A combination of election-year politics and heavy media scrutiny over the now-infamous U.S. General Services Administration 2010 conference in Las Vegas has hit the government meeting sector hard. And sources say things are likely to get worse before they get better.
“We are hearing there are cancellations [of government meetings],” said Erik Hansen, director of domestic policy at the U.S. Travel Association in Washington, D.C. “But we don’t have enough data to say definitively that it’s a widespread problem yet. What we do know is that the cancellations are going beyond GSA. There is an impact across other government agencies.”
“I’ve had eight government meetings cancel in the last week or so,” said the owner of a Washington-area independent meeting planning company who asked to remain anonymous. “And my associate has had two more cancel, with another three likely to cancel. And none of them were in Las Vegas. They’re in places like San Antonio (Texas) and Richmond (Virginia)—totally noncontroversial destinations. But they’re canceling anyway.”
Lori Kolker, founder and president of Rockville, Maryland-based site selection firm Elle K Associates, another government vendor, has had no cancellations yet, but four of her upcoming meetings have been relocated out of Las Vegas. “Everybody is too scared to go to Las Vegas now,” she said.
Reza Sheybani, founder and principal of Bethesda, Maryland-based Conference Planning International, who has 30 years experience in government meeting planning, has had three major meetings cancel so far—in Washington, Atlanta and Charlotte, North Carolina. “They all said, ‘Everything is being put on hold,’” Sheybani said, adding that Las Vegas is the major victim of the chilling effect. “You can’t even mention Las Vegas as a government meeting destination anymore. And I think that for the next year or two, the impact of all this is going to be serious.”
Exacerbating the damage is what seems to be some miscommunication over a $12,601 commission and who ended up footing the bill.
In a 2 April report, GSA Inspector General Brian D. Miller said the $12,601 commission paid by The M Resort Spa Casino to Location Solvers, the site selection firm that facilitated the GSA meeting, represented a “redundant and wasteful” expenditure. He said the GSA had in-house meeting planners who could have executed the booking, perhaps with lower net hotel rates. Additionally, in the report, Miller said the finder’s fee “indicates that further discounts might have been available to GSA if GSA had contacted the hotel directly, rather than working through Location Solvers.”
In reality, whether GSA’s in-house staff or Location Solvers would’ve booked the rooms, the rate would have been the same, meeting planner sources said. Commissions are considered an industry standard cost of doing business and have no impact on room rates.
“Hotels absorb the commission in order to preserve relationships with the third-party planning and site selection companies,” said Rich Keurajian, VP of sales and marketing at Kingsmill Resort in Williamsburg, Virginia. “And the commissions have no impact on room rate, because of rate parity. The meeting host pays the same room rate whether a commission was paid to a third party or not.”
However, the commission issue became more complex when the Washington Post reported on 24 April that the Location Solvers commission was added onto the event’s food-and-beverage catering bill.
“In 28 years in this business, I’ve never done that and I’ve never heard of anyone doing that,” Keurajian said.
“It just does not happen,” Kolker added.
If it did happen in this instance, however, it could be construed as an illegal kickback, sources said. That's one reason why the matter has been referred to the U.S. Justice Department for possible criminal prosecutions.
The GSA did not respond to multiple requests for comment and M Resort declined requests for comment for this story.
“I’m in shock about the way the media has reported this,” Kolker said. “They don’t realize the damage they are doing to an entire industry, or the importance of the meeting industry to the economy.”
Of equal concern to Hansen and U.S. Travels is the missing context that the GSA meeting was an anomaly. “You had federal officials deliberately negotiating to have the meeting be ‘over the top,’” he said. “They were going for excess. And that’s the point that’s getting overlooked in the media coverage. It’s a fact that 99.9% of all government meetings are done properly, within prescribed guidelines.”
The damage done
Last week, both the House and Senate passed provisions, in two different bills, which would limit total government spending on meetings to 80% of 2010 levels.
“That would be a disaster, because in 2010 we were still in a recession,” Kolker said. “The industry would be devastated.”
Although Hansen said he thought such dire prognostications might be a little hyperbolic, he said, “I do think it’s likely you’d see fewer government meetings taking place (if this provision becomes law) because the total budgets of federal agencies would be shrunk.”
It remains to be seen, he said, whether the House and Senate can reconcile the two bills into one piece of legislation that President Obama will sign.
Yet another focus of the new provisions being touted in the wake of the GSA scandal is heightened transparency that will require government agencies to post detailed information about their meeting costs in a centralized web portal.
And with that heightened transparency will come more caution in terms of F&B expenditures and other typical meeting amenities, said Charles Sadler, executive director and CEO of the Society of Government Meeting Planners in Washington. And that caution could have a further chilling effect on planner decisions. But, he stressed, increased accountability will ultimately be a good thing. “The more accountability, the better, for the whole process,” He said.
“But,” Sadler added, “there also will be planners who will be afraid again to send meetings to Las Vegas or Reno (Nevada), which were blacklisted for a while during the 2009 crisis, because they’ll be concerned about questions being asked.”