Hotels speculate about fallout from GSA scandal

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It might be too soon to know whether the local hotel industry will feel a backlash from the GSA scandal, but hospitality managers are bracing for it.

Some members of Congress want to limit government conferences and travel after news, and You Tube videos, circulated last month that the General Services Administration was partying in Las Vegas on the taxpayers’ nickel.

Travel industry leaders are urging Congress to view the scandal for what it is: an isolated incident, said Erik Hansen, U.S. Travel Association director of domestic policy.

“It’s a tight fiscal climate; it’s an election year — those two things will put pressure on government,” Hansen said. “What we don’t want is for them to cancel legitimate government meetings because of the political climate.”

Any time government talks about tightening its travel belt, it’s on local hoteliers’ radar, said John Branciforte, Cheyenne Mountain Resort director of sales and marketing.

So far, no groups have cancelled their reservations, he said.

Across the country, meetings and events generated $99 billion in direct travel expenditures, which supports 859,000 American jobs and contributes $15 billion in tax revenue for local, state and federal governments, according to U.S. Travel Association.

In the Pikes Peak Region, group meetings brought in $91 million to the economy last year, according to the Colorado Springs Convention and Visitors Bureau annual report.

The CVB estimates that about 30 to 40 percent of all room nights sold are for groups. And, about 20 percent of group meetings are government.

It wouldn’t be the first time the misbehavior by a few brought the hotel industry to its knees. Back in 2009, corporate travel came to a near halt after AIG flap hit the news. The taxpayers felt betrayed to learn American Insurance Group, which had taken government bailout money, had a lavish retreat for its employees.

Hotel industry leaders called it the AIG effect and the industry estimates it lost $1 billion in corporate travel. The ripple was felt in Colorado Springs. CVB booked-rooms went from 230,066 in 2007 to 204,409 in 2009.

After AIG, the U.S. Travel Association and the American Lodging and Hotel Association launched a full media blitz to ensure Congressional leaders know exactly what tourism meant to the economy. This week, the U.S. Travel Association is hosting rallies across the country to spotlight the impact of travel and tourism on the U.S. economy.

“I think we will fare better than in 2009,” Hansen said.

Their hope with the campaign was as build support if another travel scandal hit the fan.

No such luck with U.S. Sen. Tom Coburn, R-Okla. He’s already gained Senate support on a proposal to limit government travel in direct reaction to the GSA scandal.

On his website, Coburn said his proposal would save $65 million every year. It would: reduce the amount an agency can spend on conferences to 80 percent of the amount spent in 2010; cap the amount that can be spent on a single conference at $500,000; prohibit sponsoring more than one conference per year per organization; and would require an explanation on how the conference advanced the mission of the agency.

The Senate approved the measure, which is part of the Postal Service bill, and now it will make its way to the House of Representatives.

Just when the U.S. and Colorado hotel industries are showing signs of recovery and corporate business travel and meetings are coming back, comes the GSA scandal, said Christine O’Donnell, Colorado Hotel and Lodging Association president.

Following the AIG scandal, one thing that saved Colorado was government travel and meetings, she said.

“Now, to pull the wool out on government travel is a little bit daunting,” she said. “We are gravely concerned — many hotels rely on government travel.”

O’Donnell said Colorado hotels likely won’t see any immediate cancellations. Many government and group meetings are set seven to 10 months out.

“Anyone who is locked into a contract won’t cancel,” she said. “We may not see the fallout for 9 to 12 months.”