The Senate last month passed a measure limiting "luxury" spending for corporate travel by recipients of federal bailout funds. Two weeks later, about two dozen senators of both parties left town for political meetings on the Florida coast.
Hotel-industry leaders are seizing on those trips as ammunition in a campaign to get lawmakers and the Obama administration to tone down the rhetoric against business travel, which they say is adding to their economic difficulties.
"It's just the hypocrisy," said Frank Fahrenkopf, a former chairman of the Republican National Committee who is president of the Washington-based American Gaming Association, one of the groups urging politicians to moderate the criticism. "We've got to have Washington stop beating up on us."
On March 11, hotel executives including Jonathan M. Tisch, chairman of New York-based Loews Corp., which operates a chain of 18 hotels in North America, Bill Marriott, chairman of Bethesda, Maryland-based Marriott International Inc., the biggest U.S. lodging chain, and Jay Rasulo, chairman of Walt Disney Parks and Resorts, a unit of Burbank, California-based Walt Disney Co. that operates its theme parks, met with President Barack Obama and three Democratic senators to express their concern.
Cancellations
The executives said the political attacks are having a broad effect on their business — even though the restrictions are intended to apply only to recipients of federal bailout money — and cancellations have been increasing as the rhetoric heats up.
"We've seen companies cancel meetings last minute, leaving 100 percent on the table just to avoid criticism and ridicule," said Frits van Paasschen, president and chief executive of White Plains, New York-based Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. lodging company, who attended the White House meeting.
"We've also seen meeting planners move meetings from resort locations to city locations, at a greater cost to their companies, again, for optics' sake," he said.
A preliminary survey by the U.S. Travel Association, a Washington trade group, suggests the hotel industry suffered about $1 billion in cancellations in January and February. Las Vegas has been hit especially hard, losing more than $131 million in non-gambling revenue in recent months.
On March 18, the U.S. Commerce Department reported that spending on travel and tourism fell 0.4 percent in 2008, the first yearly decline since 2001. Spending on accommodations fell 10.1 percent in the fourth quarter of 2008.
‘Sense of McCarthyism'
The political rhetoric "has a terrible sense of McCarthyism about it," said Laurence Geller, president and chief executive of Chicago-based Strategic Hotels & Resorts Inc., which owns 19 properties, including the Hotel Del Coronado in San Diego, and who didn't attend the Washington meetings.
Christopher Dodd, a Connecticut Democrat who heads the Senate Committee on Banking, Housing and Urban Affairs, sponsored the amendment to the $787 billion stimulus package that requires companies that received funds from the Troubled Assets Recovery Plan to curb "excessive or luxury expenditures," including spending on events and private jets.
Over the weekend of Feb. 27, two weeks after the Senate passed the measure, the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee, the party fundraising arms for Senate candidates, each held their annual winter meetings in Florida.
Naples Fundraiser
About a dozen Democrats, including Dodd, 64, gathered at the Marriott-operated Ritz-Carlton resort in Naples, Florida. Donors who gave at least $15,000 were invited and offered a "coastal view" room at the group rate of $469, according to the Democrats' invitation.
At least 11 Republican senators held a similar retreat at The Breakers resort in Palm Beach. Rooms could be had for $475 a night. For another $292, participants could play in a golf tournament. The invitation urged guests to make reservations for the resort's spa "indulgences."
Dodd spokeswoman Kate Szostak didn't return phone calls and emails seeking comment. Afshin Mohamadi, a spokesman for Senator Robert Menendez of New Jersey, the chairman of the Democratic Senatorial Campaign Committee, didn't return a call seeking comment.
Democratic committee spokesman Eric Schultz said the group doesn't comment on its fundraising.
Republican Response
Brian Walsh, spokesman for the Republican Senate Committee, which is led by Senator John Cornyn of Texas, said the spending for the congressional meetings in no way resembles the actions of financial institutions that accepted billions of dollars in taxpayer bailouts and then spent money on sales meetings and conventions.
"This was not paid for by taxpayers or the government," Walsh said. "It's private donations from contributors,"
Hotel executives said their business began to suffer after Obama, 47, warned Feb. 9 during a town-hall meeting in Elkhart, Indiana, that companies receiving bailout money "can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime."
Soon after, Northern Trust Corp. was criticized for organizing a conference and golf tournament in Beverly Hills, California. The Chicago-based bank received $1.6 billion in federal bailout money.
‘Frittered Away'
House Financial Services Chairman Barney Frank and 17 other lawmakers on Feb. 24 demanded that the company return what it "frittered away on these lavish events."
The day the senators boarded the planes for Florida, San Francisco-based Wells Fargo & Co. — which received $25 billion in bailout funds — canceled a four-day event in Las Vegas, saying the trip may send mixed signals to the public.
"We can only shake our heads at the cynical behavior of our politicians," Geller said. "It is political rhetoric to fan the fuel of fear."
Van Paasschen of Starwood said the senators' Florida trip sends another message.
It "speaks to the point that getting out and traveling is important," he said. "I would encourage the members of our government to get out and travel."
