The Arizona Boycott's Effect on Meetings

The Cost of Protest

The decision to cancel a meeting or event in support of a boycott can result in significant legal consequences and hefty cancellation fees. What's more, it can tarnish a group's historical data, say experts.

"Groups need to understand that political beliefs come at a cost," says Lisa Sommer Devlin, founder of Phoenix-based Devlin Law, which represents hotels. "Hotel management companies have a responsibility to their hotel's owner. The owner is gong to say, ‘Well, it's all well and good that you relocated to another property in the same chain as my hotel, but that doesn't help me, because I don't own that hotel. I want my money that you promised.' "

"Depending on how important it is to your membership base, you can at least ask that if, after the signing of your contract with the hotel or venue, the state or local government should pass a law that is, say, anti-immigrant, you have the right to terminate your event without liability," says attorney James M. Goldberg of Washington, D.C.-based Goldberg & Associates, which represents meeting planners. "The problem, however, is going to be selling that provision to a hotel. You have to prove that your cause is in your bylaws, and it has to be very clear. It can't just say the group is against discrimination. Discrimination of what? The typical backlash from a hotel will be that they can't control what a legislature does, so why should they take a hit for it?"

"Meeting planners have always been trained to brag about their history to get a better deal," says Dallas-based hospitality attorney Steve Rudner of Rudner Law Offices. "A group that has canceled for whatever reasons should be prepared to face stricter contractual terms in the future, particularly in a recovering economy, because hotels are going to be much less risk-adverse.

"It's one thing to be brave and take a stand when the political winds blow," Rudner adds, "but you better expect to pay for it."

 

On April 23 this year, Arizona Gov. Jan Brewer signed into law a controversial immigration measure, Senate Bill 1070, setting off a firestorm of national and international criticism, strident political sparring, and a call by civil rights leaders to boycott meetings and conventions in the state. Seemingly overnight, Arizona became, for many, a national symbol of racial intolerance. In the first two weeks following the bill's enactment, the fallout in cities such as Phoenix, Scottsdale and Tucson was immediate and harsh, as some 23 groups quickly relocated upcoming meetings to neighboring states or wiped scheduled future events from their calendars, costing those destinations millions of dollars in potential delegate spend.

The backlash has put the state's hospitality leaders in a difficult position. "It pains me to see that the Arizona I know and love is not being depicted accurately," says Steve Moore, president and CEO of the Greater Phoenix Convention & Visitors Bureau. "But I have never believed in taking a defensive position, and I am not going to start now. I'm focusing my energies on getting as many people as I can to understand the economic importance of meetings and conventions to the very fabric of this city and the state."

Moore's careful language illustrates how the new law has thrust Arizona's meetings and hospitality industries into sudden crisis-management mode.

Action and reaction Widely considered the nation's toughest measure to combat illegal immigration, SB 1070 initially gave Arizona's local law enforcement the power to stop any individual to check his or her immigration status based on "reasonable suspicion" of illegal activity. Opponents of the bill, including President Obama, called the law draconian and said it would lead to racial profiling and unfairly target the state's large Hispanic and Latino population. On April 29, bowing to political pressure, Arizona lawmakers passed amendment House Bill 2162, which limits the scope of the law, specifically outlawing race, color or ethnicity as criteria for reasonable suspicion, as well as protects local governments from lawsuits. But the measure did little to ease fears. Unless challenged -- and many insiders predict a lengthy legal battle -- SB 1070 is set to take affect on July 29.

If Arizona tourism officials were dismayed to find their industry the pawn of a heated national political debate, they were outraged when perhaps the most damaging blow was struck from within. Rep. Raul Grijalva, a Democrat representing the southern part of the state, called for what he termed a "targeted ban on conventions and conferences for a limited time" and advised businesses to "refrain from using Arizona as a convention site...until Arizona turns the clock forward instead of backward."

"Nobody ever thought one of our own congressmen would call for a boycott," says Jonathan Walker, president and CEO of the Metropolitan Tucson Convention & Visitors Bureau. "There are laws being passed every day in just about every state, and they are not made out to be tied to tourism. How did this law become associated with the tourism industry?"

Indeed, Grijalva's boycott, says Moore, highlights the crux of the problem: While elected officials might think they understand the economic power of meetings and conventions, they still don't comprehend the interdependence of meetings and other businesses that generate critical revenue for the state.

Collateral damage It didn't take long after passage of SB 1070 for Tucson to begin feeling the pain. Within a few weeks, the Falmouth, Mass.-based Alliance for Community Media canceled its July 2011 meeting, scheduled to be held at the JW Marriott Star Pass Resort & Spa; in a letter to Gov. Brewer, the association said, "We are eager to spend our money in Arizona, but you leave us no choice but to take all necessary steps to move our annual conference to another state."

Also axing its plans to meet in the city was the Seattle-based Glass Art Society, set to convene in April 2011. "With a Latin American focus for this conference, the controversial issues in the state are particularly poignant," the society's board said in a letter to members.  

In Phoenix, the state capital and the country's fifth-largest city, the boycott could not have come at a worse time. With its new $600 million convention center and a long-awaited, city-owned 1,000-room headquarters hotel finally in place, the city seemed poised to fully shuck its old second-tier reputation and go for the gold. But in the aftermath of SB 1070, organizations canceling conventions so far include Alpha Phi Alpha, the nation's oldest African-American college fraternity, which relocated this month's annual meeting to Las Vegas at a cost of $300,000 in cancellation fees; the National Association of Black Accountants, which pulled its 2012 meeting; and the New York City-based National Minority Supplier Development Council, which announced at the end of May that it would relocate its October meeting, expected to draw 5,000 attendees, to Miami.

Suzette Eaddy, CMP, director of conferences for the NMSDC, estimates that her group's economic impact on Phoenix would have been close to $31 million, while acknowledging that "the hotel, the CVB and the people who work in the tourism industry were not at the governor's table when this legislation was created. We chose the city because of its diversity. Our constituents are minorities, and we felt it was a good match. It's sad. There will be no winners in this."

Even as Phoenix reels from these cancellations, city tourism officials are trying to work with other groups weighing their options. One of those is the Boston-based Unitarian Universalist Association, which is scheduled to bring its annual general assembly, worth about $6 million, to town in June 2012. The UUA executive leadership said it would make a decision on whether to jump ship at the end of this June, following a vote by delegates at this year's meeting in Minneapolis. Should it vote yes, the association faces $615,000 in cancellation penalties between two downtown hotels.

"My biggest concern is my relationship with the city of Phoenix," says Jan Sneegas, director of general assembly and conference services for the UUA. "They worked so hard to attract religious business. When I learned of [SB 1070] and called my contact in Phoenix, he said, ‘I was expecting your call.' They know it's nothing personal on my part. They understand that."

The real extent of the boycott damage, says bureau head Steve Moore, lies in the unrealized and unknown convention pipeline: "We will never know the true extent of the damages this boycott has caused, because we don't even know who took us off their radar. The reality is, there are some groups who probably will not even put us on their list of places to consider, and that is where the impact is enormous." There is simply too much at stake, Moore adds, to lay low and wait for the high-water mark of political rhetoric to recede.

Fighting back Hospitality industry associations from every sector have responded to the boycott with a united front in support of Arizona. "Every destination knows that tomorrow they could be in the same predicament over some political decision they cannot control," says Michael Gehrisch, president and CEO of Washington, D.C.-based Destination Marketing Association International. As a result, he notes, "none of our members want to prey on business lost by a destination" over such issues.

The U.S. Travel Association in Washington, D.C., which issued a statement on April 30 calling for an end to the boycott, has been quietly lobbying politicians and business on both sides of SB 1070 to take the tourism industry out of the equation and make immigration reform a federal, rather than a state, imperative (the same stance being taken by the Obama administration). While the USTA declined to comment for this story, Moore says the organization's support has been invaluable in his ongoing efforts to promote the importance of meetings and conventions and protect Phoenix from further economic hardship.

When the Washington, D.C., City Council threatened to enact legislation urging the district's businesses to boycott travel to Arizona -- following the lead of cities such as Boston; Boulder, Colo.; El Paso, Texas;  San Diego, and San Francisco -- the American Hotel & Lodging Association, also based in D.C., issued a stinging rebuke. In a letter addressed to city council chairman Vincent Gray, AH&LA's president and CEO, Joe McInerney, wrote, "What if Arizona citizens did not travel to Washington or host meetings in this city because members of the Arizona State Legislature did not like the district's stance on the five-cent bag recycling tax or on allowing gay marriage? Do we really want to set that type of precedent in the nation's capital city?"

For her part, Debbie Johnson, president and CEO of the Arizona Hotel & Lodging Association, which represents more than 34,000 hotel rooms statewide and has 400-plus members, says, "I have been called every name in the book from individuals on both sides of this issue, but we will remain focused. Arizona's reputation has been tarnished and damaged. We will not let it stay that way."

In mid-May, Gov. Brewer met with tourism leaders from across the state and charged a 15-member task force, under the auspices of the Arizona Office of Tourism and funded with $250,000 from the Arizona Department of Commerce, with launching a campaign to staunch the flow of lost meeting and conventions business and encourage local and out-of-state tourism through promotional offers. The group's initial fact-finding report was due to the governor in mid-June, with a follow-up report scheduled to be delivered July 12 during the Arizona Governor's Conference on Tourism.

Notes Steve Moore, a task force member, "I will chair a section on the true power of meetings and conventions and show how meetings revenue is vital to sustain state budgets." One objective, he says, is to make it painfully clear that groups have choices. "Attrition clauses today are not as narrow and ironclad as they were before 9/11," he says. "Groups don't sign contracts years in advance anymore, which means they have more flexibility to pull out closer to their event, which gives them choices where to spend their dollars. Legislators need to understand this."

Moore also has formed an important alliance with Phoenix Mayor Phil Gordon, who has been the bureau's strongest spokesperson. "He has gone before the U.S. Conference of Mayors on our behalf to explain to his colleagues why boycotts are economic suicide," he notes.

At press time, the Phoenix CVB had put together an information kit for planners who call with concerns; it includes a copy of the bill, so interested parties can see the actual law and its attempts to safeguard against racial profiling, and a copy of the police training video created to help the state's local law-enforcement agencies carry out the law's provisions with all due sensitivity to racial issues.   

"But because the issues on either side are so controversial and the rhetoric so inflammatory, we will not engage in any discussion of the bill," Moore says. "Instead, we are giving planners every bit of information we can get our hands on, so they can make an informed decision."