Return of the Lavish Corporate Retreat

Oct. 8, 2009— -- The recession might have kept American travelers home -- or at least closer to home this year, but the real damage for the industry has been corporate travel, especially the booking of business class airplane seats and corporate retreats at lavish resorts.

But now there appears to be a glimmer of hope. Hotel and convention organizers say that more events are being booked and that businesses are slowly becoming more willing to spend again.

This year goes down as one of the worst for the travel business in decades but 2010 is looking a bit brighter and by 2011 many industry executives expect a rebound. It won't be like the boom times seen just back in 2006 and 2007, but they predict there will be a return to profitability.

In the meantime, leisure travelers used to deals, promotions and all sorts of price cuts shouldn't fret. They aren't disappearing anytime soon for hotels or cruises. There is still a massive surplus of rooms available and companies are doing whatever they can to fill those spots.

"I think it's still going to be a very much promotion-driven market. Consumers are going to be very cautious about spending discretionary income. They will still travel, but they will have to see a value that is well defined," said Gary Sain, president of the Orlando/Orange County Convention & Visitors Bureau.

"The message here is that there is no better time to travel in the history of travel. There are so many great values out there."

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Sain said the industry has hit it bottom and is slowly climbing out of its troubles.

"It is going to take several years to get back to the upward growth that the travel industry saw back in 2006 and 2007," he said.

But the real bread and butter for hotels comes from conventions. Corporate scandals, bankruptcies and just general belt-tightening evaporated that market in 2009.

"Where most destinations have felt it is on the meetings and convention side," Sain said. "I call it the AIG affect."

Bruce Seigel, director of sales and marketing for the two Ritz-Carlton resorts in Naples, Fla., said that corporate retreat bookings in "2010 and 2011 are quite strong."

"There was certainly a hysteria that took place," Seigel said, but now companies realize that they need to recognize and reward their employees.

"Our key messages is: It's not extravagant, if it produces results," he said.

(Like many other high-end resorts, the two Ritz properties did not cut rates for individual tourists but were offering packages that included up to $180 in nightly credits to be used at restaurants, the spa, golf or elsewhere at the resort. Those deals aren't going away.)

Lindsey Ueberroth, executive vice president of Preferred Hotel Group, said that the downturn in corporate travel has also really hurt her member hotels.

"If they are traveling they are sending fewer people, they're having shorter stays," Ueberroth said. "They used to send executives to four and five star hotels, now they are staying at four star hotels or lower."

But now for the end of 2009 and the beginning of 2010, Ueberroth said, the majority of Preferred Hotels are seeing a rebound in corporate meetings and events.

(Leisure travel is also going to take longer, she said, with "people really watching what they spend, looking for great deals" for at least another year.)

The biggest change with these corporate getaways is going to be the tone said David Tobin, founder Dream Escape, a luxury tour booker and operator in Scotland. The events he is now planning are more half-meeting, half incentive.

"They're less showy and expensive and more of a business angle to them," Tobin said. "They're still trying to reward people and incentivize them but it's less dramatic in terms of what they are doing."

Companies bailed on the trips this year because of appearances and because they simply didn't know how back the recession would get. But now, he said, they realize that there's a place for it.

"People are going to have to start getting competitive again and it's all about relationships and developing new business," Tobin said. "A lot of people in certain businesses are no longer there, so new relationships need to be formed. People do that as much over a meeting-room table as out on the golf course."

Tobin said that his leisure clients are also starting to return a bit to normal.

His traveler isn't your typical one: "Sixty-five percent of our clients come in on their own private jets," he said.

"It's not that they don't have the money or the marketing budget, but they just can't be seen to be spending. That's the biggest issue that we've found," Tobin said.

Still, some are going over-the-top. Tobin is helping a woman plan a 60th birthday celebration for her husband. She is paying to privately fly in 150 of his friends for the party.

"If you want to celebrate, you have to do that then. You can't put that off," Tobin said.

Scott Wiseman, president of high-end tour operator Abercrombie & Kent's U.S. office said that people are booking slight shorter trips, not necessarily to save money but because they don't want to be away from the office too long. He said that people are still going on big group trips for big anniversaries or birthdays but that a lot of tourists are now adding some type of philanthropic or volunteer work onto their itineraries.

The biggest change though has been how far in advance people book, Wiseman said. They are waiting until the last possible moment to book.

"With many different companies advertising specials all over the place, people just had the perceptions that there was availability last minute and so they could afford to wait," he said.

But ultimately at the high end, people are still traveling and "popular destinations like Egypt and the Galapagos continue to be sold out regardless of the downturn."

"Probably 80 percent of the people traveling with us are going to travel when they want, how they want and are not that concerned with a discount. And about 20 percent are looking for some value or added incentive."

Jaume Tapies, president of the upscale restaurant and hotel group Relais & Chateaux, said depending on the country things "are going a lot better."

For instance, "The south of Europe is suffering a lot more than the rest of Europe."

Tourists are waiting a lot longer to make plans. People used to make restaurant reservations a month in advance; now they are booking the same week. Hotels used to be six months out; now just three.

He is also seeing shorter vacations and U.S. and British citizens staying closer to home.

Ultimately he thinks the trends will reverse and travel will once again be robust.

"In recent years," Tapies said, "people traveled more than ever. They discovered the world. They aren't going to stop doing it."