President Obama created a flap last month when he told a town hall meeting in Indiana “You can’t get corporate jets, you can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime.” He was speaking, of course, of companies using bailout money to fund lavish trips for their employees. Seems reasonable enough, right? Not if you happen to live in a city that depends on business travel to survive.
Las Vegas is one such city, and has been hit hard by the recession and concurrent drop in tourism. Las Vegas mayor Oscar Goodman was irked by Obama’s comments, and asked for an apology from the president, as well as a clarification that he was not criticizing the city itself but rather excessive corporate spending.
Which brings us to the crux of the issue: Is corporate travel in a recession just wasteful spending, or is it a lifeline for cities floundering in a down economy? On the one hand you have huge, struggling companies—many of which are at the center of the financial meltdown and have accepted government bailout money—spending money on travel. On the other, you’ve got cities that rely on conventions for revenue and suffer when business travel is discouraged. Does that make corporate travel, which for many represents the excessive greed that caused this whole mess, a necessary evil?
If you ask people like Mayor Goodman, the answer would seem to be “yes.” But for regular travelers, the drop in business travel could be a good thing. Cities that rely on business travel have no choice but to slash prices and go after the leisure market—no easy task in a recession—and that means deals, deals, and more deals. Priceline recently put out a list of “convention cities” feeling the brunt of the business travel drop, and suggests leisure travelers look there for lower prices. Our own Deal Detective, Kate Hamman, just unearthed a host of deals to Las Vegas in particular, and it stands to reason deals will keep coming so long as executives aren’t traveling on the company dime.
But back to business travel, because there really are two sides to this story. The public backlash against free-wheeling travel budgets, and the downward pressure from Obama himself to curtail wasteful corporate spending, has companies cutting back. A drop in convention attendance and corporate travel overall has wide-ranging ramifications on a city’s tourism industry. Countless jobs are at stake, from bellhops to line cooks to housekeepers. USA Today reports that “Incentive trips, meetings and events account for 15% of all travel spending, which creates 2.4 million jobs, $240 billion in spending and $39 billion in tax revenue, according to the U.S. Travel Association.”
Still, I think it’s safe to say the public’s anger will take a while to simmer down, meaning big corporations will likely keep the kibosh on travel firmly in place for the near term. Just how deeply that cuts into the revenue of big convention cities is anyone’s guess, but the outlook is not good.
I’d like you to weigh in. How do you view corporate travel in this current economic crisis? Is luxury travel a necessary part of big business to begin with, or is it just wasteful? Have you seen deals to so-called “convention cities?” Leave a comment below with your thoughts. Thanks!