When or if companies loosen their purse strings and allow employees to attend meetings and conventions again, expect a lot less flash. And a lot more scrutiny.
Earlier this month, the Treasury Department published new rules around meetings and conventions for companies receiving TARP funds. The rules require TARP recipients to “eliminate excessive and luxury expenditures” for entertainment or events as defined by the Treasury Secretary.
But don’t think for a minute that just because your company is not a TARP recipient, you won’t be subject to the new rules.
“Business travelers and conventioneers who have been living high on the hog for the last few years are definitely going to feel it whether or not their companies are TARP funded,” says Kevin Iwamoto, a V.P. at StarCite, former president of the National Business Travel Association and a longtime industry visionary. “With the recent level of public scrutiny, it’s doubtful things will go back to the way they were [before the financial meltdown]. The changes and downsizing happening today will be the new baseline.”
Some other key points from my recent conversation with Iwamoto:
- The rules around spending at meetings have changed permanently. If you think Sarbanes-Oxley requirements were a hassle…just wait. “There was an ‘anything goes’ mentality in recent years and that’s no longer the case. From now on, attendees will see more scrutiny, more compliance mandates and more policy enforcement.”
- Conventions that were once over-the-top and lavish will come back down to earth, which means you can probably forget about conspicuous spending like stretch limo rides, mega celebrity speakers, lobster dinners and pricey take-home swag. “At one time, companies were trying to outdo each other when it came to lavish spending for meetings. Now they’re trying to outdo each other by showing how little they can spend and how little publicity their events generate.”
- Destination luxury and golf resorts located away from major cities are going to feel the impact of the new rules most. “These hotels were overbuilt during the good times and will struggle for corporate meetings business much more than other hotel categories in coming years. Hotels located in downtown areas and near convention centers will be the first to see some pick up in business, whereas resorts built at off-the-beaten-track locations will have to adjust some of their sales strategies and target markets to compete and fill rooms.”