GSA Scandal Backlash Hurts the Hospitality Industry

When the Office of Inspector General (OIG) reported the spending excesses, contracting missteps and ethics violations related to the 2010 General Services Administration (GSA) Western Regions Training Conference in Las Vegas, there was immediate media uproar and the wonderment of what was to come for our industry. There was no doubt it would be a negative impact similar to that of the AIG Affect from four years ago and Muffingate less than one year ago.

Since the OIG report was released on April 2, 2012, nearly $1 million worth of meetings have been cancelled in the GSA alone and every other government agency is feeling the pressure to cancel their meetings and thus avoid the scrutiny and investigation that could ensue.

During the backlash following the scandal, acting GSA Administrator, Dan Tangherlini promised to take “strong action” and improve internal controls and overnight in the agency. He has already cancelled the 2012 Western Regions Conference in addition to 34 other 2012 GSA conferences. All remaining conferences have been placed under review to evaluate their legitimate business justifications before approving their execution. The 35 cancelled meetings total $995,686 of federal funding.

This $1 million is just the tip of the iceberg. After the iron-fisted internal review of all other GSA conferences, many more are likely to be cancelled. Additionally, all other government agencies are already cancelling meetings and will continue to do so in the coming months. Tightened government regulations and review processes will further deplete the future government market in our industry.

While there is no doubt that better internal practices were needed to prevent outrageous abuses like the 2010 Western Training Conferences, many meetings continue to prove their necessity. While virtual meetings and tele-presence are gaining popularity, face to face meetings will remain paramount for their invaluable networking, training and motivating potential.

Our industry has and will continue to see the devastating aftereffects from this scandal. More than ever, responsible third party planners need to hone in on their ability to not only deliver exceptional and well run meetings to their clients, but also concentrate on their ability to negotiate enough overall savings to bring down the bottom line and justify their own fees. Third parties know better than anyone else the ins and outs of the industry- how to negotiate the best deal, how to justify a meeting’s legitimate business purpose with objectives and evaluation tools, and it’s our responsibility to share these best practices with our clients.