Downturn hits U.S. corporate meetings

By John Buchanan

ORLANDO, Florida (Reuters) - The storm buffeting the U.S. economy threatens to swamp the $175 billion corporate meetings industry as companies seek to cut back on expenditure by reducing the number of conferences they hold.

By organizing fewer big meetings in distant cities, companies can save millions on airline seats, conference hall bookings, hotel rooms and a range of smaller items.

But those savings -- while smart for the companies -- are provoking a crisis in the industry that provides the services.

"I've been in this business 40 years and I've never seen anything like this before," said Kevin Maguire, president of the National Business Travel Association.

"I call it the DDE for 'devastating domino effect'," said Maguire. It is having an impact from cab drivers and florists to restaurants and street vendors, he said.

Tammi Runzler, vice president of convention sales and services at the Orlando Convention and Visitors Bureau, compared the situation to the weeks after the attacks of September 11, 2001, when fear of air travel gripped much of the business world.

A total of 64 percent of companies globally will reduce spending on meetings next year, a figure that has doubled since August, according to research by Meeting Professionals International, the world's largest organization for meeting executives.

A separate survey, by Maguire's National Business Travel Association, presented a more mixed picture. It showed that about 38 percent of U.S. companies will maintain their meeting budgets next year, with the remainder about equally split between those planning to cut their budgets and those increasing them.

Companies that are increasing spending on meetings understand that during an economic slump training conferences and sales meetings are even more important, Maguire said.

"AIG SYNDROME"

To make matters worse, many companies have slashed their meetings budget based on the experiences of insurance company AIG, said Meeting Professionals International President Bruce MacMillan.

AIG ran into a storm of negative publicity in October, when it flew top independent brokers and some of its executives to California for a lavish week-long retreat shortly after it received an $85 billion government bailout. Brokers had earned the trip based on their sales prior to the bailout.

The situation was made worse by media coverage of a conference in November for 150 of AIG's top independent brokers at the Pointe Hilton Squaw Peak Resort in Phoenix.

In the hotel industry, such cancellations were known as "AIG syndrome," said Barry Brown, director of sales and marketing at the landmark Hotel del Coronado in San Diego.

Among other signs of a downturn in corporate meetings, new business leads are down 21 percent from 2007 at the Orlando Convention and Visitors Bureau, according to said Tammi Runzler, vice president of convention sales and services.