AIG impact: shooting down a myth

Conventional wisdom often expressed in the media is that super luxury hotels and resorts were hard-hit by the AIG effect, which was prompted when that company held a lavish meeting after taking billions of taxpayer dollars.
 

But that is turning out to be largely a myth.
 

Smith Travel Research (STR) says the top tier of hotels will fare better than any other segment this year. It also says US luxury hotels have seen growth of up to eight percent in the past few months, much of it coming from a rise in corporate travel.
 

“If you look at the luxury segment over the last few months, there has been substantial recovery at the high end. It had the best demand performance in 2009,” said STR President Mark Lammano.
 

He predicts high end and luxury hotels and resorts will recover at a faster rate than any other part of the travel market.
 

“The AIG effect was more myth than realty. If it existed at all, it went away in a hurry,” he said.
 

One reason for that is higher-end hotels have found ways to cut into the business of lower-tier properties.
 

“Everyone talks about the AIG effect, but there are a lot of planners out there who say ‘If I can stay at a five-star for the same price as a three-or-four star, why wouldn’t I do that?’” said Greg Champion, CEO for Benchmark Hospitality.
 

“The planners I’m working with are definitely taking advantage of the great deals,” said Barbara Thavis, president of Select Meeting Sites.
 

Higher-end hotels are often luring meeting-goers with offers of concessions such as amenities, audio-visual discounts, complimentary meeting space and free welcome cocktails.
 

The impact is that while the meetings business is still far below what it was several years ago, bookings are heading back up, said Tim Ryan, vice president of sales for The Lodge at Pebble Beach and The Inn at Spanish Bay, two luxury resorts in California.
 

A dying down of negative press on the subject has helped. “The perception issue is still there but planners seem to be able to make a better argument for holding a meeting at a resort,” Ryan said.
 

Knee-jerk perceptions have also changed.
 

“Now the attitude is that if a meeting is needed, let’s have a really solid, defined purpose for the meeting,” said Mark Sergot, vice president at Fairmont Hotels.
 

By David Wilkening