Life as we know it in the hotel industry is over, at least for the time being until someone stands up and says, “Enough already Mr. Elected Politician – you’re killing us!”

The hotel industry has been hit with a wave of group cancellations, reschedules, demolition of the “incentive trip”. No more pre-TARP banquets, events or parties that feature any type of high profile entertainment intended to thank and woo high net worth investors and clients that have blessed companies with loyalty, business and the ongoing revenue streams. The days of the extravagant schmooze, ice carvings with flavored vodka flowing into frosted martini glasses, lavish banquet spreads, spa and shopping junkets for wives as well as the obligatory celebrity golf scrambles may just be a thing of our past – at least until TARP is repaid or the government just gets too busy to check the schedules of it’s TARP recipients. Creating the relationships, incentivizing associates and top performers and providing formats for attracting and informing clients in a fun, albeit top end way that produce premium business for your business is down right un-American these days.

No, it’s back to creating and competing for the base business that has traditionally been the core of business in our industry – staid and information filled meetings, Power Point presentations, white boards, coffee breaks, low budget lunches, rubber chicken dinners and cash bars. One day meetings packed with information. Regionalized business generation vs. global business events. The illustrious Senator John Kerry, Barney Frank (both from MA) and our new Commander in Control, President Obama, have seen to it the great unraveling of our business – they have come forward and until very recently were bending over backwards in an effort to make sure they were involved in destroying the economy of doing business in America with our business taking the front end ramming from their train.
It’s reported on Forbes.com that some recipients have responded to lawmakers’ criticism by scaling back. American International Group Inc., Wells Fargo & Co. and Citigroup Inc.’s Primerica unit have canceled corporate events set for resort locations. Goldman Sachs Group Inc., which received $10 billion in TARP funds, this month moved a technology conference to San Francisco from Las Vegas, citing the “new landscape for our industry.”

President Obama has declared in so many words that companies that utilize tax payer funding and use it by staying in hotels, providing entertainment that resembles anything other than a sit down meeting for their clients and guests are Un-American!

Senator Kerry has announced the “TARP Taxpayer Protection and Corporate Responsibility Act”. The Act would prevent ANY recipient of TARP funds from hosting, sponsoring or paying for conferences, holiday parties and entertainment events with TARP funds. Penalties would include fines and forced reimbursement of all TARP funds. A bank receiving TARP funds could still host a party for clients provided it receives a waiver from Treasury Secretary Tim Geithner, who would have 30 days to issue the waiver upon receipt of the request. This is the same Tim Geithner who is working on the details of the financial system and automotive industry plan which he has so far done such a “great job” in addressing. In other words, the revenue management for many of our industry bretheren has just come under Mr. Geithner’s perview…what a relief. I’m almost sure the first thing he will do every morning is come into his office, pull the stack of waiver requests that include meeting space confirmations and banquet event orders banks and other institutions for approval of their hotel and restaurant based functions. Riiiiiiiiight!

What the administration is suggesting in it’s actions is that we must come up with or there must be a new way of doing business, creating relationships, capturing share of business other than getting to know your customer and client the old fashion way.

So what is the new model or do we need a new model? Is this just a phase of political grandstanding that passes us by only to revert to the norm? My guess is that it is. Unless the government is really positioning for “Command and Control” of the institutions to which they provide TARP/TALF funds, which from the way they have addressed the auto industry may be their true modus operendi, we should be back to growing our business by early to mid 2010. That being said, 2009 is a total wash and the havock and erosion of value on our hotel assets as a result of this rhetoric has been devastating and magnified the events of this deep resession into a hotel downturn tsunami.