'AIG effect' tones down lavish business events
— -- In past years, partners of global executive search firm Stanton Chase conducted business meetings in South Africa during a long trip with their families that included a safari. They also enjoyed Sydney during a gathering at the Australian city's Ritz-Carlton.
But next month, the firm's partners will huddle at a Marriott in the suburbs of Nashville, chosen partly for its access to low-cost Southwest Airlines, says Mickey Matthews, a Stanton Chase executive. The firm is also overlapping meetings to avoid the expense of flying people out twice.
Today, "practical" has replaced "memorable" as the buzzword in high-end business circles. Companies are canceling splashy events and lavish business dinners or revamping the way they plan them. The new mood means drastic changes for employees who've come to expect five-star treatment, as well as hoteliers and travel planners who base their businesses on such meetings and incentive travel trips.
They've even coined a new phrase for the trend: "the AIG effect."
It comes from the embarrassing disclosure last fall that struggling insurance giant American International Group had spent about $400,000 on a retreat at a luxurious St. Regis resort and spa after taking an $85 billion federal bailout. After that, hoteliers saw mass cancellations or postponements of previously booked upscale trips and meetings.
Businesses usually cut back on luxury travel spending in tough times, but new image concerns raise additional worries, says Bjorn Hanson of New York University.
"There's not many companies out there that want to see their name on the reader board in a four-, five-star hotel nowadays," he says.
Smaller checks at dinner
The mood is evident even at business dinners. At Morton's in Midtown Manhattan, where a steak typically costs $50, the average check for business meetings and dinners is getting smaller, says Barbara Rodriguez, the restaurant's sales manager. People are scheduling early dinners or lunches instead of four-course meals, she says.
