Perhaps Congress and President Obama forgot that the hotel industry is a business just like any other. It contributes tax revenue, employs thousands of workers and takes care of thousands more each year by providing leisure and corporate services. But never a peep from them during this economic meltdown, which has seen occupancies drop to historically low levels and RevPARs recede faster than any amount of Rogaine could take care of. Have you heard about the hotel industry asking for a bailout? Me neither.
So, why are our public officials making the industry's headache a migraine? It all started with AIG. The insurance giant was censured by Congress for spending $440,000 on a retreat for its top producers at the St. Regis Monarch Beach after an $85 million bailout loan. Ok, yes, the brass at AIG are a bit moronic and disconnected in thinking this would play ok in the public forum.
Then Wells Fargo & Co. made a similar boneheaded decision to have a casino junket for employees at the Wynn Las Vegas and Encore. Wells Fargo canceled the trip after Capitol Hill railed against it. And, President Obama made sure to get a dig in: "You can't get corporate jets. You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime," he heroically said.
More damage. This time, Vegas Mayor Oscar Goodman came out asking for a public apology by Obama. "With a rather reckless, cavalier remark on the part of the president, which will not be discerned by the average person in the public to apply to those folks who are receiving money, but as a general proposition, the message was, don't come to Las Vegas," he said.
There's more: Morgan Stanley canceled a trip for employees last week to Monte Carlo, while Goldman Sachs put the kibosh on an event in San Francisco.
You can understand if the hotel industry is a bit ticked off. They are feeling as much of the brunt as these companies are. John Tisch, CEO of Loews Corp., says lawmakers are destroying the hotel business. "Congress has done a great job of killing the resort hotel business with the way they've criticized the number of financial firms from having conferences," Tisch said. "In fact, I just heard this morning of another investor conference that was canceled by another major investment firm because of the fear of being criticized by members of Congress."
According to Friedman Billings Ramsey analyst C. Patrick Scholes, it's going to continue. "In our view, this trend will likely only intensify over the next few weeks as public companies (not just the ones which asked for a government handout) become increasingly image-conscious," Scholes writes in a note.
It's correct that the lawmakers and the public are pointing out the senselessness of these companies. It doesn't take a genius to understand that if someone, the taxpayer, is being forced to give you money that it doesn't want to, you better at least use it to get your act together, not so your employees can lay poolside and down umbrella drinks.
The real issue here is that—and maybe inadvertently—by demonizing these companies, the enduring effect is harm to an American industry. The hotel industry has it bad enough right now, and doesn't need further trampling—the proverbial kicking a man when he's down.
Congress should act more responsibly when they level these accusations. They are creating more harm than they know.