Seat 2B By Joe Brancatelli
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Indiana Feels Power of the Boycott Purse
April 9, 2015--Indiana wants me, but I wasn't really planning to go back any time soon. Indiana wants you, too, but that may depend on whether your company has backed off its travel ban now that the Hoosier State has caved on its so-called Religious Freedom law.
Unless you've been living and working under a rock without WiFi coverage, you surely know all about Indiana's passage of a bill late last month that claimed to be about religious freedom, but many felt was carte blanche to discriminate. You surely know about the massive corporate uprising against the law and Indiana Gov. Mike Pence's panicky climb down, which last week neutered some of the more incendiary portions of the measure. And you probably also know that Arkansas abruptly hit the brakes on a similar law after watching the Indiana kerfuffle.
But what you may have missed is how the issue was resolved: with the power of the purse, specifically the power of travel and entertainment spending. Shortly after the Indiana Religious Freedom Restoration Act passed, the governors of several states banned non-essential travel to the Hoosier State. Salesforce.com said it would help employees move out of state. There was pressure on major sports to stop holding events there. Big-name companies bailed on the IndyBigData show scheduled for Indianapolis next month. And I lost count of the number of firms that instructed their business travelers to bypass Indiana.
Regardless of what you think of the battle and its aftermath, it was impressive to watch business travelers and their corporate underwriters flex their financial muscle. Especially in a state where the words "tourism" and "travel" don't jump immediately to mind.
Yet that's the amazing thing about business travel: it flourishes in the least likely places. Places like Indiana. Did you know that Indiana has the most effective tourism-promotion operation in the nation? Neither did I until I happened upon this interesting bit of data a few months ago. Turns out Indiana generates $8.3 billion in tourist revenue and only spends $2.3 million to get it. That's a cool $3,600+ return on every promotional dollar spent. Compare that to Hawaii, where the travel-promotion spending ($75 million) generates very little more revenue ($8.6 billion) than Indiana and a return of just $115 per dollar spent.
That's another thing about travel spending. It's generally done quietly, without regard to race, religion, politics or sexual orientation. Business travelers like us trudge from place to place, from airport to airport, hotel to hotel, and we spend our or our company's money without making too much fuss. Leisure travelers sometimes have a more obvious public footprint--just ask Hawaii's 1.4 million residents, who play host to about six times as many guests each year--but even holidaymakers tend to spend without regard to local issues or politics.
The amount of money we leave behind is staggering. According to U.S. Census reckoning, travel in 2009 accounted for $700 billion in economic activity. A more recent estimate, from the Commerce Department, pegs travel's economic impact at $1.5 trillion in 2012.
This surprisingly big financial stick is infrequently used--and it is often wielded by our government rather than us or our firms directly.
U.S. business travelers have been generally banned from spending money in Cuba since the first economic embargo was imposed in 1960. It's only in the last few months, since President Obama moved to normalize relations with Cuba, that we can contemplate a return to the nation that was once our preferred Caribbean getaway. It's been virtually impossible to travel to Lebanon since the 1980s. It was the decades-long curtailment of travel to South Africa that contributed to the end of apartheid there.
But as the disparate effects in Cuba and South Africa show, travel bans and boycotts have a distinctly mixed track record.
The most successful domestic travel action was directed at Arizona in the late 1980s and early 1990s after the state refused to observe Martin Luther King Day. Dozens of conventions cancelled planned events. After Arizona voters rejected an MLK holiday in 1990, the National Football League moved the 1993 Super Bowl away from Tempe. According to later estimates, the NFL's decampment to Pasadena for the 1993 game cost the state at least $250 million. Many major musical acts boycotted the state, too, depriving Arizona concert venues of millions of additional dollars over the years.
Arizona finally surrendered to financial reality and adopted a King holiday in the fall of 1992. Arizona mostly learned its lesson, too. Last year the state legislature approved a "religious freedom" bill very similar to the one passed last month in Indiana. After several big companies threatened a travel boycott--and the NFL pledged it would move the 2015 Super Bowl from Glendale--Arizona Governor Jan Brewer vetoed the bill.
But more esoteric attempts to use travel spending as a cudgel for social change have failed. When the tiny Southeast Asian nation of Brunei adopted sharia law last year, groups targeted the fabulously wealthy Sultan of Brunei. The target: his Dorchester Collection that includes swish lodging outposts such as the Beverly Hills and Bel-Air hotels in Los Angeles, the group's namesake Dorchester in London, the Principe di Savoia in Milan and the Le Meurice and Plaza Athenee hotels in Paris.
Led by fashion icon Anna Wintour and entertainers such as Jay Leno and Ellen DeGeneres, a boycott of Dorchester Collection properties was mounted last year. After an initial wave of support and much publicity, the boycott went pretty much as long-time luxury hotelier Michael Matthews predicted: the Sultan was not deterred, sharia remained the law of the land in Brunei, tip-dependent Dorchester Collection employees lost income and the matter quickly faded from the headlines.
Where does that leave us business travelers? As I said, I'm not headed to Indiana anytime soon and R. Dean Taylor's Indiana Wants Me may be the only classic Motown tune not on my music player. And none of my clients would appreciate an expense account listing a 480-pound (US$713) stay at the Dorchester tonight regardless of the Sultan's politics.