Besides the war on terror, the nightly news regularly reminds us of one other development: Once the economic bubble burst at the end of the '90s, executive behavior that wasn't previously questioned became ripe for examination.
And when the entities scrutinized are those entrusted with public funds, such as convention and visitor bureaus (CVBs), the spotlight can burn brightly, and uncomfortably. In fact, the bulb's been used so much it may need changing: In the past three years alone, CVBs in at least 10 major cities have come under investigation for indiscretion, and even impropriety, in their spending, accounting, or compensation practices. Funded in most part by local hotel and motel bed taxes, the workings of CVBs stir passions both in the local media and among city officials, particularly when there is activity that draws the public's attention.
In this case, nearly every one of the 10 cities had new or renovated convention centers -- again, funded publicly through bond issues or new taxes -- just completed, under construction, or in proposal. This fact likely triggered the local media's intense look into the use of public funds to promote its city's tourism and hospitality industry, which in turn gave local politicians a chance to score points with voters from atop their soapboxes.
But none of this is to imply that CVBs should not be held accountable to elected officials and the general public for their spending. Explanations from bureau executives are necessary, especially as their decisions involve substantial amounts of public money. Actually, several of the particular expenditures that have come to light do not appear to be in proportion to the task given to CVBs; in short, they appear to be outright abuses. Tales of overseas golf trips, sports-event ticket use, weight-loss program enrollment, and other dubious purchases for bureau employees were reported in different cities.
On the other hand, many of the allegations fall into gray areas -- practices that can be perceived as improper by an industry outsider, but are actually a critical part of a successful marketing strategy. And "If a reporter wants to report a negative angle or frame an issue in a way to sell papers, there are times when something is going to get sensationalized no matter how good your communications have been," says Doug Neilson, president and CEO of the Greater Milwaukee CVB and a board member for Washington D.C.-based International Association of Convention and Visitor Bureaus (IACVB).
Adds Roger Aronoff, executive secretary at Washington D.C.-based Accuracy in Media, a monitor of journalistic bias:"Consumers of news should be aware that there's often another side to a story that carries a sensational headline implying wrongdoing."
The Bottom Line
So on the whole, are CVBs simply getting their comeuppance for a litany of indiscretions, or are they getting a bad rap? From a meeting planner's perspective, the answer matters only if there is an impact on a CVB's ability to assist with an event. The fact is that planners who must leverage the expertise of CVBs have large, complicated events to contract, coordinate, and run. They look to a city's bureau to be an asset to them in their planning efforts -- as a liaison to the hospitality community, stressing the economic importance to the city of each meeting group; and as an entity that gets the various hotels, venues, attractions, restaurants, transportation providers, entertainment outfits, and other suppliers to give in a little -- both contractually and in spirit -- in order to make a very complicated plan become a seamless reality in that city.
But when bureau executives find themselves in the midst of controversy -- either legitimate or manufactured -- "It certainly is distracting to the whole bureau and it takes staffers off their main mission of working with potential clients to bring their attendees into town," says Neilson. And if a seed of doubt is planted in planners' minds about the bureau's focus, or about its credibility with that city's hospitality community, it may cause planners simply to look at other destinations to host the events they are contracting and planning for at that moment.
Michael Gehrisch, IACVB's president, understands that sentiment. "I think it is a reasonable expectation, because when planners see some things going back and forth in a city and getting played out in the media, it's going to put skepticism in their minds." Philip Jones, president and CEO of the Dallas CVB, adds that "in such situations, there is absolutely a perception problem the bureau must deal with."
And Michele Wiergzac, CMM, principal of Oak Lawn, IL-based event planning and consulting firm Michele and Company, says, "It would be naive for a CVB to think that its most critical components, its brand and reputation, have not suffered as a result of negative publicity it has received. CVBs that have had their indiscretions publicized will need to spend time repairing the brand damage and rebuilding trust in their good name among planners."
The Nature of the Job
CVBs are in a unique position in the business world, in that they are most often quasi-public entities; although they might be classified as private, nonprofit organizations, they are almost always funded by a combination of bed taxes plus dues from members of the local hospitality community. And this position creates challenges when certain spending is examined by local media. "Bureaus must compete much like private corporations do in order to function properly, but they also have to live up to the same scrutiny of elected officials. That's an incredibly difficult balancing act," says Gehrisch.
Dallas found this out the hard way. Before leaving that city's bureau several months ago, then-CEO Dave Whitney was pilloried by Dallas newspapers, which published a laundry list of expenses it deemed questionable. Included near the top of the list was nearly $2,000 in wine and alcohol purchases for clients.
But "entertaining is central to the nature of this business," says Joe D'Alessandro, president and CEO of the Portland Oregon Visitors Association and a former IACVB board member. "We're trying to showcase what the city offers, so that planners know firsthand what their attendees can expect. For instance, we have a thriving wine industry, and we make sure planners experience what goes on at the vineyards, because it is part of Portland's product. It would be irresponsible for us to not have planners experience what the city offers attendees. Planners don't book events based on what's on paper."
"We get examined much more so than the traditional corporate world, in that the entertaining costs they incur can be kept private," Neilson adds. "Our figures have to be out in the open, and the media can choose to blow up any line item into something bigger than it should be."
Gehrisch says that he gets "frustrated when I see some of the news stories that come out. My response to people who point out the expensive dinners, chauffeured car rides, or similar items is, 'You have to put out your nicest offerings for people you've invited to come look at the city, so they can see what their meetings can expect.' For bureaus, entertainment differs in that we're showing our guests the actual product we're trying to sell to them. It's not like we're selling toothpaste."
And there's no doubt that "bureaus around the country do a much better job than they have in the past of getting the message out to the local media regarding the benefits their work brings to their communities," says Rich Grant, VP of communications for the Denver Metro CVB. Grant says that announcements regarding convention groups and trade shows that have agreed to come to the city are released regularly to newspapers and TV stations, along with the projected economic boost these groups will create when there. But once the media tires of reporting the straightforward economic-impact angle, "you must find a unique aspect of a convention or trade show to get the media to cover it," notes D'Alessandro. "And CVBs work hard to make creative pitches to get stories picked up."
In local political arenas, the communication effort from bureaus is generally strong as well. Like many bureaus, "We have executive committee meetings every month and full board meetings every other month to report on our activities, and we do quarterly reports on our funding to the city council," says D'Alessandro. "We also invite politicians to receptions and dinners where we are hosting out-of-town planners."
This is important, because it helps keep these folks from piling on the bureau if the local media find what they deem a controversial outlay of cash. For instance, the late George Kirkland, former head of LA Inc., the CVB, was forced to defend several hundred thousand dollars' worth of expenses related to European sales missions.
"Politicians in our city used to look at international sales missions as junkets -- just until we got them to accompany us on one," notes D'Alessandro. "They saw how competitive our business is, and recognized how an event such as World Travel Mart in London is not a boondoggle for our people, but a serious and necessary way for the bureau to garner business."
But successful communication by bureaus can create unintended consequences. "It's a double-edged sword: The more we get out the message as to how much money comes in because of business and leisure travel, the more media scrutiny and political machinations we invite upon ourselves," says Gehrisch. "These days, travel and tourism are news, and things probably won't ever go back to how there were. But we can't let ourselves be victimized, because we're promoting what the public is paying us to promote."
Where There's Smoke . . .
But for all the lamentations about how much of the criticism bureaus receive is unfair or opportunistic, there have been enough instances of poor judgment and even willful indiscretion by bureau employees to contend that the media and politicians indeed have legitimate gripes with several bureaus' actions. Gehrisch acknowledges that "some of our people were not as sensitive as they should have been" to the possibility that fall out could come from allowing questionable expenditures. D'Alessandro adds that "some of the spending that has come into question at a few bureaus seemed excessive." Keith Purcell, VP of sales and marketing for the Austin CVB, stresses that "bureau decisions need to pass the smell test. Executives have to ask themselves, 'If this was reported in the paper tomorrow, would I be unhappy about that?' "
The reason: Once the media find what they deem a rotten nugget, it damages the reputation the bureau cultivated through its previous communications. What's more, scrutiny rarely stops at that one transgression; it often becomes the impetus for media or politicians to start a deeper probe that can play out over weeks and months in newspapers and on television newscasts.
And in some of the cities where probes dragged on and bureau executives resigned or were fired, "it's really hurt both the bureau team and the hospitality community," says Purcell. "They become distracted. And when potential customers see this, they start saying, 'Why do I want to look at dates there when there's a possibility that I'm not going to get undivided attention I need right now from the bureau?' "
A good example of how negative publicity hurts a bureau's reputation and relationship, both with its local hospitality community and with meeting planners, took place in 2000. Over several months of that year, one second-tier city was investigated for accounting irregularities that related to booking meeting groups, and the bureau's director eventually resigned. A former director of sales for a popular meetings hotel in that city, who requested anonymity, tells of what happened as the investigation played out:
"A lot of the planners coming on site inspections would ask, quietly, whether the bureau could be trusted if they needed to work with it. Others said they didn't feel comfortable going through the bureau with the people who were currently in charge. And there were no definitive statements coming from the bureau, so the hotel and restaurant employees around town began openly talking about what they thought was going on, what they thought they saw, et cetera. This only made perceptions worse. So of course, some planners said to us, 'Thanks, but I think we'll consider you guys at another time.' It was a nightmare."
Pam Hemann, president of Pasadena, CA-based Association Management Services and a board member for the American Society of Association Executives, feels those planners were smart to probe the thoughts of the local hospitality community, to gauge the faith it had in its local bureau. "A planner would be remiss if she paid attention only to the media reports," she says. "Planning veterans understand that there are politics involved with CVBs, so we have to do more homework and not let one source form our impressions, or guide our decisions."
IACVB's Gehrisch adds that "most people can get a read on how well a city's bureau is operating by talking to the local stakeholders. A bureau should encourage planners to interview major suppliers in the city as to what those suppliers can deliver in conjunction with the bureau for a meeting. Planners should have no qualms about asking the bureau to provide references among the major hotels, restaurants, and attractions so that planners can verify that the bureau is capable of providing the service it promises. I don't know of any bureau that wouldn't do that."
Repairing the Damage
The CVBs in Dallas and Cleveland are two that have redoubled their communication efforts after enduring scrutiny that forced personnel and policy changes at their organizations. Both have new presidents, who have been busy touting to local politicians, hospitality suppliers, and media, as well as meeting planners nationwide, the changes made in their bureaus. They're also tirelessly promoting the value the bureaus bring to their cities.
"When I took this position a few months back, I made it clear that public accountability is the number-one priority here," says Philip Jones, the new head of the Dallas CVB. "When one or two employees do things that are inappropriate, it reflects badly on the whole organization, and we have made policy changes so that the same abuses cannot reoccur. I've also made a direct appeal to the mayor and other city leaders for their support in helping us get the message out on what services we provide, and the asset we can be, to event planners. Personally, I've been on the road constantly, meeting with planners to tell them in person that we are ready for their business. I have met ASAE, MPI, and IAEM members in their local chapters, and I plan on attending the major trade shows to see more folks from across the nation, because I recognize that there may be concerns that planners may have. We must address those concerns head-on, to reassure people what happened in the past won't happen in the future and draw our attention away from serving them."
Further, the bureau's relationship with local media has changed such that "we've had good pickup in the newspapers recently on the importance of business and leisure travel to the city, and the importance of the convention center and CVB in that segment," Jones adds. "So the media support is stronger here than it's been for maybe ten years."
Finally, Jones does not hesitate to encourage planners to solicit the opinions of local suppliers regarding the capabilities of the bureau. "I recently told the many local chapters of MPI that I met to do just that, so when a planner does come to town, he or she will get the message that things are happening the right way in the Dallas bureau."
In Cleveland, the CVB and its new chief Dennis Roche got a boost in December when the Greater Cleveland Society of Association Executives did something quite unusual: It passed a resolution of support for its home bureau and publicized it in a release to the meetings trade media. That, says Roche, is evidence that "the bureau's relationship with the city is better than it has been in the last several years. For a moment there, we had lost the highest-quality relationship with our stakeholders and we had to function in a defensive mode for several months. But I would say to planners that our relationships with our local hospitality community have greatly improved over the past six months. Planners who sign with us will have the commitment of hotels, restaurants, attractions, and local government officials, because we just went through the process of demonstrating our changes and repairing our relationships with those entities. Next, we will rebrand, and in 2004 our senior people and I will visit with as many planners as we can."
On a grander scale, IACVB's Gehrisch will maintain a high profile for the entire CVB industry in 2004. He's chair of the Convention Industry Council, on the "Committee of 100" for the U.S. Chamber of Commerce, and active in the National League of Cities and U.S. Conference of Mayors.
But politicians rarely hold office very long, so Gehrisch and all bureau chiefs must maintain vigilance over their entities' operations and reputations. Failure to do so will only invite fresh scrutiny.