Business & GA, Commercial

Editor’s Note: Hotels And Bizjets

By Bill Carey | April 1, 2009
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I was comparing notes with my brother the other day about the sorry state of the economy. He’s an executive at a luxury resort in Florida. Nice place, to say the least. I’ve stayed there before (at a discount) and imagined: this is as good as it gets. Dinner gave me pause — the cheapest cut of steak was $28, sans vegetables — but hey, mi hermano said he’d pick up the tab.

No surprise the hospitality industry is taking a beating in this recession. Thousands of corporate meetings and events have been canceled, thanks in large part to the "AIG effect," the fear of inviting the kind of public rebuke insurer AIG did after hosting its agents at the St. Regis Monarch Beach Resort within days of accepting an $85 billion loan from the Federal Reserve. Adding to the hurt, the Treasury Department in February issued guidelines for financial institutions receiving government assistance. Among the requirements: "a company-wide policy on any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties, and conferences and events." CEOs are required to certify any expenditures "that could be viewed as excessive luxury items."

The fall-out goes beyond companies on the federal dole; a recent survey by Meetings & Conventions magazine found that 20 percent of companies not receiving taxpayer dollars had cancelled events due to negative publicity.

Lost and cancelled hotel bookings endanger the wait staff, the bartender, the bellman and the housekeeper, but also a few others my brother mentioned that didn’t immediately come to mind — companies that wash the linens, rent audio visual equipment, deliver flowers, do the décor. "Luxury is way down," he lamented, adding industry was slow to react to the negative media coverage and government heavy-handedness.

But it has responded. The U.S. Travel Association in early March launched "Meetings Mean Business," a campaign "intended to push back against the political demonization of business meetings and events." Companies receiving federal assistance must be held to a different standard, "but the pendulum has swung too far," said Roger Dow, CEO of the travel organization.

On a similar trajectory, the National Business Aviation Association and General Aviation Manufacturers Association in mid-February launched "No Plane, No Gain" to underscore the economic importance of business aviation. This is an industry, dominated by the United States, that annually contributes $150 billion to economic output and employs 1.2 million people, the associations say. Yet mainstream media would have you believe it’s an enabler of robber barons. The rap sheet has the public up in arms: Detroit automobile executives descend on Washington in luxury jets, hat-in-hand; Citigroup fat cats covet new Dassault Falcon 7X before government intervenes; Bank of America President Ken Lewis, summoned to New York to explain $3.6 billion in bonuses, arrives in Gulfstream G5.

Count me among those who believe these "masters of the universe" are grossly overcompensated for the results we’ve seen. But condemning a bad-apple CEO or corporation is one thing; casting aspersion on a high-tech industry with a positive trade balance is something else. Slowed production and cancelled orders affect more than just laid-off assembly workers at Gulfstream, Cessna and Hawker Beechcraft; the contraction in business aviation hurts suppliers, corporate flight departments, MROs, FBOs and yes — aviation magazines. You better believe Honeywell and Rockwell Collins care. Rockwell Collins cited business aviation specifically in lowering its sales expectations this year by $200 million.

This is no polemic against the Obama administration, which I believe is applying the necessary rudder inputs to right the ship of state. I’m an admirer of the new president. I was among the 1.8 million people who gathered on the esplanade in front of the U.S. Capitol in late January, eating cough drops, swabbing my nose with toilet paper, to see him take the oath. Thanks to a connection of my sister’s, I landed in front of probably 1.795 million of the others, and actually had a seat for this historic event. Unlike Rush Limbaugh, I want this administration to succeed.

But the vilification of fancy hotels and business jets without apparent regard to the industries they sustain is troubling. We can throw out the bath water; just keep the baby.

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