The U.S. Travel Association (formerly Travel industry Association) unveiled new "accountability standards" on business meetings, events and incentive travel for companies receiving federal bailout funds. The standards are designed to convince Congress and the Obama administration that corporate America can police itself, despite widely publicized events labeled as wasteful corporate junkets held by bailout recipients.
Key points of the standards are:
- Each proposed meeting, event or incentive/recognition travel with a cost exceeding $75,000 must be supported by a written business case identifying a specific business purpose.
- Annual expenses for meetings, events and incentive/recognition travel shall not exceed 15% of the company's total sales and marketing expenditure.
- The amount spent for an employee performance incentive/recognition event shall not exceed 2% of the total compensation of eligible participants or 10% of total award earners' compensation.
- At internal meetings or events attended only by senior executives and/or board members, participants shall be responsible for any expenses incurred for non-business-related activities.
Roger Dow, president and chief executive officer of U.S. Travel, said 200,000 travel-related jobs were lost in 2008. He said the curtailing of legitimate business meetings and incentives would cause additional job losses even as the government-proposed stimulus package aims to create jobs. "Hotel bellmen, maids and wait staff are the first to lose their jobs" when business is down, he said.
Dow said U.S. Travel figures show that business travel generates 2.4 million U.S. jobs, $244 billion in spending and $39 billion in federal, state and local tax revenue. Of that total, $100 million is spent on meetings and incentive travel.
The association was joined in the effort by the National Business Travel Association, the American Hotel & Lodging Association, the Society of Incentive Travel Executives, Meeting Planners International, the Professional Convention Management Association and Destination Marketing Association International.
They acted to avert "the unintended consequences" of government restrictions on legitimate activities. The Treasury Department last week directed companies receiving funds to adopt "a company-wide policy on any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties, and conferences and events." The new policy "requires certification by chief executive officers for expenditures that could be viewed as excessive or luxury items."
The companies will be required to post their expenditure policies on their Web sites.
Meanwhile, Senators Christopher Dodd (D-Conn.) and Dianne Feinstein (D-Calif.) introduced separate legislation calling on the Treasury Department to provide additional regulations for companies hosting, sponsoring or paying for events and for expenses related to employee recognition events.
U.S. Travel noted that Wells Fargo & Co. canceled an incentive program for several hundred mid-level employees who earned a trip to Las Vegas by collectively producing $230 billion in mortgage loans for U.S. homeowners last year. In a statement, Wells Fargo said it canceled the trip after it was "portrayed in the media as a 'junket' for wealthy executives."
According to Dow, hotels also are receiving cancellations from companies that have not received federal government support for fear of negative media coverage. He declined to name the companies or the affected hotels.
Last October American International Group held a weeklong "retreat" for its executives at the St. Regis in Monarch Beach, Calif., just days after receiving $85 billion in bailout funds. The company spent $440,000 on rooms, meals and spa treatments and received a public scolding from Congress.