A Defining Moment

Bad press and misinformed lawmakers create an opportunity for a unified industry to prove its worth and help its members succeed.
By Jessie States

March 2009
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Cooling October winds last fall ushered in salacious media stories of corporate travel "atrocities" and meeting cancelations by hundreds of corporations. Apprehensive as news worsened, Christine Duffy of Maritz Travel called Roger Dow, chairman of the U.S. Travel Association, to rally support from one of the industry's most powerful organizations.

Those urgent conversations would eventually lead to an unprecedented collaboration among meeting organizations and associations, an alliance that just might give the industry the backing it needs to not only combat fallacious media reports and hollow congressional inquiries but also to assemble the data to prove its worth to corporate executives and bring meeting professionals to the c-suite.

In the coming months as congressmen interrogated executives from companies that had received emergency financial bailouts, Dow and Duffy forged an unparalleled alliance, working urgently to unite an industry long fragmented into regional and sector factions.

In December, a group of the industry's flagship organizations (including MPI) formed the progressive Meeting, Event and Incentive Travel Coalition and placed retainers on marketing and lobbying firms in Washington, D.C., to fight back against a biased media corps and pressure from U.S. lawmakers.

The coalition, led by Dow and the U.S. Travel Association (formerly the Travel Industry Association), now provides a singular voice for the industry and communicates the sector's message to the government, the media and any number of quasi-related groups from corporate boardrooms to airlines to chambers of commerce to unions. Industry attorney Dr. Jonathan Howe of Chicago-based law firm Howe & Hutton says the goal is to generate recognition in Washington, D.C., and beyond for the industry, its goals and its economic influence.

In mid-January, MPI and a group of industry leaders met at the Professional Convention Management Association's annual conference in New Orleans, committed to an inter-association task force and agreed to raise US$1 million through their foundations to conduct an exhaustive 12- to 18-month study of the U.S. meeting industry.

The MPI Foundation just last year completed a comprehensive report on the industry in Canada, finding that the sector contributed an overall output of CAD$71 billion and fueled 235,500 full-time jobs. The report was heralded around the world as a first-step initiative toward global recognition. Now industry associations will generate data for the U.S. market, and the results will come none too soon, as the public looks to make meetings a scapegoat for corporate greed.

Meanwhile, media pressure found its way to Washington, D.C. Lawmakers began to misconstrue both the purpose and advantage of meetings and events in corporate America. On Jan. 6, Sen. Dianne Feinstein (D-Calif.) introduced the TARP Transparency Reporting Act (Senate Bill 133), demanding accountability from financial institutions receiving federal rescue funds. (TARP stands for Troubled Assets Relief Program, and most U.S. banks and asset management firms have received some modicum of funding.) If passed, the act would require the U.S. treasury secretary to develop corporate governance principles and ethical guidelines for TARP recipients, specifically regarding "the hosting, sponsorship or payments for conferences and events."

On Feb. 4, the U.S. Treasury issued its own regulations on executive compensation for bailed-out companies, which included somewhat vague restrictions on meetings and events and pre-empted the legislation proposed by Feinstein a month earlier.

"The boards of directors of companies receiving exceptional assistance from the government must adopt company-wide policies on any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties and conferences and events. This policy is not intended to cover reasonable expenditures for sales conferences, staff development, reasonable performance incentives and other measures tied to a company's normal business operations."

The next day, the U.S. Senate approved by voice vote an amendment proposed by Sen. Chris Dodd (D-Conn.) making treasury department review of bonuses and incentives for TARP executives retroactive.

Duffy says the treasury gave industry leaders about three days to issue their own guidelines. She and Dow immediately coordinated efforts among the associations that had met in New Orleans, drafting a set of strategic regulations for meetings and events held by TARP recipients. Dow presented the guidelines to the treasury department and released them to the national press on Feb. 9 in Washington, D.C., while attendees at MPI's MeetDifferent in Atlanta contemplated the industry's future.

MPI's event moved attendees and online viewers across the globe, commencing with an unprecedented One+ Real Time opening general session that merged theories and perceptions from international economist Don Reynolds with specific initiatives and ideas from the very people behind the industry's singular collaboration. An impromptu session with Duffy and Howe drew hundreds of attendees, eager and anxious about their futures and the future of their industry.

By and large, leaders at MeetDifferent advocated cautious optimism, effusing that the no-doubt turbulent present presents an unparalleled opportunity for the industry to define itself and its invaluable economic and business contributions.

The proposed guidelines for TARP beneficiaries spoke for themselves, requiring bailed-out companies to ensure that 1) conferences or events with costs exceeding $75,000 be supported by written business cases with specific purposes and positive returns on objective; 2) no more than 10 percent of incentive attendees be senior executives from host organizations; and 3) total annual expenses for meetings, events and incentive/recognition travel not exceed 15 percent of total sales and marketing spend.

Duffy expects that non-TARP-funded organizations may also adopt the regulations, though these businesses may alter the metrics based on industry and company size as well as market sector. And Howe says that the regulations could spread to any organizations working with government agencies-not just companies that received emergency lending. Global industry professionals continue to eye their U.S. peers, watching for any regulations (like Sarbanes-Oxley) that might easily jump borders.

Meanwhile, the U.S. industry is working to collaborate and rally like never before. Duffy calls the events of the past months a "defining moment for the industry," offering a singular opportunity to speak with one voice and collect the proof necessary to prove the vast power of meetings and events on the national-and ultimately global-economy.

"Meetings are the primary way for businesses to facilitate discussion, and to lump this industry under the cloud of executive greed is wrong and unfair," Duffy said. "The reality is that we were not prepared to react to the crisis in a speedy manner. But, as in anything like this, there is always a silver lining. The opportunity is now there to contribute in a different way."

Howe said it is impossible to unscramble the egg. "We just need to make sure no more eggs get broken." But in order to protect, foster and build upon what remains, the industry will have to create meaningful dialogue with the fourth estate-the press.

It won't be easy...

Dealing with the Media
After bailout, AIG executives head to resort alleges an early October WashingtonPost.com headline. Beneath it, anonymous readers sound off against the audacity of AIG executives, who had just received $85 billion in credit from the Federal Reserve Bank of New York.

"Thanks for the facials and salt rubs, U.S. taxpayers," reads one post from a user identified as AIG VP. "They were thoroughly enjoyable." Other readers protested the "gullibility of Congress," "immoral businessmen," free market capitalism and the "fat cats" on Wall Street.

"Somebody better go to jail over this," wrote tiredofpaying. "I'm sick of spending my money for someone's booze and drugs (or brandy and massages)-there's not much difference in the people who gladly take from us working people and expect more."

But the event wasn't an executive retreat. It was a meeting held by one of AIG's subsidiaries for independent life insurance agents. Only 10 AIG employees even attended the trip, and none were executives from headquarters. If the meeting had been terminated, the company would have lost out on key strategic business initiatives; the city (Monarch Beach, Calif.) would have lost thousands in tourism dollars and hotel taxes; and taxi drivers, wait staff and hotel housekeepers would have lost shifts, income and potentially jobs.

Duffy recalls that corporations were not canceling meetings because of the economy or lack of need, but because of public perception and fear of governmental reprisal. AIG certainly wasn't out of hot water. On Oct. 10, the company canceled all nonessential conferences and meetings, travel and overhead. In the coming weeks it slashed more than 160 events. Still, an early November meeting in Phoenix drew national ire, despite the fact that it was a seminar for independent financial planners with 90 percent of costs paid by sponsors and attendees.

On Nov. 11, AIG Chief Edward M. Liddy issued a statement decrying the press coverage of the strategic event. The 150 attendees had generated about $200 million in revenue for AIG that year alone.

"This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer," Liddy said.

AIG wasn't the only company insistently hacking at its corporate meeting schedule. Goldman Sachs, U.S. Bancorp and Primerica are among hundreds of companies that slashed events in the coming months-when, in fact, research shows that 53 percent of marketing and sales managers think event marketing is the best way to accelerate and deepen relationships with target audiences (EventView 2009, MPI).

"Meetings and events drive business results and are critical to rebuilding the economy," said Bruce MacMillan, CA, president and CEO of MPI. "By restricting businesses from prudently using meetings and events as part of their business strategies, we are paralyzing them and inhibiting economic recovery."

Nevertheless, in November, planners predicted that their meeting budgets would fall by 6 percent this year (FutureWatch 2009, MPI). Research released by the Association of Corporate Travel Executives in February indicates that 71 percent of member companies will spend less on travel in 2009.

But the media remain unconvinced. In late October, Wells Fargo and Co. was forced to accept $25 billion in the form of a preferred stock purchase by then-Secretary of the Treasury Henry Paulson. The company had not asked for funds. Some three months later on Feb. 3, the Associated Press pounced, running a sensational and misleading piece: BAILED-OUT WELLS FARGO PLANS VEGAS CASINO JUNKETS. The so-called junket? A four-day business meeting and recognition event for Wells Fargo team members who-in 2008 alone-produced $230 billion in mortgage loans for U.S. homeowners. The company promptly canceled the event to avoid further backlash.

"The problem is many media stories on this subject have been deliberately misleading. These one-sided stories lead you to believe every employee recognition event is a junket, a boondoggle, a waste, or that it's for highly paid executives," said John Stumpf, CEO of Wells Fargo & Co., in an ad strategically placed in several highly respected newspapers early last month. "Who loses besides our team members? The workers who depend on our business. The hospitality industry. Hotel housekeepers. Restaurant servers. The airlines."

It now falls to the newly formed Meeting, Event and Incentive Travel Coalition, with Dow at the helm, to spread that industry messaging through direct and indirect lobbying and communications campaigns in Washington, D.C., as well as to the leaders of the country's mega-corporations.

"We must share that positive story," Dow said. "We have not, as an industry, done our homework, and shame on us. That's what we're doing now-getting the research, defining what the economic impact is and what the value of these meetings is."

Dow recalls a phone call from financial news service Bloomberg.com, requesting a quote following the cancelation of a U.S. Bancorp meeting at a Ritz-Carlton in Florida.

"I said, 'They're not stupid, they planned that meeting and it had great business results, but you scared the dickens out of them and they canceled it and it had a great business purpose.'"

It's this reality that the travel coalition faces as it urgently works to repair the industry's reputation and educate lawmakers, corporate executives, the media and the public on the intrinsic value meetings have on not only local communities but on the business bottom line. The travel coalition has planned a 12-month, three-platform campaign to help people understand the business impact of meetings and events, examining the industry's impact on the economy, local communities and individuals.

"I don't think that people in Washington, D.C., have connected the dots that jumping on this bandwagon and saying that people should not move forward with their meetings and events actually puts more people out of work," Duffy said. "And the people that they're likely to put out of work are not senior executives."

The U.S. Travel Association estimates that meetings and events are responsible for 15 percent of all travel-related spend, create nearly $40 billion in tax revenue and generate more than 1 million jobs, without which 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.

Yet, the media have failed to embrace the numbers, and according to MPI's MacMillan, the meeting industry is under attack. He says that misguided public perceptions and proposed government regulations threaten jobs, businesses and the communities they support. But things will improve now that the meetings sector is rallying and proving its worth.

"Working with organizations and corporations in our industry, we will relay our story-and the opportunity our industry provides-to legislators and boardrooms everywhere," MacMillan said. "Recent events mark an unprecedented opportunity for our industry, and together we will use the power of meetings to get our economies and our businesses moving."

MacMillan may be right. Perceptions are already beginning to change. On Feb. 17, The Wall Street Journal called out Republican and Democratic leaders for holding the same types of business meetings politicos had been bashing for months. Earlier last month, CNN commentator and finance expert Terry Savage empathized with meeting professionals as she moderated the MeetDifferent 2009 Opening General Session.

"[The meeting industry] will make the case for the fact that America needs to meet, needs to talk, needs to do business," Savage said. "If I were doing this story, I would fly out to Las Vegas and get the taxi drivers sitting in a long line of taxi cabs saying, 'Well, we were supposed to get 45,000 people coming in but, darn, Wells Fargo canceled it, and I'm about to lose my home.'"

It's now the industry's task to ensure that the media receive the right message-and it now has the professional and financial backing from the U.S. Travel Association and a corps of trade organizations.

Too, if the past is any indication of things to come, challenges may spread before they retract, and the international meetings community will need a strategy for protecting itself across the globe. What the industry accomplishes in Washington, D.C., and in media markets across the U.S. may eventually become a framework for even greater, international collaborations.

"The industry is coming together," Duffy said. "We are speaking with one voice. And we now have a consistent message to tell the other side of the story."

JESSIE STATES is an award-winning journalist and the assistant editor of One+.