California Hotels Fear Cutbacks

Arnold Schwarzenegger

California Gov.
Arnold Schwarzenegger

Planners and suppliers alike are feeling the effects of an executive order by California Governor Arnold Schwarzenegger calling for the reduction of “nonessential” travel costs incurred by state-run meetings and conferences. The Feb. 19 decree seeks to curb government spending during the state’s fiscal emergency, officially declared by the governor in January.

The order has put extra pressure on planners, said Emily M. Schroeder, president of the Society of Government Meeting Professionals’ Sacramento chapter. “They’re spending a lot of time with administration justifying their meetings, when they should be focusing on the strategic planning,” she noted.

There are concerns on the hotel side as well. At Sacramento’s Holiday Inn Capitol Plaza, where 20 to 25 percent of group business is government-funded, “We’re asking ourselves whether the groups are really going to fill all the rooms,” said Heather Washington, CMP, director of sales. Indeed, the property recently has experienced low room pickup, with the percentage of rooms being filled dropping from 85 to 75 percent. At press time, no cancellations had occurred.

Some properties that rely on government meetings are concentrating on other market segments, such as Internet bookings, to attract new business; others are taking another look at business they once scorned.

For example, Kim Davidson, a regional manager for Scottsdale, Ariz.-based site selection firm HelmsBriscoe, said the Embassy Suites Anaheim-South recently expressed interest in hosting a government meeting it previously had rejected due to a low mandated rate. The hotel cited the “current economy” as the reason for the change of heart.