Teaching the Ways of Uncle Sam
In February, the 7,000-member Hospitality Sales & Marketing Association International (hsmai.org
) launched a new program, HSMAI Government Insider, to help hotel sales staffs understand and navigate the nuances of doing business with the federal government, which despite cutbacks still generates more than $2 billion in travel-related expenditures per year.
The program features monthly webinars on topics such as how to price government meetings and working with third-party government vendors. Members also will be invited to take part in quarterly conferences to share best practices. - C.A.S.
It has been a rough two years for government meeting planners. Following several high-profile cases of lavish conference spending, and with economic recovery from the Great Recession remaining in fragile mode, Congress has turned up its scrutiny of federal travel and conference spend and pushed for legislation that would restrict and regulate meetings outlay. Determined to avoid potential accusations of excess, federal agencies responded last year by taking an ax to meeting budgets, canceling multiple conferences and shunning resort destinations such as Hawaii, Las Vegas and Orlando, concerned that even the location alone could raise eyebrows.
The slash-and-burn reaction resulted in a 30 percent drop in government meetings in most of the top-tier markets in 2013. It also set off a heated debate on the importance of face-to-face meetings and spawned a flurry of white papers and studies from various groups anxious to reaffirm the power of in-person gatherings.
The fallout has galvanized the U.S. Travel Association to voice its concern on Capitol Hill as well as relaunch a national campaign, Meetings Mean Business (meetingsmeanbusiness.com), which touts the importance of meetings and conferences as an essential business tool.
Created by a coalition of 24 major industry players and headed by executives from Hilton Worldwide and Maritz Travel, the campaign kicked off on Jan. 14, 2014, and was timed to coincide with a hearing held that same day by the U.S. Senate Committee on Homeland Security and Governmental Affairs on "Examining Conference and Travel Spending Across the Federal Government."
"A decline in in-person communication would measurably threaten the quality of outcomes in a number of critical spheres," says Roger Dow, president and chief executive officer of the U.S. Travel Association, which is a member of the coalition. "We're not going to allow that to happen."
Cracking down on meetings
In May 2012, the Office of Management and Budget issued regulations that required federal agencies to reduce travel spend by at least 30 percent through fiscal year 2016. According to newly appointed OMB deputy director Beth Cobert, that mandate, which also demanded more oversight by agencies on where their meeting dollars were being spent, resulted in savings of $3 billion for fiscal year 2013 compared to 2010, when total travel and conference spend reached a record high of $17 billion. (For 2013-2012 comparisons by agency, see the chart, "Deep Cuts" below.)
Much of those savings, said Cobert at the Jan. 14 hearing, were a direct result of cancellation of nonessential meetings and new, robust conference-oversight procedures, which include strict requirements for meeting approval, particularly for large gatherings. Currently, agencies must submit reports to their inspectors general on any conference that costs more than $100,000, including the number of participants and a breakdown of every line item, including food and beverage, audiovisual and entertainment. Plus, for any conference costing more than $20,000, the inspector general of that agency has to be notified within 15 days from when the event has concluded.
For international meetings, no more than 50 employees from any one agency can attend, unless they are law-enforcement personnel. What's more, the OMB said it is committed to achieving even greater savings in 2014, primarily through cost-effective alternatives such as videoconferencing.
Such rigid guidelines could get even more regulated and restrictive. Currently before the Senate is H.R. 313, the Government Spending Accountability Act of 2013, which passed in the House last July. The bill limits agency travel expenses for the next five fiscal years to 70 percent of what was spent in 2010, and prohibits expenses of more than $500,000 for any single conference, unless an agency head provides a written waiver. It also calls for increased transparency, including a detailed quarterly report posted on a public website listing all events costing more than $10,000, including the date and location of the conference, who authorized it, the number of attendees, why the venue was a cost-effective choice and any private financial assistance received that was used to help defray costs.
The industry speaks out
A strong, cohesive voice is the only way the travel industry will get Capitol Hill to pay attention as the crackdown on government travel plays out, says Katherine Lugar, president and CEO of the Washington, D.C.-based American Hotel & Lodging Association.
This past January at the Florida Restaurant & Lodging Association's board of directors' winter meeting, Lugar told attendees gathered at the Ritz-Carlton, Amelia Island, "We need a long-term and sustained proactive approach to advocacy. Government travel has been an easy area to pick up, and we can be better partners and help them make better decisions, so this issue isn't squarely on them."
With some 3,000 members across 30 chapters and growing, the Society of Government Meeting Professionals has decided the time has come to join the roster of coalition leaders fighting efforts to restrict federal travel and meetings. According to Rob Bergeron, executive director and chief executive officer of the Alexandria, Va.-based association, the group has begun a concerted effort to partner with other entities, such as the U.S. Travel Association, in adding its expertise to the struggle.
It marks new ground for SGMP. "We are bridge-building more than ever before by communicating externally," notes Bergeron. "As we continue to work in this environment, we are an organization that can provide information and feedback to our industry partners." (SGMP was one of the signers in a coalition letter to the Senate committee that was submitted at the Jan. 14 hearing.)
Paul Somogyi, director of sales, middle markets, government and affinity segments, for Marriott International, has a unique perspective on the ongoing review of government meeting spend. He is the only hotelier awarded a seat on the federal General Services Administration's newly formed 15-member Governmentwide Travel Advisory Committee, whose purpose is to review existing travel policies, provide advice and help develop best practices for agencies to implement going forward. The committee will meet on a monthly basis through the end of the year.
"The GSA is looking to get industry input on how to become more efficient, sustainable and cost efficient," says Somogyi. "We are trying to help them reshape how they operate, and I believe we are going to make some waves."
Among his duties, Somogyi works with 15 cabinet-level agencies that do business across all Marriott brands, and he provides training tools and resources to Marriott's salespeople on how best to work with the government market. In fact, since early 2008 the hotel chain has run an online, self-guided program to give its sales associates a complete view of the needs of government travelers. To date, some 1,000 associates have completed the training.
"It's a first-of-its kind program," according to Somogyi. "It provides an in-depth understanding of how the government operates and the hierarchy of the various cabinets and independent agencies, as well as government contractors and their role in procurement. It covers topics such as the GSA's annual per diem-setting process, individual travel, extended stays and group contracting."
Somogyi believes the current austerity mode will remain in place for the next three years before things begin to settle down. "It's very frustrating," he says. "There is so much red tape and so many hurdles before an event can take place, that many agencies just say forget it. And those destinations that are seeing an uptick of any kind are in tertiary markets with lower per diems."
Fighting to regain lost business
According to a Dec. 26, 2013, article in USA Today, government meetings shunned destinations such as Hawaii, Las Vegas and Orlando in 2013. Yet even cities close to the nation's capital felt the burn of missing federal attendees.
At the start of 2012, member hotels of the Alexandria (Va.) Convention & Visitors Association were enjoying a healthy 40 percent in government business -- and then they began to notice a substantial dropoff in bookings. Executives at the ACVA decided to step up their efforts to woo the government market. They formed a focus group, which included six government planners, several hotel partners and Elizabeth Perrin, director of consulting for Washington, D.C.-based Courtesy Associates, a division of Chicago-based association management firm SmithBucklin. In her previous position at Dolce Hotels & Resorts, Perrin spearheaded an effort in 2011 that resulted in Dolce becoming the first hotel brand to be awarded a GSA contract.
The ACVA created a marketplace on its website dedicated to government meetings, providing online, downloadable resources, such as the Government Spending Accountability Act of 2012, the H.R. 4631 bill of 2012, which outlines the reporting procedures for meetings, as well as a link to the Society of Government Professionals, of which the ACVA is a member.
"All these executive orders are very confusing to the planner, who is trying to figure out what they are allowed to do and what they have to ask approval for," says Lorraine Lloyd, senior vice president, sales, at the ACVA, who was instrumental in creating the new marketing effort.
Alexandria, she says, typically hosts federal agency meetings of between 20 to 300 participants. "This makes it very black-and-white for them. And while we did see a downturn, we have begun to see a flurry of activity, and we are letting them know that Alexandria is here, ready to do business."
Also turning up the marketing heat is the Bloomington Convention & Visitors Bureau of Minnesota, which typically hosts government meetings of 75 to 150 attendees. "We have been on a journey with technology on how to better sell our destination," says Dan O'Neill, vice president of strategy and sales. "Our message to government planners is we are a value destination with affordable amenities, and we have the resources to promote your event without any additional cost to you."
According to O'Neal, the CVB has begun creating customized web pages for government planners to promote their meetings in real time. The bureau also offers coupons for the nearby Mall of America, which attendees can download on their smartphones. "This is a challenging market, but we believe we're a great Midwest destination for the government market due to our competitive per diem rate," says O'Neill.
A federal travel rebound?
Whether due to such bureau efforts or not, some are seeing glimmers of a rebound in federal travel. "Government meetings business fell significantly last year, but as of this January, Miami has seen a significant increase in government groups, specifically military groups," notes Marriott's Paul Somogyi. "We are now working on three new group opportunities, as opposed to none during the last half of 2013, and we recently booked a major training exercise."
Meanwhile, on Jan. 31, 2014, the federal Oceanic and Atmospheric Administration announced it had lifted a hiring and employee training freeze that had been in place since March 2013 as part of federal spending cuts. "Training and hiring will resume immediately," said Commerce Department Under Secretary for Oceans and Atmosphere Kathryn Sullivan in a memo to NOAA employees. "We all know that efficient hiring and regular professional development are critically important."