this sector of the travel economy, which also is responsible for millions of jobs and billions in economic revenue, suffer lasting harm. Already, we have witnessed dangerous shifts in public opinion and regulatory requirements that have driven changes in corporate behavior.

In the past several days we have experienced the following:

The Obama Administration added further pressure to corporate travel events by issuing new guidelines stating that "the boards of directors of companies receiving exceptional assistance from the government must adopt a company-wide policy on any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties, and conferences and events."
Senators Christopher Dodd (D-CT) and Dianne Feinstein (D-CA) have introduced separate pieces of legislation calling on the Treasury Department to provide additional regulations for companies hosting, sponsoring or paying for events and for expenses related to employee recognition events.
Wells Fargo & Co. abruptly canceled an incentive program for hundreds of employees who, through great performance, had earned a trip to Las Vegas. Although the trip was to benefit mid-level employees and was used as a substitute for cash compensation, it was portrayed in the media as a "junket" for wealthy executives. Lawmakers accused Wells Fargo of misusing $25 billion in taxpayer bailout money.
Hotels across the country are witnessing hundreds of cancellations from companies that have not received federal government support for the fear of negative media coverage.

These events and others have created an environment in which legitimate meetings, events and incentives are being portrayed as symbols of excess. This is a dangerous trend. If this public perception and the corporate response to it take hold, the travel economy could experience a lasting economic hit on par with the decline of international travel post-9/11.

Risks

We see the following substantial risks to the long-term operating environment for travel businesses:

Incentive travel perceived as symbol of excess: Incentive travel, long used as a cost-effective means of motivating high performance from employees, could become equated with excess. Companies may feel increased pressure to reduce or eliminate incentive travel programs.
New regulatory restrictions: This is a sea change environment, which almost always leads to new laws that overreach and yield unintended consequences. Legislation and regulation may be introduced that would limit the ability of companies to hold meetings and events, particularly if they have received federal assistance.
Temporary changes in travel policy become permanent: Reductions in business travel in response to economic conditions could become permanent, as companies begin to use new technology as a substitute for in-person meetings.

Should they become permanent, these shifts would have a long-term impact on every sector of the travel industry -- carriers, hotels, resorts, attractions, rental car companies, travel agents, online bookers and many others.

What We Can Do

In times like this, we must be realistic about what is within our ability to influence. Many businesses are reducing travel as a prudent cost management tool in tough economic times. Likewise, some forms of excess must legitimately be reigned in.

On the other hand, we have a responsibility to safeguard the long-term reputation of the industry, and do what we can to mitigate the temptation to demonize legitimate business travel and events. It is clear to us that the pendulum already is swinging too far.

To that end, the following areas are within our scope to influence:

Define the issue: Today, the definition has been one-sided. Critics have insinuated that business-related travel events are irresponsible, excessive and worse. Our task is to tell the other side of the story: meetings and incentive travel contribute to smart business growth, generate jobs and economic growth for local communities and reward hard-working Americans.
Demonstrate economic impact to communities: Business-related travel and events are the lifeblood of many local communities. Jobs, businesses and tax revenue are highly dependent on business travelers. When a company is pressured to cancel an event at the Greenbrier, the real victims are the people of White Sulphur Springs, West Virginia who support the resort's operation in various ways and the 650 waiters, bellman and others who recently lost their jobs. It is therefore incumbent on us to better define the economic consequences.
Manage the regulatory environment: We have already seen both regulatory and proposed legislation that would place new travel restrictions on companies receiving federal assistance. We believe that transparency and responsibility is absolutely necessary in this area. In order to ensure that new rules do not lead to unintended consequences, our industry would be well-served to proactively issue our own standards of conduct as a model for companies and the government. (Click here for release.)
Engage our members and partners: The U.S. Travel Association is working in partnership with the American Hotel & Lodging Association, Destination Marketing Association International, International Association of Exhibitions and Events, Meeting Professionals International, National Business Travel Association, Professional Convention Management Association and the Society of Incentive Travel Executives to ensure that the business community, media and policymakers hear a consistent message from across travel sectors. Similar engagement from grassroots activists across the country is critical to establishing the benefits of travel and the unintended consequences of additional government regulation.

In the coming days, you will hear more from us regarding the specific action plan we intend to initiate in order to manage the environment. This will include a host of tactics involving research, ally development, shoe-leather lobbying and a communications strategy for the travel community to promote effective messages to both the media and policymakers. And, of course, we will continue to work closely with and coordinate the various representatives in Washington who work with travel organizations in order to speak with a unified voice to the Obama Administration and Congress on these issues.

What We Will Need From You

Your engagement and support is critical. Lawmakers, opinion leaders and the news media will need to hear from you, and you can serve to personalize and localize the issues. Please share this overview of the issue with your colleagues and be ready to help us implement the action plan over the coming weeks.

At this critical moment in time, the travel community must pull together to speak with one voice and act collectively to deliver our message on the value of travel, and its benefit to businesses and the overall economy. By proactively taking these steps to communicate the value of meeting, events, incentive programs and other forms of business travel, we can "make it safe" for businesses to travel, and shorten the recovery period for the travel economy.

One thing is certain: if we don't aggressively tell the story, others will tell it for us.

Sincerely,

Roger Dow
President and CEO
U.S. Travel Association

Feb 6, 2009 2:00 PM

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Travel Industry Must Respond To Critical Test or Face Consequences - United States Travel Association