Industry Begs Businesspeople to Travel

Nov. 2, 2009— -- The age of high-flying executives filling those first-class seats is long over. Or is it?

Airlines, hotels and others in the travel are trying to convince businesses that it's OK to travel once again. In a series of new ad campaigns and slogans, they are trying to pitch the importance of meeting customers in person and trying to erase some of the negative stigmas attached to once-extravagant travel.

Business travelers are often the most profitable customers for airlines, hotels and car rental companies. They book at the last second, often make several changes to their travel plans and are often more concerned about time and convenience than price.

But the recession changed all that. Companies scaled back -- or even eliminated -- travel budgets. Those business people who were still traveling generally downgraded from 5-star hotels to 3-star hotels and flew coach with everybody else.

Now the travel industry is fighting back.

"We got vilified. We got vilified for being who were we. The media jumped all over anybody who was walking through the doors of a luxury hotel to have a meeting," said Bruce Himelstein, senior vice president for sales and marketing at Ritz Carlton.

Himelstein said it got "way out of hand" with companies taking heat whether they took government bailout money or not. In the public's eyes it didn't matter if they were a Wall Street firm or a successful farming company.

"If you were walking through the hotels of a luxury hotel, you were a bad person," Himelstein said.

So now the luxury hotel company is pushing a new message about staying at its properties and, more importantly, holding corporate events and retreats there. In advertisements in the Wall Street Journal and in communications with clients the message has been: "It's not extravagant if it produces results."

No matter how competitive Ritz Carlton and other luxury brands were, Himelstein said, there was a six-to-eight-month period when organizations just could not tell their board of directors that meetings would be held at a luxury resort, especially at a time when companies were laying off thousands of workers.

Now that feeling has subsided, he said, and hotels can start pushing their message of the importance of in-person meetings. Himelstein said such retreats build a corporate culture, raise morale and help workers build connections.

"When people get together, there's a dynamic that takes place that you just can't replicate," he said.

Even Las Vegas, home of "What happens here, stays here," is now trying to lure in businesses with a new line: Vegas Means Business.

Jeremy Handel, a spokesman for the Las Vegas Convention and Visitors Authority, said the Nevada city has always attracted conventions and business meetings but is now focusing on more mainstream companies.

Instead of just advertising in meeting and convention trade publications, the city is now running ads in Forbes, Fortune, USA Today, The New Yorker and others.

One of the ads features a business executive in a suit saying: "No, I've never shouted 'Woo-Hoo' out of a limo." The ad then says: "If you don't think Vegas is a serious place for business, then you are missing out."

"We want to drive home the fact that business travel means business for them," Handel said. "Face-to-face meetings are how things get done."

There are about 140,000 hotel rooms in the Las Vegas area. Leisure travelers can't fill them all. The city relies on large conventions and smaller business meetings to fill those beds. (The Consumer Electronics Show in January, the largest annual convention in Vegas, brought in 110,000 visitors last year.)

British Airways took things one step further, giving away more than 1,000 tickets (and some hotel rooms) to business people who won an essay competition. The business people were asked to make a case for their unmet business travel and why traveling would help grow their company. They were given free flights from New York, Chicago or Los Angeles to London, or anywhere in the world that British Airways flies, to attend a crucial meeting.

David and Cathy Goff, owners of DIVADEVA, were two of the winners. They sell their line of anti-aging skincare products around the world, but thanks to the recession stopped traveling to meet with distributors and clients.

Pre-recession, at least one of them was on the road usually once a month, spending 50 to 60 nights a year in hotels. They attended trade shows, met with distributors and made deals. But then went the economy fell apart, they cut expenses, including travel.

"We were very, very nervous for our business because nobody was buying luxury products," Cathy Goff said.

The Goffs were on the first plane of winners, back on Sept. 15, and attended a trade show in London and then went to Nice, France, to meet with a new distributor.

Suddenly old clients, who had only been talking to the company's overseas representative, were interested in once again placing orders.

"People don't like to go through a third party. They want to deal directly with you and unless you can get to see them, you can't do your job the way you should," Cathy Goff said.

As a result of the trip, the Goffs said, they were able to expand their products to 14 new countries.

Simon Talling-Smith, executive vice president, head of the Americas for British Airways, summed up his airline's message this way: "If you are going to seal the deal, you have to be there in person."

"If you want to grow your business, you can't just stay locked in your office with a cell phone and e-mail. You have to get out there and meet customers, suppliers and partners," Talling-Smith said.

Business travelers make up about half of the airline's revenues, he said, but are clearly less than half of the passengers. They just pay substantially more.

Consider this: a highly-restricted coach ticket between New York and London, booked well in advance, will cost as little as $290 roundtrip plus taxes and fuel surcharges. A ticket for an upper economy seat, called World Traveler Plus, would cost $699 plus the taxes and fees. The cheapest business class seat under those same conditions is $2,296.

And business travelers often book last-minute and make costly changes to their itineraries, adding more profit to the airline's bottom line. However, Talling-Smith said such habits are now changing.

"They've actually started to act like leisure travelers," booking in advance and hesitating to make changes, he said.

Through its campaign, British Airways hopes to convince companies that it is dangerous to see travel as a discretionary expense, he said.

"As long as each business is procrastinating about spending money on travel, they're taking the gamble that their competitors are also procrastinating," Talling-Smith said. "As soon as their competitors start getting out there and meeting the customers face to face, you'll find you will start to lose market share quite fast."