Born a year ago and more than 2,000 miles away, the "AIG effect" continues to cause pain for South Florida's tourism industry.
A year ago this week, about 100 insurance executives and their spouses gathered at a St. Regis resort near California's Laguna Beach for a posh weekend of massages, cocktail parties and pampering. American International Group picked up the $440,000 bill for the getaway — designed as a reward for top sales producers. It began the same day Washington authorized an $85 billion bailout of the teetering insurer.
Outrage fired through the political arena — Barack Obama, at the time a presidential front-runner, called for the firing of any AIG executives responsible. The backlash prompted a wave of conference cancellations across the country as companies feared being blasted for lavish travel in a severe recession.
Some industry watchers predict meetings business will improve next year, and the Travel Industry Association, a trade group, has launched a campaign to point out the economic importance of conventions.
But for now, "resort communities have been demonized," Loews Hotels CEO Jonathan Tisch complained during a recent interview at the company's 790-room hotel in Miami Beach.
For South Florida's hotel industry, the "AIG effect" distinguishes this recession from past ones, with meeting bookings dropping farther and resisting a rebound, industry watchers said.
"Nobody could have forecast the weakness in group" bookings, said Scott Berman, a hotel analyst in Miami and head of PricewaterhouseCoopers' hospitality division. "I use the word 'unprecedented.' "
While there are no firm numbers locally or nationally, industry surveys show half of U.S. companies cut back on travel spending this year. Future group bookings by the Greater Miami tourism bureau, which represents South Florida's largest hotel market, are down 30 percent this year.
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