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As the travel industry continues to lobby against proposed restrictions on corporate travel and events for companies that have received taxpayer bailouts, Congress and the president last month tasked the U.S. Department of Treasury with defining "excessive or luxury expenditures" as part of a federal requirement that bailout beneficiaries create companywide policies on spending for events, aviation and other items.
Meanwhile, the National Business Travel Association is calling on its members to oppose a bill submitted by Sen. John Kerry (D-Mass.) that would ban events paid for by the more than 400 firms (mostly banks) that received federal funding under the Troubled Asset Relief Program.
The most contentious proposals and bills are not law, but the requirement that TARP beneficiaries create policies and Treasury come up with definitions was in the $787 billion American Recovery and Reinvestment Act of 2009 that President Barack Obama signed on Feb. 17. It includes this passage: "Limitation On Luxury Expenditures. The board of directors of any TARP recipient shall have in place a companywide policy regarding excessive or luxury expenditures, as identified by the Secretary, which may include excessive expenditures on entertainment or events; office and facility renovations; aviation or other transportation services; or other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives or other similar measures conducted in the normal course of the business operations of the TARP recipient."
The Treasury Department did not return a call seeking comment, and industry sources had no sense of when it might act.
According to National Business Travel Association president and CEO Kevin Maguire, "NBTA has been discussing this with Treasury. The problem has been Treasury is trying to fill all of the empty positions due to the presidential changeover, and it has been slow going. At this point, we don't know the exact timing of the Department of Treasury rulemaking on the TARP companies' travel practices; yet, at some point, there will be an opportunity for the public to contribute and comment on Treasury's deliberations on what constitutes 'luxury' or 'excessive' travel. NBTA, of course, and other groups will be filing comments."
Treasury already had announced on Feb. 4 related rules for three companies that received "exceptional" funding--AIG, Bank of America and Citicorp--but those rules had not been entered into the Federal Register and thus could be just a "trial balloon," said one lobbyist. If finalized, that rulemaking would require the companies to "post the text of the expenditures policy on their Web sites."
While continuing to combat the regulatory and media backlash on corporate jets and junkets, NBTA and other associations were alarmed by Sen. Kerry's Feb. 24 bill that would ban TARP beneficiaries from holding events at all, unless they get a waiver from the Treasury Department. "The Secretary has 30 days to respond to a waiver request," according to Kerry's proposal. "Any violation will require the federal government to be reimbursed by the company's CEO for the cost of the event, and there will a fine of $100,000 per violation. A recipient will have 30 days to reimburse the government and pay the fine. The fine increases $10,000 a day for each day after 30 days." Despite its proposed March 1 effective date, the bill was referred to committee for deliberations.
NBTA responded by calling on its members to educate Congress "on the importance of managed travel and the benefits it brings."
Industry officials worry that what's missing in the hubbub is an understanding among policymakers that frivolous corporate-sponsored events are not the only corporate-sponsored events--and that much of what has been stereotyped as excessive actually supports business missions.
"There is a fine balance between spending less on meeting or incentive programs and spending enough to ensure that the event engages the audiences to think, act and feel differently," according to Carlson Marketing engagement and events president Fay Beauchine. "The purpose of holding an event is to change behavior--learn more, do more, sell more. If employees and channel partners have heightened levels of enthusiasm, they contribute more and that turns into better results. The employee service, sales and value profit chain that have been talked about for years are still the right idea--bad economy or not. So let's keep it in balance and ensure that the right kinds of events are designed so that the audiences are fired up, engaged and leave with a more productive behavior that, of course, can be measured. Return on equity and return on investment matter even more today. The event may not be as fancy, but it must be good enough to inspire and produce results.
"There are several studies and proof points that demonstrate higher stock performance, less employee turnover and higher productivity" from such engagement, Beauchine added. "Disengagement costs the U.S. economy $350 billion a year. Not all employees come to work fully engaged every day. The more engaged, the more discretionary effort is demonstrated."
While mounting a PR campaign to halt cancellations and downward pressure on industry revenues and jobs, NBTA and other organizations last month unveiled model meeting and event accountability standardsthat Treasury may or may not be considering in its definitions.
"Thousands of companies, most of which have not taken any assistance from the federal government, are canceling their meetings out of fear," said U.S. Travel Association CEO Roger Dow, speaking during a March 4 conference call. He cited "political rhetoric and pending, short-sighted legislation."
Dow referenced "sample letters" and other resources that USTA posted to one of its Web sites, and noted three objectives: advocating to Treasury the "sensible guidelines" that industry associations submitted, challenging "any further legislation that tries to establish Congress as the nation's meeting planner or the nation's travel manager," and asking politicians to "tone down the rhetoric."
NBTA letter-writing campaign
U.S. Travel Association's Meetings Mean Business Web site
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