Meeting Mentor Magazine

September 2022

Cover Story

Government Shutdown Compounds
Impact of Travel Cutbacks

It wasn’t enough for meeting organizers that by mid-August, federal agencies had cut their travel spending by $2 billion since the onset of the Obama administration’s executive order to cut government waste in mid-2011. Whether or not it is resolved this week, the federal government shutdown that began October 1 promises to compound the impact on the meetings industry.

The pain is being felt. “About 35 percent of the attendance at our annual convention comes from the U.S. military. Last year, cutbacks on government travel decreased overall attendance by about 10 percent. This year, the federal shutdown, sequestration and government travel restrictions will likely result in 20 to 25 percent lower attendance than ‘normal.’ Indeed, if this goes on much longer, we will have to start redefining ‘normal’ for our convention,” reported John Cudahy, president, International Council of Air Shows.

Industry associations quickly responded. The Professional Convention Management Association’s CEO Deborah Sexton stated, “The government shutdown is very disappointing. Our hope is all parties come to an accord quickly and the impact to the meetings industry, a vital contributor to our country’s revenue and employment, is minimized.” The Global Business Travel Association called the shutdown “self-destructive,” with “rippling effects throughout the economy.” In a survey of business travel professionals released late last week, GBTA found:

• Cancelled meeting or business opportunities in the U.S. (57%).

• Increased uncertainty about the economy (57%) and cancelled bookings (57%).

• Cancelled and delayed contracts with government agencies (48%).

Does the shutdown qualify as force majeure? Here’s what Barbara Dunn, ConferenceDirect MeetingMentor’s legal columnist and partner at Barnes & Thornburg, LLP, had to say: “The two requirements of invoking a force majeure provision are: Does the current issue fall within the ‘grocery list’ of calamities, and if it does, has the current issue impacted either party’s performance to the standard stated in the provision? For the first requirement, if the force majeure clause has a ‘catch-all’ statement such as ‘or any other cause beyond the parties’ control,’ I would say the provision applies to the current government shutdown. If the clause states ‘or emergency beyond the parties’ control,’ the government shutdown does not likely qualify in its current state. As for the second requirement — the standard of impact — phrases that make it more likely force majeure would apply in the government shutdown situation include: ‘inadvisable or commercially impractical,’ or ‘materially affects at least 30 percent of people from traveling to the meeting.’ If the provision simply stated it would apply only if performance were ‘impossible,’ the requirement would not likely be met with the current situation unless the meeting involves a government facility currently closed.” As always, talk to your legal counsel…

Meanwhile, meeting organizers can expect even more diminished attendance from the government sector as new policies take hold:

• The General Services Administration set new per diem rates for FY2014 at 5 percent below the average daily rate of the local market. These maximum reimbursement rates for federal employees went into effect October 1. The per diem average lodging rate rose to $83 from $77 in FY2013, while the average rate for and meals and incidental expenses remained unchanged at $46.

Examples depending on season (lodging maximum, meals and incremental expenses): Atlanta — $133, $56; Chicago — $130-$190, $71; Houston — $109, $71; New York City (5 boroughs) — $216-$295, $71; Orlando — $97-$111, $56; San Francisco — $155-$184, $71; Seattle — $137, $71.

• By eliminating the Conference Lodging Allowance (which permitted federal travelers at conferences to spend 25 percent above per diem rates), the federal government will save an estimated $10 million, according to GSA.

• To obtain further savings, GSA recently announced that its City Pair Program — which provides discounted airfares from 10 major U.S. carriers for federal government travelers — increased available routes by 25 percent to 6,300 destinations. The overall rates for 2014, GSA claimed, are consistently below corporate benchmark rates in all markets. Average one-way fares for domestic flights were down 4 percent and international rates 7 percent. Many secondary markets not in the program in 2013 have been added, as airlines this year offered competitive rates. In all, the program is projected to save agencies a total of $2.2 billion a year.

In an analysis of conference spending by federal departments, STR identified the 16 largest departments in total employment (representing almost half of 2.7 million federal civilian workers). These reported 895 conferences (with more than $100,000 in expenses) costing $294 million. STR found that:

— The Department of Defense led all the others, holding 295 conferences with almost $90 million in spend (representing just 0.01 percent of the department’s entire budget for 2012).

— The Department of Veteran Affairs came next with $72 million in conference spending, followed by the Department of Health & Human Services with $56 million.

— The combined spending of $162 million by the Department of Defense and Department of Veteran Affairs accounted for more than half of the $294 million among all departments STR analyzed. Adding in the Department of Health & Human Services, the three departments were responsible for just under three-quarters of the conference spending of all departments. — Maxine Golding

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About MeetingMentor
MeetingMentor, is a business journal for senior meeting planners that is distributed in print and digital editions to the clients, prospects, and associates of ConferenceDirect, which handles over 13,000 worldwide meetings, conventions, and incentives annually.

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