citigroup

The "AIG effect" is still affecting the luxury resort industry.

Indeed, businesses started toning down lavish corporate events after American International Group, the insurance giant, was widely criticized for holding a conference at a luxury resort days after it received a cash infusion from Congress in 2008.

Many resorts that have a heavy dependence on group business are still struggling. The latest victim is Amelia Island Plantation. Last week, the 1,350-acre luxury enclave overlooking the Atlantic Ocean in northeast Florida filed a voluntary petition for Chapter 11 bankruptcy protection.

The resort is very dependent on its group business, which has dropped precipitously over the past year, according to Richard Goldman, its chief marketing officer. "More than half of our business is from corporate groups that hold conferences here," says Goldman. "The AIG effect has basically scared off folks -- even businesses that could afford to have meetings -- who are afraid to hold conferences at resorts."

The company will operate as "business as usual" during the reorganization and an investor group, comprised of Amelia Island Plantation residents and club members, has already collected to aid the resort.

Amelia Island Plantation isn't the only hospitality company struggling during the recession. In Scottsdale, Ariz., the W Hotel recently staved off foreclosure and the InterContinental Montelucia Resort, also in Scottsdale, faced possible foreclosure earlier in the year. The Tropicana Las Vegas casino and the Ritz-Carlton Lake Las Vegas emerged from bankruptcy this year.

This week, Citigroup reached a tentative agreement to sell the very same resort that started the whole mess in the first place. The St. Regis Monarch Beach resort in Dana Point, Ca., made headlines last year when it hosted a group of AIG executives at a retreat just days after the government bailout of the company. Citigroup seized the St. Regis from its owners last summer, after they failed to make payments on the bank's $70 million loan on the property.

Last month, the AP mentioned that unlike the car companies that were feeling the heat over their private jets, bailed-out financial firms were still flying high. That run seems to be over with the news that Citigroup has spent $50 million on a Dassault Falcon 7X, which it ordered two years ago. The French jet seats 12 in leather seats and and has a top speed of 559 mph.

Michigan's senior senator Carl Levin was angry over the news. He sees the fact that Citigroup can buy a new jet while receiving a multibillion dollar bailout as a double standard since Michigan's automakers have been forced to sell their planes. Levin plans to ask new U.S. Treausry Secretary Timohty Geithner to do what he can to block the sale. So far Citigroup has received $45 billion in government funding. According o the NY Post, Citigroup is trying to sell two of their older Dassault 900EXs which are worth an estimated $27 million each.

The bank said it has reduced its number of aircraft dramatically over the past eight years and that it would have to forfeit a deposit if it did not take delivery of the plane (the same rationale Starbucks used to justify its new Gulfstream 550 jet). A spokesperson for President Obama commented that the President does not feel that this type of spending is the best use of taxpayer assistance.

UPDATE: After receiving pressure from the White House, Citigroup has decided not to take possession of the new plane.

The car companies may have gotten in trouble for their corporate jets, but as the AP reports, private jets are still flying for Wall Street's firms. They report that six financial firms that received billions in bailout dollars haven't sold off their jets. In fact they are still in use to carry executives to company events and sometimes personal trips. In many of these cases, the CEO is required to use a private jet for security reasons. AIG has seven planes but a spokesman reports they are being used sparingly. The company sold two jets earlier this year and is selling or canceling orders for four others. Citigroup's aircraft are being used a by a few executives but the execs are "encouraged to fly commercial." Morgan Stanley has two jets. JP Morgan owns four Gulfstream jets including a a 2007 ultra-long range flagship G550 model, a plane that sells for around $47.5 million. Bank of America has nine planes including four Gulfstreams. Wells Fargo owns a single jet that is strictly for business use.

While SEC rules require that publicly held companies disclose executives' personal use of corporate aircraft, the line between personal use and business use can often be hard to determine. Overall, companies are cutting back on the use of the jets for any reason that can seem frivolous. They haven't had to travel to Washington to beg for money yet but if they do, likely they'll leave the fleet at home.

If you are shopping for a jet, the picture above is from a used Gulfstream GIV-SP listed at $25.95 million.