The county’s coastal hotels may look back on American International Group Inc.’s much maligned October meeting at the St. Regis Monarch Beach Resort and Spa as the good ol’ days.
The St. Regis and other upscale resorts are bracing for an exacerbated downturn as investment banks and others skip conferences and meetings at hotels.
A slowdown already was under way with last year’s collapse of the housing and mortgage sectors. Now the financial crisis,and backlash over AIG’s St. Regis bash,stands to make things worse.
“We used to do a lot of investor and incentive conferences that were for homebuilders, mortgage companies and investment banks,” said Johnny So, managing director at the St. Regis. “Those conferences are not there anymore.”
Warranted or not, the backlash over AIG’s $440,000 event to reward independent agents has given pause to meeting planners who fear standing out amid the financial crisis and slowing economy.
One source familiar with Newport Beach-based Roth Capital Partners LLC’s annual Growth Stock Conference said she’s hearing of others cutting back on conference expenses to avoid scrutiny in the wake of AIG.
Roth, an investment bank, still plans to hold its conference in February at the Ritz-Carlton, Laguna Niguel, in Dana Point.
But attendees are slower to commit and Roth is waiting to sign some vendor contracts, the source said.
AIG, recently rescued by an $90 billion Federal Reserve loan, has gone on to cancel 160 conferences and events worth more than $8 million, according to New York-based Penton Media Inc.’s MeetingsNet.com.
The St. Regis declined to say if any of AIG’s canceled conferences were set for the hotel.
The hotel plans to host events for other insurance companies, according to So.
The insurance companies “incentivize the agents and the only way to entice them to sell their specific product is to give them a good experience,” So said.
Bankrupt investment bank Lehman Brothers Holdings Inc. is lost business for the St. Regis, according to So.
“We used to have so many pieces of business from Lehman,” he said.
In late 2006, the investment bank held its Lehman Brothers Small Cap Conference at the St. Regis.
The neighboring Ritz-Carlton, Laguna Niguel hosts several conferences throughout the year for investment banks.
“It’s too early to comment” on how the financial crisis will impact business, said Deanne French, director of public relations at The Ritz-Carlton.
For the St. Regis, reservations are flat or slightly down for conferences because clients are watching their expenses, according to So.
Other Business
The hotel is going after new sources of business, including holiday parties, he said.
Legal, telecommunications, technology and healthcare events are other sources of business, according to So.
“More law firms are doing their retreats here,” he said.
The St. Regis saw more events in the past few years as high airfares and unfavorable exchange rates prompted meeting planners to focus on U.S. locations, So said.
The exposure from AIG’s event has been good for the St. Regis, So said.
He and others call the backlash misplaced,the independent agents being rewarded are vital to the success of the company and thus the government’s bailout, they said.
But “the coverage and the shots that they were using showcased the hotel very nicely,” So said.
