ASAE Urges Sen. Kerry to Reconsider Addition of More TARP Travel Rules

HIL ANDERSON, SENIOR EDITOR
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Washington, DC – The exhibition industry urged Congress to defer to new rules from the U.S. Treasury on the participation of firms receiving government financial assistance in events rather than adopt even tougher restrictions that could further dampen the meetings industry.

The American Society of Association Executives (ASAE) sent a letter to Sen. John Kerry, D-Massachusetts, after Kerry announced he would introduce a bill banning companies receiving money from the Troubled Asset Relief Program (TARP) from “hosting, sponsoring, or paying for conferences, holiday parties and entertainment events.”

In its February 26 letter the ASAE told Kerry, a senior member of the Senate Finance Committee, that the Treasury had already announced corporate guidelines for spending on events that should be given a chance to work. “These rules clamp down on excessive or unnecessary spending while permitting reasonable expenditures for educational conferences, trade shows and other legitimate events,” said the letter, which was signed by ASAE President and CEO John Graham.

The Treasury guidelines issued February 4 require the boards of directors of each TARP company to adopt a company policy on “luxury expenditures.”  The policy, however, exempts reasonable spending for sales conferences as well as incentives, staff development and “other measures tied to a company’s normal business operations.”

The ASAE told Kerry the guidelines were adequate to protect both taxpayers and the business travel industry, which has been buffeted by the ripple effect of cancellations and cutbacks by companies that are not on the TARP roster but are nonetheless uneasy about potential public criticism of their participation in events.

Kerry’s press office March 2 confirmed with Trade Show Executive that the planned legislation would apply to entertainment-oriented events and not to trade shows and professional conferences.  Kerry said earlier the legislation was a response to the public flap over Northern Trust Bank, a company that was the recipient of $1.6 billion in TARP funds and which put on a full slate of parties around Los Angeles in conjunction with the PGA tournament it sponsored last month.

ASAE said that while the travel industry agreed that TARP recipients should curb “extravagant spending practices,” the Treasury guidelines and best practices developed by a coalition of travel and exhibitions industry associations were the best solution.

“Now is not the time to exacerbate the decline of a vital industry in the United States,” the ASAE letter said. “Meetings and events are crucial to the bottom lines of associations like ours and those of our members, and we must have priorities in place that allow these legitimate meetings to take place.”

Reach John Graham at (202) 626-2741 or jgraham@asaecenter.org

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Full Text of ASAE Letter to Sen. Kerry:

February 26, 2009

Sen. John Kerry
U.S. Senate
218 Russell Senate Office Building
Washington, DC 20510

Dear Senator Kerry:

On behalf of thousands of trade and professional associations and industry partners
who are dependent on a healthy and vibrant meetings industry, I must respectfully ask
you to consider the cooling effect your proposed legislation of Feb. 24 – the TARP
Taxpayer Protection and Corporate Responsibility Act – would have on an essential cog
in the U.S. economy.

The American Society of Association Executives (ASAE) represents more than 24,000
association professionals from all 50 states and 50 countries abroad – the
overwhelming majority of whom hold annual meetings, conventions, educational
seminars and trade shows in the United States. These meetings are a multi-billion dollar
business and an integral piece of the related hospitality and travel industries, as well as
the economic stability of destinations in the Commonwealth of Massachusetts and every
other state in the union.

While we understand and share your regret that some firms receiving TARP funds have
used those resources in ways that have breached the public trust, we urge you to
consider the unintended fallout from your proposed legislation to prohibit any recipient
of TARP funds from hosting, sponsoring or paying for conferences and events.

We absolutely agree that companies receiving TARP funds must end all extravagant
spending practices and be accountable to taxpayers. But the Treasury Department has
already instituted new guidelines this month to ensure that public funds issued to
struggling institutions are directed only toward the public interest in strengthening our
economy, and not toward inappropriate, frivolous gain.

The Treasury guidelines require the boards of directors of companies receiving TARP
funds to adopt company-wide policies on any expenditure related to travel and
conferences and events. These rules clamp down on excessive or unnecessary
spending, while permitting reasonable expenditures for educational conferences, trade
shows, and other legitimate events.

To assist companies in abiding by the new Treasury guidelines, the leaders of key
organizations representing the meetings, events and incentive travel industries
collaborated to issue model policies for approval of company travel to meetings and
events. These model policies are designed to ensure transparency and accountability
from recipients of government lending, while protecting the more than 1 million
American jobs supported by corporate meetings and events. We have enclosed these
model policies with this letter for your review.

The public furor over these reported abuses of TARP funds, while warranted, comes at
a time when economic pressures are already forcing many companies to reduce
business travel in their budgets. The hospitality and travel industry has confirmed that
the portrayal of meetings and events as lavish, unnecessary expenditures has led to
cancelled bookings from other organizations – including those not receiving emergency
lending from the government.

According to the U.S. Travel Association, which represents all components of the $740
billion travel industry, the Department of Labor reported a loss of nearly 200,000 travel related
jobs in 2008 and the Commerce Department predicts a loss of an additional
247,000 travel-related jobs in 2009.

Now is not the time to exacerbate the decline of a vital industry in the United States.
Meetings and events are crucial to the bottom lines of associations like ours and those
of our members, and we must have policies in place that allow these legitimate
meetings to take place. Given the dollars at stake, meetings and events should be a key
contributor to America’s economic recovery, not further evidence of its precipitous
decline.

Thank you for your consideration of this important issue, and please do not hesitate to
contact us for more information. If we can assist your understanding of issues impacting
associations and the meetings industry, please contact me or Jim Clarke, ASAE’s
senior vice president for public policy, at 202-626-2865 or jclarke@asaenet.org.

Sincerely,

John H. Graham IV, CAE
President and CEO