WisBusiness: Marcus says government-fueld stigma against corporate travel hurting hotels

By David Wise

For WisBusiness

MILWAUKEE — Battered by the recession and a government-fueled stigma against corporate travel, hotels nationally have seen a dramatic decrease in revenues, Marcus Corp. President and CEO Greg Marcus told Milwaukee Rotarians today.

But the factors causing a national drop could benefit Milwaukee, at companies look for a low-key alternative to hold meetings rather than places like Las Vegas, which generate negative publicity, he said.

Marcus said hotels’ revenue per available room, a key industry performance statistic, has dropped 18.2 percent in the first four months of 2008 nationally. Milwaukee saw a drop of 18.8 percent for the first quarter, and he said Las Vegas was hit with about a 35 percent drop.

“That’s a dramatic figure,” Marcus said, whose company owns 20 hotels nationwide, including the Pfister and Grand Geneva Resort & Spa, and a large Midwest theater chain.

The declines have led to the loss of some 200,000 hotel jobs, many of them affecting low-education workers, Marcus said.

Marcus attributed the decline not only to the recession, but also to criticism against corporate travel and retreats leveled by President Barack Obama and Congress against AIG and other companies that were receiving federal bailout money.

“In a matter of days, meetings at resorts and hotels were stigmatized, even for companies that aren’t receiving bailout money and are profitable,” Marcus said. “No one wanted to go near the issue in fear of the backlash from the media, shareholders and the others, so they stayed away from hotels.”

“Frankly, I believe the government bears the responsibility for this,”
Marcus said.

Marcus said the rhetoric has toned down since industry leaders met with officials in Washington, D.C., but the damage has already been done

“Today companies of all types and sizes are still hesitant to book sales meetings and conventions,” Marcus said. “Congress has made it embarrassing to use upscale properties for their meeting and incentive trips. And when they do, they’re scaled back from what they’ve been in the past.”

The declines in business travel have also led to lost revenues for restaurants, bars, sports teams and other entertainment businesses, Marcus said.

While increased vacancies and reduced room rates are bad for hotels, there are good for consumers, Marcus noted, adding that companies can receive good deal if they book now for future events.

He also said that although the stigma against junkets in exotic locales is bad for some areas, Milwaukee, which he described as a “gem” and a good value relative to other areas, could see a benefit, as a company’s trip to the city is unlikely to generate headlines.

“As much as we all love our city — let’s be honest — having a major incentive sales conference or executive meeting in Milwaukee wouldn’t make the front page the same way that meeting at an exclusive resort in Phoenix, San Diego, Orlando or Hawaii would,” Marcus said. “That’s a good thing. Let’s go out there and leverage this thing for all the business we can get.”