By Beth Kormanik Posted June 12, 2012, 5:21 PM EDT
When news broke about the General Services Administration’s $823,000 Las Vegas conference, many in the hospitality and event industry were thinking, Not again…
The scandal recalled the outcry after insurance giant A.I.G. spent more than $400,000 on a 2008 retreat at a luxury hotel—days after receiving an $85 billion federal bailout. The outrage had a severe ripple effect, with cancellations and downscaling of corporate meetings and travel. The fallout even earned its own shorthand, “The A.I.G. Effect.”
Now the question is what kind of effect the G.S.A. scandal is having on the industry and how long it will last. Already, the government has cut meetings and travel spending. In one example, the Air Force canceled its annual information-technology conference this summer in Montgomery, Alabama, which was expected to draw 6,000 attendees. The G.S.A. itself announced an agency-wide review of conferences and events. “Our commitment is to our service, our duty, and our nation, and not to conferences, awards, or parties,” acting administrator Dan Tangherlini said in a videotaped statement.
The details of the G.S.A.’s 2010 Western Regions Conference—including a clown and a mind reader—did not mesh with the idea of appropriate government spending. A photo of event organizer Jeff Neely lounging in a tub at the M Resort Spa and Casino on an advance trip also did not help.
“He is a bad apple in a bushel of good ones and valuable ones,” said Nancy D. Shaffer, founder and president of Washington-based Bravo! Events by Design. “I think that's what gets lost in this. … It feels that once again the industry is going to be created as a scapegoat. We're vilified because these types of things are seen as parties, and they're not. They're truly valuable business components of any organization.”
The conservative nature of Washington is playing a role in the response, said Eric Michael, owner of Occasions Caterers in Washington. Entertaining in the city is almost uniformly conservative, since public money or shareholders’ money is often being spent, he said, and now it’s become even more common to hear requests for “understated” and “low-key.”
“Meeting planners will be careful about the services and the mix of entertainment they're selling their clients,” Michael said.
The message to the events industry, Shaffer said, is that “there is no value in human interaction, there is an unrealistic understanding of what things cost, and how to represent value.” That, she said, may represent the industry’s failing to educate people on the value of in-person meetings and events, as well as what planners do. Spending tens of thousands of dollars on audiovisual equipment may sound expensive, but spread out over several days and sessions, it may not be. A seated banquet dinner will cost more than a meal at a restaurant, she said, and there are valid reasons for that.
Still, the wider industry has learned from past experiences. When the A.I.G. scandal broke, it took a while to mount a coordinated response. Eventually, several industry organizations came together with the “Meetings Mean Business” campaign, which showed the sector’s economic impact. Other changes included the formation of the bipartisan U.S. Senate Travel & Tourism Caucus last year.
The efforts helped industry advocates mobilize in response to the G.S.A. scandal. The Discover America Partnership, a coalition of hospitality groups, sent letters to every member of Congress acknowledging the inappropriate spending and noting that the G.S.A. event did not follow federal travel regulations already in place.
“We definitely hit the ground running right away,” said Lisa Costello, vice president of government affairs at the American Hotel & Lodging Association. “The Senate tourism caucus … understands they can't overreact because of the G.S.A. debacle. If they cut travel, they cut jobs, and that's not what the economy needs right now.”
For now, everyone in the events industry will have to accept working under greater scrutiny. That’s where a seasoned events professional can help.
“It's getting the right guidance that says, ‘Is it really worth doing this? Do we need $50,000 worth of audiovisual services?’ Most likely yes,” Shaffer said. “But do we need to have 27 sedans waiting out front that cost you a four-hour minimum, just in case? No, probably not. It's those types of things—what's important, what's valuable, and what's measurable? If you don't ask those questions, you can't do anything.”
Costello said the industry is fighting proposed legislation that would limit agencies from attending more than one meeting a year held by an outside organization. “It's really overreaching,” she said. “There's definitely ways to control costs and prevent waste, but it's about using regulations already in place. Having meeting planners is helpful. They know how to plan these meetings, cut costs and work with hotels. Regulations don't do it, people do it.”