No Stimulus For Hotels, Sports Events
Congress last month approved $787 billion in new spending to stimulate the economy and preserve jobs. Somebody tell that to the 13.2 million Americans who work in the leisure and hospitality industry - whose customers are standing aside in droves, partly because of those very same lawmakers' sermons against corporate "excess."
Business at hotels, sports stadiums and downtown restaurants - a leading source of unskilled and semi-skilled jobs in urban areas - is off sharply across the country. The obvious culprit is the recession. But there's more to it than economics. Striking a pose against corporate "luxury," elected officials have raised a hue and cry about any and all business entertainment. That campaign to equate austerity with good citizenship is further dampening an already beleaguered sector of the economy, raising the prospect that hotels and similar businesses will have to lay off still more workers than they would have otherwise.
As of the end of February, hotels nationwide were taking in 18.5 percent less revenue per available room than a year ago. In New York, revenue per available room was down 27.9 percent, according to Smith Travel Research, a leading publisher of hotel industry data.
A String of Cancellations
Within the past month or so:
- Wells Fargo said it will rein in client entertainment and other spending at this year's PGA Wachovia Championship in Charlotte, which the bank sponsors under a multi-year contract with the PGA tour. Earlier, Wells Fargo caved in to congressional and media pressure and cancelled a Las Vegas incentive trip for its top mortgage salesmen.
- Morgan Stanley said it canceled "participation" in a June PGA golf tournament in Ohio. It will still sponsor the event but won't send clients or executives there, the firm said.
- Bank of America said it canceled all employee incentive trips.
- Sen. John Kerry (D-Mass.) said he will introduce legislation to ban "extravagant spending practices" by banks that receive taxpayer-funded aid.
- Citigroup faced ongoing pressure to walk away from its 20-year, $400 million deal to have its name on the New York Mets' new baseball stadium.
One Alternative: Repay TARP Funds
Northern Trust, however, bucked the trend. That profitable Chicago-based bank opted to give back the $1.5 billion in taxpayer aid it took, rather than knuckle down to criticism of its sponsorship of a golf tournament in southern California in February.
Northern Trust told Congress it's talking with regulators about how to repay its TARP funds "as quickly as prudently possible under the new guidelines."
House Financial Services Committee Chairman Barney Frank (D-Mass.) had demanded immediate reimbursement of the cost of the golf tournament and related entertainment.