Lobbying Groups Pull Back Despite Urgency as Virus Hits Revenues

(Bloomberg) -- Government work is often labeled recession-proof, but the business of Washington lobbying is taking a hit from the coronavirus.

Several major lobbying groups spent less in the second quarter, including those representing hard-hit sectors like hotels, travel and franchises.

Top lobbyists, facing the rush in Congress to pass the latest economic response to the pandemic, said they’ve pared expenses, especially on outside consultants. In some cases, people from affected industries have been drafted to directly plead their case with lawmakers.

“Everything is down across the board, from membership dues to sponsorships to the job boards,” said Chris Vest, a public policy director at the American Society of Association Executives, which includes lobbying groups, trade associations and other professional organizations among its members. “Associations are having to make hard decisions about where to allocate revenue right now.”

ASAE estimated in May that 77% of the associations it surveyed were poised to lose as much as $1 million from the cancellation of in-person events, such as trade shows, that provide much of groups’ revenue.

And unlike many smaller businesses, the lobbying groups were deemed ineligible for the government’s small-business aid program.

Travel Devastated

The U.S. Travel Association spent nearly 2% less than a year ago in the second quarter, even as the industry faced unprecedented problems, according to disclosures with Congress. Outlays by the American Hotel & Lodging Association fell by more than 10%. Both lobbied aggressively on issues including the small business relief, known as the Paycheck Protection Program.

Groups such as the National Retail Federation, International Franchise Association, National Federation of Independent Business, and the U.S. Chamber of Commerce also saw declines.

“We’re trying to be an organization that is putting our members first,” said Tori Emerson Barnes, executive vice president of public affairs and policy at the USTA, which spent $835,000. Because “their revenues are significantly down, we’re also trying to limit the amount of money that we spend.”

The travel association implemented layoffs, salary reductions and cuts to advertising, she said, while those left behind sometimes logged 18-hour days because of nearly 8 million jobs lost in the sector.

The American Hotel & Lodging Association also cut costs, although some of its year-over-year decline reflected comparison with higher-than-average spending in 2019, according to a person familiar with AHLA’s workings. The group spent $740,000 in the second quarter.

The Chamber of Commerce’s chief policy officer, Neil Bradley, said the decline came because his group, which is among Washington’s most powerful and highest-spending lobbying operations, shifted expenses to educate members about relief and how “to weather the economic crisis brought on by Covid-19.”

Finding Workarounds

Lobbying expenditure isn’t a perfect reflection of a trade group’s level of activity or influence, particularly if salaried lobbyists are working longer hours or grassroots members are pressing the organization’s priorities themselves. Spending fluctuates regularly, and activities like education, advertising and hiring strategy consultants are usually invisible to those reading disclosures.

Yet it’s unusual for so many groups to rein in spending when they face urgent battles, like this year’s precipitous decline in both tourism and business travel. Multiple trade group officials said the headwinds for both their own events and their members’ fortunes were a key reason for the decrease.

“With the uncertainty in the economy, we tried to throw all of the discretionary items out of our budget,” said David French, senior vice president of government relations at the National Retail Federation.

French said the group focused on pandemic response, setting aside issues that Congress appeared poised to pick up before lockdowns. Some of the federation’s lobbying expenditures were put into “creating information resources for our members on how to deal with and comply with all of the various state and local and federal mandates and changes” around Covid-19.

More With Less

While all the lobbyists insisted their groups are doing more with less, they’re also dealing with the reality that they need to be part of the conversation in Congress, which is again struggling to put together a stimulus package as coronavirus cases spike.

“It kind of feels like we’re back in March again,” said Matt Haller, senior vice president for government relations at the International Franchise Association. “That creates a lot of longer term uncertainty not only for our members but for our association.”

The franchise group spent $190,000 in the second quarter, down more than 20% compared to the same period in 2019. It held its annual meeting in February before widespread lockdowns, which provided significant revenue. Because events and conferences represent about a third of its budget, though, it still decided to pull back on lobbying spending.

The group’s convention allowed it to raise much of the money it has budgeted for political giving, Haller said, but the virus has also affected the group’s political operation. It paused solicitations for its political action committee for a time, and is still figuring out how to foster relationships with the presidential campaigns -- a risk that could be particularly acute if Democrat Joe Biden wins in November and brings new faces and priorities to Washington.

“That is literally what this job is all about, and so that’s it’s a big challenge,” said Haller.

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