RUSH: Squawk on the Street this morning, CNBC, cohost, the Street Sweetie, Erin Burnett interviewing Laurence Geller, the president, CEO of Strategic Hotels and Resorts, and the Street Sweetie said, ‘You own some of those hotels where you get those conferences, or you used to, in lovely, warm locations, whether it’s Arizona, Mexico, Southern California. Has that business dried up?’
GELLER: The hyperbole and rhetoric was notched up to gigantic levels during this recent political debate season. The bookings of our meetings have cut down drastically. We’ve lost an awful lot of major businesses, and it’s not just those receiving government bailouts that are affected, but there’s a general fear of criticism by people not only making the bookings but people attending these conferences so it’s really got out of hand because the meetings and conference business is absolutely essentially to this nation. We lost 200,000 jobs last year. We thought if things went the same way we’d lose 240,000. This year, since the hyperbole got ratcheted up to these levels, we’re on track to lose 350, 400,000 jobs. The ripple through the economy is gigantic, lodging and tourism is the third largest retail business in the country.
RUSH: Now, I know what some of you people are thinking. ‘Well, Rush, who goes to these conferences? It’s the rich and the semi-rich and the people that can take time-out to go to Vegas or Mexico or Florida, wherever they’re going to these five-star resorts.’ Yeah, like the United Auto Workers and the AFL-CIO. But here’s the thing, and I’m going to say this until I’m blue in the face. The people that do these meetings are stopping because they are afraid of criticism from the president of the United States. The president of the United States personally is shutting down a large part of the travel and leisure industry in this country, purely on the basis of class envy. But who is really getting hurt? Aside from the hotel owners, who works at hotels? Who works in the travel and leisure business? It’s the very little guy, quote, unquote, that the Obama administration claims to stand for. The very little guy. If there are no guests arriving, if there are no conferences being held, if there’s no food being prepared and consumed, if there are no hotel rooms being occupied, then there’s no work for the maids and there’s no work for the kitchen personnel, there’s no work for any of the staff in the hotel.
But we all get caught up here in the notion, ‘Well, these people, they shouldn’t be partying in a recession, it’s bad form.’ I think it’s just the opposite. I think it’s inspirational. I think it can be motivational. Now, this is where my critics are going to say, ‘I can’t believe how out of touch Rush is.’ What needs to happen in this country is examples of economic activity flourishing like Daniel Henninger wrote about in the Wall Street Journal. We need to see evidence of the idea of a thriving, free market, of a thriving capitalist market. Instead, we see just the exact opposite. While all this is happening, Obama’s out there saying he cares about health care, so his approval numbers are going up, while he and he alone — well, he’s getting some help from Barney Frank and John Kerry, but the Democrat Party, let’s say, are personally assaulting the travel and leisure business, except when they are engaging in the travel and leisure or their big supporters, the AFL-CIO are engaging. So the Street Sweetie then said, ‘Mr. Geller, do you believe that this is something coming out of the White House? Is it bipartisan on Capitol Hill? Who are the people that are pointing the fingers at your industry?’
GELLER: If you listen to the committee hearings, I think it’s unfortunate, it’s almost the lemming factor, one starts and then the other has to show they’re more strident and stringent, and as you go around the committee, I don’t know whether it’s bipartisan or not. I can’t say it’s the White House or Congress. All I can say is the pernicious effect is pretty devastating. It’s almost, a colleague of mine was complaining this week, it’s almost McCarthyism directed against the hotel and travel industry. This is so silly, because it’s the lubrication of business in these big meetings, these small meetings, convention communication, and the fear factor has got out of control. The fear of being criticized.
RUSH: Not just the fear of being criticized, the fear of being targeted, Mr. Geller, not just the fear of being criticized. It’s the fear of being targeted by a government official, be it Senator Kerry, be it Congressman Frank, or be it the president of the United States is out there saying, (doing Obama impression) ‘You’re not going to go to Las Vegas, not going to fly on any corporate jet, not while I’m here, not with this going on.’ So it has a rippling negative effect throughout the economy. Coming up sometime this month in Charlotte, North Carolina, there’s a golf tournament, a major PGA Tour event. It’s always been known as the Wachovia Open, or whatever they called it, Wachovia, the bank. Well, as you know, Wachovia was purchased by Wells Fargo. They’re going to do the tournament. The way golf tournaments work, is that the sponsor, in this case Wachovia, would put up all the prize money and other costs, the PGA would do their things, charity would get some of the proceeds from ticket sales and all of this, and it was a win-win for everybody.
What’s happened now is that the Wells Fargo CEO has said, ‘Well, we’ll put three million into this this year, but we’re not going to put our name on it. Since there is no Wachovia, can’t be a Wachovia Open, we’re not going to call it the Wells Fargo Open, so I don’t know what they’re going to call this thing, the Charlotte Open, I have no idea. I haven’t kept up that much with it. All I know is that Wells Fargo doesn’t want their name on this because of what happened to Northern Trust with the LA Open, which used to be the Nissan Open that Nissan pulled out. The PGA Tour is always running around trying to find new sponsors for things, because that’s where the prize money comes from. That’s who pays the pros when they win or finish in the money in these tournaments. I’m sure they’re going to reduce the partying and what goes on at these things anyway. You know, a friend of mine, an acquaintance of mine is a former chairman of AT&T. You know, AT&T sponsors what used to be the old Crosby, the AT&T Pebble Beach National Pro-Am , and I once asked this guy, ‘What do you really get out of this? I don’t know what it costs you, but I mean do you — because it says the AT&T Pebble Beach — do you have a bunch of people signing up for AT&T services from the public? How does this work?
He said, ‘You’re looking at it the wrong way. Our marketing budget every year is hundreds of millions. This thing cost us 20. This is where we entertain our customers; this is where we thank ’em; this is where we appreciate them for being part of what we do; this is where we wine and dine our best customers. We’re not so much using this to generate new, although we do, but it’s normal business.’ Now that’s not even going on. People are afraid to even thank their best customers. Now, believe me, he told me the total marketing budget for AT&T when he was there, and the 20 million — maybe 15, the percentage of that whole marketing budget spent on that golf tournament is zilch, it’s infinitesimal, but it’s where they thank everybody, and let people come out, hobnob with the pros. Pebble Beach is a beautiful place to go, it’s a week-long tournament, all these services are out there. It’s a great time for people to go.
But now that’s under assault, thanking your customers, trying to keep your customers, trying to grow your customer base. That’s what Mr. Geller is talking about. That’s why a lot of these things take place. But today we’re being told this is just a bunch of Roman excess, it’s just a bunch of irresponsible people coming out there and having a giant party at a five-star place while the rest of the country is starving and can’t find a house and can’t find a job and all this sort of thing, and it’s an all-out assault on capitalism, there is an all-out assault on free markets, but because Obama says he cares about health care, his approval numbers skyrocket right up while the private sector crumbles bit by bit in front of our eyes.
BREAK TRANSCRIPT
RUSH: Springfield, Ohio, hi, Jeff. You’re up next on Open Line Friday. Hi.
CALLER: Rush, it’s an honor. Hey, listen, your discussion about the damage to the travel and leisure, you’re exactly right. I’ll tell you something else: it actually started way back with the signing of Sarbanes-Oxley.
RUSH: Oh, yeah.
CALLER: I’m not kidding you, you know, we would have a major event for our customers for exactly what you’re talking about — to say, ‘Thank you for your business, your loyalty,’ whatever — and we’d fly ’em down on those company jets to a golf event, a PGA event. And we’d put ’em up there for a couple nights, take them to the tournament. We could not give away badges to publicly traded large companies. If they wanted to come, they’d have to take a vacation day (which nobody did). They’d have to pay for their lodging. They’d have to fly; they won’t fly on our jet. They’d have to fly on a regular airline. It was ridiculous. We would bring customers to our manufacturing facilities or our corporate headquarters, you know, to see how the products are made and what they’re buying to meet our executives. And they would literally want us to invoice for any food and any expenses we picked up on their behalf.
RUSH: I know. I know. That’s all because of Sarbanes-Oxley, which… What gave us Sarbanes-Oxley? Do you remember, Mr. Snerdley? (interruption) That’s right. Enron gave us Sarbanes-Oxley. Fannie Mae and Freddie Mac, Barney Frank, Chris Dodd, are Enron times a hundred, if not more. That’s a great call, Jeff in Springfield, Ohio. Thanks much.