Scandal over GSA junket won't affect travel spending, experts say

April 30, 2012|By Hugo Martin
  • Martha Johnson, former head of the Government Services Administration, testifies before the House Oversight and Government Reform Committee as GSA Regional Commissioner Jeff Neely listens.
Martha Johnson, former head of the Government Services Administration,… (Chip Somodevilla / Getty…)

In Washington, another scandal has broken over excessive spending during a business conference. But travel experts predict the effect this time around will be limited.

Four years ago, it was insurance giant American International Group Inc.  that was slammed for holding a lavish executive retreat at a Dana Point resort after taking billions of dollars in government bailout money.

In the face of harsh criticism of excessive spending amid a recession, corporations dramatically cut back on business travel, dealing a blow to hotels and airlines across the country.

Now it’s the General Services Administration that is getting heat for putting on an $823,000 Las Vegas-area conference for 300 GSA employees in 2010. Investigators found that Jeff Neely, a top GSA administrator, had thrown a $2,700 party in a hotel suite using taxpayer money, and hired a clown and a mind reader to perform.

GSA Administrator Martha Johnson resigned and two officials were fired. Since then, the agency has already canceled a couple of future meetings in Las Vegas. But Rossi Ralenkotter, president and chief executive of the Las Vegas Convention and Visitors Authority, said he doesn’t expect the scandal to cut into travel spending.

At a travel trade conference in Los Angeles last week, Ralenkotter said the business travel industry grew more united after the AIG scandal and probably will continue to stress the importance of face-to-face meetings. “We are better positioned now,” he said.

Mark Liberman, head of the Los Angeles Convention and Visitors Bureau, agreed that the effect of the controversy should be limited. “The business community has learned from past experiences and this is an isolated incident,” he said.


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