Tarp Rules Cited in Travel Drop

A preliminary survey by the U.S. Travel Association said the hotel industry suffered about $1 billion in cancellations in January and February, a decline the industry attributed in part to restrictions on companies like Northern Trust Corp. and Wells Fargo & Co. that received federal bailout funds.

Hotel industry executives said their business began to suffer after President Obama warned Feb. 9 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." Sen. Christopher Dodd, D-Conn., sponsored an amendment to the $787 billion stimulus package requiring companies that received funds from the Troubled Asset Relief Program to curb "excessive or luxury expenditures."

Soon after Obama's Feb. 9 remarks, Northern Trust, a Chicago banking company that received $1.6 billion in federal bailout money, was criticized for organizing a conference and golf tournament in Beverly Hills. Wells Fargo canceled a four-day trip to Las Vegas, saying it might send mixed signals to the public.

On March 18 the Commerce Department reported spending on travel and tourism fell 0.4% last year, the first yearly decline since 2001. Hotel industry leaders argue new legislation is having a broad impact on the business even though the restrictions are intended to apply only to recipients of federal bailout money.

"We've got to have Washington stop beating up on us," said Frank Fahrenkopf, a former chairman of the Republican National Committee and the president of the American Gaming Association.

Hotel industry leaders say lawmakers are being hypocritical. Over the weekend of Feb. 27, the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee each held their annual winter meetings in Florida. About a dozen Democrats, including Dodd, gathered at the Ritz-Carlton resort in Naples, Fla. At least 11 Republican senators held a similar retreat at the Breakers resort in Palm Beach.

Hotel executives are seizing on those trips as ammunition in a campaign to get lawmakers to tone down their criticism of certain business travel spending.

Executives of the hotel industry met with President Obama and three Democratic senators on March 11.

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