Corporate hospitality is cleaning up its act, thanks to the demands of increasingly discerning clients.
In the Eighties, marketers threw money at corporate hospitality organisers. They appeared to care little about who was partaking of their largesse. As long as they had cold champagne and a famous sporting event close by, clients didn’t question whether they were getting value-for-money.
Then came recession. Clients cut back on displays of conspicuous consumption and became more concerned about “who” and “why” they were entertaining.
Now the recession is receding, marketers are increasing their spend on entertaining. But they are less inclined to see corporate hospitality as a good old beano and more likely to see it as an integral part of marketing.
Chris Bruton, chairman of event management company Cavendish Hospitality, says its sales this year have been about 15 per cent ahead last year’s. He says Cavendish looked closely at the market at the beginning of the year and assumed clients would want something new.
“We thought there would be a move away from the major events and planned our marketing strategy accordingly. But I’m not so sure we were right.”
His doubts stem from a discussion last week at an event organised by Cavendish in Cowes. The client confessed to him they were disappointed by the turnout because: “We didn’t get many senior decision-makers. The client said that it wasn’t our fault – it was the nature of the event. In his experience, far-and-away the best event, in terms of quality of guests prepared to attend, was the British Grand Prix, followed by Royal Ascot”.
Bruton says Cavendish has had “the best Open Golf Championships ever, and the Grand Prix has been the best year since 1989. The classics have stood up to the pressure.”
Whether or not these so-called “classics”, such as the Open Golf or Wimbledon, can attract a better class of client than more innovative, purpose-built entertain- ments is a moot point. Richard Scott, a director of corporate hospitality brokers Langston Scott, is not so sure they will continue to retain their allure. While he agrees that events such as Wimbledon have held up surprisingly well during the recession, Scott believes clients are beginning to look further afield.
“We’ve found people are being much more creative – they’re taking clients to events such as Pavarotti in the Park. If you invite someone to Royal Ascot five years running they begin to expect it and it loses impact.”
Bruton and Scott agree that clients are now judging their own corporate hospitality more in terms of the people who attend. Marketers are much happier to entertain six people than 40, if those six are the right people.
Mike Travers, a partner in Eureka Event Management, confirms that the corporate hospitality market is growing again. “Clients are becoming a lot more sophisticated and companies are looking much more at getting the right client along.”
But he says clients have begun to shy away from the term “corporate hospitality”. “They like to say ‘client entertainment’. Corporate hospitality smacks of jollies and marquees of people they didn’t want to entertain.”
Alan Payne, managing director at Payne & Gunter – the official corporate hospitality organiser for Twickenham and Goodwood, among other events – has had a slightly different experience in the past few months. While he has seen business grow, Payne has noticed a significant change. Whereas five years ago most corporate hospitality was aimed squarely at clients, now it is often used in-house to motivate staff and provide “thankyous”. “In 1990, motivation made up about five per cent of the corporate hospitality market. Now it’s more like 50 per cent,” he says.
Bruton believes the concentration on quality over quantity will be good for the industry in the long run, although he wryly admits that it may reduce profits in the short term.
On the plus side, Bruton has found that clients have begun to invite guests “even before they are sure they’ve booked the event”. However, they are inviting less people.
Corporate hospitality has always been a labour-intensive business. Thomas Cook Performance Management found the whole business so much effort, it has given up on offering it on a regular basis. Thomas Cook Event Management marketing manager John Dann says: “We of-fered a corporate hospitality service until last year, but it was taking up a lot of our time and was not really giving us a return on our investment. It was too busy a market and it was diluting our resources.” The company does organise bespoke events for clients if they ask for them.
Dann is aware of the problems caused by unscrupulous operators misleading clients about the services they offer.
“There are an awful lot of less-than-professional people in the business. We have to be very careful not to damage the brand name of Thomas Cook.”
Everyone has heard horror stories about marketing directors who snapped up bundles of tickets for Wimbledon or Twickenham, only to be turned away at the gates with their important clients because the tickets turned out to be forgeries. But major sporting events are cracking down on ticket fraud and black market sales.
Another problem for owners of the country’s more famous sporting events is the resentment directed at corporate hospitality when it means that “real” sports fans are unable to get tickets.
The Rugby Football Union, which runs Twickenham, has very strict rules about corporate hospitality.
When the ground re-opens in September for a match between England and South Africa, with a new West Stand, Twickenham will be the UK’s largest all-seater stadium, with a capacity of 75,000. But the RFU limits the number of tickets allocated to corporate hospitality.
As part of its funding campaign, the RFU sold 12,000 debenture tickets. Some of these went to businesses but, because the business debentures were deliberately priced high, most went to private individuals.
How many of these debenture tickets are used for corporate hospitality is unclear, though the figure is not thought to be high. In addition, 800 ordinary tickets are available for official packages organised by Payne & Gunter. Another 500 or so seats are available in the restaurant operation run by Peter Parfitt Sports. The packages these companies offer have to be endorsed by the RFU.
Payne says marketers are now aiming for smaller numbers of better quality guests. He welcomes the change: “It got to the silly situation in the Eighties where people didn’t give a damn about who they were entertaining. I found that unacceptable. I want this industry to have a future.” Payne says research suggests that corporate hospitality is still the most effective way of spending marketing money.