It’s not frequent when a company’s corporate event budget is available for public analysis – even if it’s partial data, so the recently shared information about an AIG American General (AIG’s life insurance unit) independent agent program at a luxury resort offers an excellent opportunity for analysis.
It’s possible to analyze this information because the House of Representatives Committee on Oversight and Government Reform requested and released this information, announcing that AIG spent $440,000 on an executive event, which was then followed by significant criticism for its extravagant expense at a time when the company required a government bailout. The following two documents were made public:
Unfortunately, AIG spokesperson Joe Norton declined to provide comment or clarification as to whether the event was an incentive trip or an external sales conference.
Norton did indicate that the invited attendees were generally considered in the top 5 percent of revenue generating producers during a 12 month period that ended June 30, 2008. Norton also said that spouses (or personal guests) may have accompanied attendees, but provided no additional clarification as to whether those costs were covered as part of the trip. As many event and meeting planners know, this would be an important distinction that may potentially trigger a tax/accounting related decision.
Although this sounds as if the program may have been an incentive trip, without confirmation it is relatively safe to analyze the program as if it were classified as an external sales conference related to business development.
Summary of Observations
To be sure, regardless of the type of program, it’s reasonable to understand that business meetings and events provide significant and measurable ROI to an organization.
However, despite the fact that AIG’s management opted to cancel all events not required by law (due to the negative publicity the event received), the planners and management behind the sales conference may still be able to identify several opportunities for potential improvements in the future when this ban gets lifted. Event and meeting planners may consider this as a possible case study for their own future hotel negotiations.
After analyzing the data that has been made public, meeting planners are likely to make these observations strictly as they relate to the hotel guest rooms expense category:
- AIG contracted 494 room nights, and only reduced to 488 room nights.
- St. Regis resold 48 room nights to reduce AIG’s obligation to 440 room nights.
- AIG used about 65% of its contracted rooms (287 room nights).
- AIG’s required contracted rooms cost an average of $427 (includes tax).
- Based on the final bill, AIG paid an average of $680 per room night (includes tax).
- The St. Regis final bill is $7,183.50 higher than identified in the exhibit detail.
- The $7,183.50 remains unexplained. (Were incidental items covered?)
- Nine staff rooms were contracted, but only three were accounted as used.
The Final Bill
To arrive at these and other observations, event planners should look at the two documents shared: the St. Regis Invoice Summary and Conference Program Breakdown that detailed information related to guest room charges and spa services. According to Karen Lightfoot, spokesperson for the House Oversight and Government Reform Committee, the program breakdown was provided by Starwood Hotels and Resorts Worldwide.The St. Regis Invoice Summary
- Master Rooms: $139,375.50
- Comp Rooms: ($2478.60)
- Attrition (required per contract): $58,373.12
- Subtotal: $195,269.82
Based on the conference program breakdown that details the contracted rooms vs. rooms used, the value identified for the comp room was factored into the program (i.e., the hotel simply added the value of those comp to the Master Rooms and then subtracted the comp value). Also these totals reflect a gross amount that reflects the 10.16% occupancy tax. Therefore, it really just demonstrates that the actual Master Rooms Fee is $136,896.90.
Details Behind the Conference Breakdown, page 2
AIG Event in More Detail and Suggested Improvements, page 3
