Earlier this year, some of the country’s biggest lending institutions found themselves in a bit of a sticky situation after accepting federal funding to shore up their industry.

The problem? Many of them were forced to take a hard look at their incentive travel programs. In Wisconsin, Green Bay based Associated Bank ultimately canceled a pre-planned trip to San Juan, Puerto Rico to reward about 100 high-performing employees for a job well done. Even though none of the $525 million in Troubled Asset Relief Program funds that Associated’s parent company had received was being used to fund the trip, a point quickly made public by then Associated CEO Paul Beideman, the outcry was enough to make the company think twice about it.

San Francisco-based Wells Fargo, also a TARP recipient, found itself abruptly canceling a four-day employee conference in February for the very same reason. Bowing to the same public outcry, several other top national banks cancelled plans to send their top executives to the World Economic Forum in Davos, Switzerland. In any other year, their presence would have been expected. In 2009, justified or not, it seemed to take on a taint of excessiveness.

According to Mae Ibe, CMP, director of convention sales at the Fox Cities Convention and Visitors Bureau, there has been a definite trickle-down effect on the meeting and events industry.

“Absolutely we’ve seen an impact,” says Ibe. “It’s something that the bigger cities and destinations have really experienced.”

To avoid the perception of spending money wastefully, many businesses and organizations have been giving meeting planning a long, hard look.

“The destinations that have really been hit hard are those that have a ‘fun’ perception to them,” she says.

“Any meeting that is surrounded by water is getting looked at a second time,” adds Naomi Tucker, CMP, project manager for meetings and event planning at Humana and vice president of education for Meeting Planners International Wisconsin Chapter.

“Companies are taking a break from these types of destinations and being conscientious about their destination decisions.”
That re-evaluation actually has helped destinations like the Fox Cities and other similar meeting points throughout the country.

“We know we’re more of a destination for state and local meetings,” she says. “Because those destinations are being so scrutinized, we’re often seen as a better value. But even statewide, in corporations, associations and other organizations, people are really watching every penny.”

Change of heart

Whether the current zeitgeist that surrounds the industry is positive or long-lasting is hard to say. In fact, pulling back, particularly at the last minute, can be an expensive decision to make.

Ibe shares an anecdotal tale from last July.

“I know of a large corporation that decided to cancel an event in Atlanta at the last minute,” she says. “The expected attendance was in the neighborhood of 5,000 people.”

She said that such decisions often carry a double, if not triple whammy.

“First of all, when you cancel an event at the last minute, you end up paying significant cancellation fees,” she says, noting that in some cases, the meeting or event is still essentially paid for. “Secondly, that means a good chunk of change isn’t trickling down to the local economy, to the taxi drivers, the servers and the bartenders.”

There’s also a third critical element that is getting lost in decisions based purely on financial perception: The learning that happens at these events, from keeping up on best practices to the continuing education many events often include.

“Not providing these opportunities to your employees or members can definitely start to add up,” says Ibe. “If you cancel a meeting or conference – particularly without any explanation – you’re also canceling the training and professional development that goes along with it. In time, this can definitely put an organization behind the eight ball.”

Incentive travel has also been under the microscope, though local industry experts are a bit split on the long-term effects on canceling or postponing these activities within an organization.

On one hand, with the entire country trying to navigate itself out of a recession, a sense of frugalness is understandable.
Humana’s Tucker notes that people within her organization have been receptive to the overall pullback, though she also adds that Humana’s meeting planning philosophy has always been conscientious.

“I think when you present the fact that you’re doing responsible meeting planning and perhaps cutting back or re-thinking certain trips, people do generally take it pretty well,” she says. “It’s a matter of perspective, too. There are people out there who have lost their jobs in this economy, so to see a company pulling back to remain in a good position is not necessarily viewed as a bad thing.”

On the other hand, it can also send the opposite message.

“With incentive travel, sending someone to a conference is not the perk; sending them to a conference in a great location is the perk,” says Ibe. “A perk like that does make you feel secure in your industry.”

Canceling meetings, events and attendance at industry conferences can send a signal – true or false – that the issue may not be fiscal responsibility. It can be interpreted that your organization could be in a bit of fiscal trouble. Regardless of the decision making process, some businesses, associations and other entities have found that meeting and event planning this year has become a bit of a Catch-22 situation.

National measures

Leaders from key organizations representing the meetings, events and incentive travel industries united earlier this year to issue guidelines on acceptable business travel practices to companies that have received emergency government lending. The guidelines, built upon existing corporate best practices, are designed to ensure transparency and accountability.

"The business practices of our customers impact the welfare of our industry, our employee base and the economic health of the communities where we do business," says Roger Dow, president and CEO of the U.S. Travel Association.

The established standards support President Obama's call earlier this year for the boards of directors of companies that have received emergency government lending to develop guidelines on conferences, events and employee recognition programs. Highlights from the guidelines include:

• Conferences or events with a cost exceeding $75,000 must be supported by a written business case identifying a specific business purpose and positive return on objective and investment metrics;

• At least 90 percent of incentive program attendees shall be other than senior executives (as defined by Treasury Department guidelines) from the host organization; and

• Total annual expenses for meetings, events and incentive/recognition travel shall not exceed 15 percent of the company's total sales and marketing spend.

Meetings and events are responsible for 15 percent of all travel-related spending, create nearly $40 billion in tax revenue at the federal, state and local level and generate more than one million jobs. Without the jobs generated by meetings, events and incentive travel, 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.

While the metrics outlined in the guidelines are intended for the recipients of emergency government lending, the drafters note that many other organizations and industries can benefit from the structure outlined in the policy. In those cases, they say that the metrics may vary based on industry size, company size and market sectors.

Midwestern mentality

Many businesses and organizations located within the state have found that the extra measures called for in 2009 are not terribly different than what they’ve had in place all along. Whether you chalk it up to our inherent Midwestern frugality and practicality or not, for some organizations, this year has been essentially status quo.

“The measures called for in 2009 have actually been somewhat comforting to us in a way,” reports Humana’s Tucker. “We’ve always made a conscious effort in our meeting and event planning. The ‘perfect storm’ situation that we’ve had this year has only validated our approach.”

Other groups are instituting a variety of approaches to be more fiscally conservative without sacrificing the benefit of meetings, conventions and other events.

Alison Huber, event planner for the Wisconsin Association of School Boards, says that her association has actually seen an interesting change in attendance at their events.

“Our overall attendance is slightly up for the year, but what we think is happening is that more school boards are sending a more limited amount of staff to our events,” she hypothesizes. “We’ve recognized this, and we’re trying to reach out more to our members in ways that can help them when they are trying to be a little more conscious of their spending. We’ve noticed that people may attend and ask for an extra folder of information to share with someone who isn’t in attendance.”

For example, instead of holding an activity once in the state, she reports that the association would now think of holding in two or three times in different regions so more people can attend. The association is also considering other creative ways of meeting its membership’s needs, such as video conferences and web-based education.

“The economy has hit the different market segments in different ways,” notes Ibe. “Associations still are having their meetings, but their attendance numbers are definitely coming in lower, generally about 15 to 20 percent on average.”

Most associations that Ibe works with are continuing to host events, though often on a scaled-down level.

“I know of a handful that have decided to completely cancel events, and generally these were unusual situations,” she says. “For example, one association found that they were only getting about 10 percent of their expected attendance for the event.”

She says that the lingering effects of TARP accountability continue to have an effect on the corporate marketing segment.

“Plus, I think it can be very hard for a company to justify holding an event if they are laying people off,” she says, noting a recent situation where, on the heels of a layoff, a company canceled a scheduled activity the day before the event.

Improvement on the horizon

Meeting planners do note that things do seem to be changing their industry from earlier in the year, albeit quite slowly. And there are some changes in the way meeting planners are working.

“The industry has changed,” says Tucker. “We’ve realized it a little more in the information we collect and how it might need to be used or reviewed in the future.”

Huber says that people seem to be looking for a greater return on their investments.

“I think attendees are being more thoughtful about why they are attending things and what they are getting out of the experience,” she says. “For our members, it’s very important for them to be able to go back to their districts and say, ‘I learned this’ or ‘I met this person’ or ‘I found this great resource’ while I was at the event.”

Meetings and events are returning, though often in a series of proverbial baby steps.

“I do see it coming back; there is a little patch of light,” says Ibe. “I think companies and organizations are starting to feel a little sense of security in moving forward from where we were earlier in the year.”

By Laurie Arendt

Laurie Arendt is editor of CRW. She can be reached at crweditor@crwmag.com

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