Companies cut back on conventions, meetings and other events
By Kevin Smith, Staff Writer© Pasadena Star-News, March 7, 2009
Sometimes, perception is everything.
And the negative perceptions surrounding recent abuses of corporate spending have prompted many companies to cancel meetings, conventions and other special events.
A new survey by Meetings & Convention Magazine reveals that more than 20 percent of companies that have not received taxpayer assistance have cancelled events because of recent media and political attention.
More than half claim the news coverage influenced their companies' decisions to hold events.
Consumers and investors were especially appalled to hear about the recent behavior of Northern Trust Corp., a Chicago-based custody bank.
Northern received $1.6 billion in government bail-out funds last fall. But management recently spent some of the company's money on dinners and concerts for clients and employees who attended a week-long golf tournament, of which Northern was the title sponsor.
Entertainment Web site TMZ reported that Northern hosted several dinners for special guests, featuring concerts by the likes of Chicago, Earth, Wind and Fire, and Sheryl Crow.
"At the end of the day, all of us got clobbered in the stock market," said Pete Tzavalas, vice president of the Southern California region of Challenger, Gray & Christmas, a company that provides nationwide executive outplacement services. "So when we see companies we invest in out there having a good time ... it doesn't look right."
Roger Dow, president and CEO of the U.S. Travel Association, agrees that companies that have received taxpayer assistance need to be held to a different standard and conduct their business in a transparent and responsible manner.
But the pendulum, he says, has swung too far.
"The climate of fear is causing a historic pullback of business meetings and events, with a devastating impact on small businesses, American workers and communities," Dow said in a statement.
The U.S. Travel Association has launched a "Meetings Mean Business" campaign, which is intended to push back against the political demonization of business meetings and events.
Meetings, conventions and other similar events serve a very real purpose for companies in a competitive business world, said Geoff Freeman, the association's senior vice president.
"Business gets done, whether it's with customers or employees," he said. "Sales meetings, meetings with customers and taking customers out for a good time - it's all about competition, creating value and driving revenue."
But benefits aside, businesses are still battling negative perceptions, according to Gary Kaplan, president of Gary Kaplan & Associates, a Pasadena-based executive search firm.
"The companies that are smart have become a little gun-shy," Kaplan said. "You almost have to be a bit arrogant or insensitive if you are taking federal assistance and holding some kind of high-visibility social event."
Moreover, the corporate world is facing a very angry population, he said.
"Inordinate numbers of people have been damaged by this economy," Kaplan said. "Many have lost their jobs or had their salaries cut. There is anger - especially toward the financial sector. Most companies are cutting costs every way they can before they have to impact labor."
Companies are dispensing with such amenities as club memberships and first-class travel, he said.
And Kaplan knows of what he speaks.
"I've gone through my own organization and everything that wasn't an essential service has been eliminated," he said. "We had a plant service that would come in and water our plants. We've had them for 20 years, but we eliminated it. We've also reduced our expenditures for outside computer service and we're more conservative with the money we're spending on business development costs."
CNBC reported last week that Las Vegas has lost $20 million in convention cancellations so far this year and that the city is being "stigmatized" in the current economic climate.
But Vegas promoters are saying that cancelling conventions now may be "pr wise, but penny foolish," CNBC reported, as it will likely cost companies more to re-book the events and hold them elsewhere.
Late last month, Morgan Stanley said it would eliminate events for entertaining clients that had been scheduled to run in conjunction with a professional golf tournament it sponsors in June.
That announcement came a day after protests erupted in Congress over the parties and concerts hosted by Northern Trust.
"There is no doubt that the economy is driving so much of what businesses are choosing to do," Freeman said. "In a down time, businesses have to look at all of their expenses. But when the economy is giving them a left jab, the last thing they need is a right upper cut."
