The corporate hospitality industry has just recorded its best year since the recession, and the good times look likely to continue. But although business may be heading back to the successful days of the Eighties, there are several significant differences between then and now in the way the industry is perceived.
John Fisher is marketing director of Page & Moy Marketing, which creates corporate hospitality events under the brand name Escapades. He says: “During the recession there were cuts. Training budgets went first and then corporate hospitality.”
But like most of his contemporaries, Fisher argues that the recession, while pushing many companies to the limits of their resources, has ultimately proved a positive force.
“At the end of the Eighties clients were given a lot of good days out and often couldn’t remember who had sent them to any particular event, or why. And the companies doing the entertaining did not research what effect their hospitality was having. Clients tend to be fairly promiscuous and go with whoever asks them – it is no guarantee of a special relationship.”
The recession changed all this.
“People started looking at how their money was being spent, what value was put on the effects of the entertainment and how this could be measured,” adds Fisher.
“Now companies looking at corporate entertaining are more likely to consider the commercial effects – wanting to know what the value of the events will be in terms of profits, for instance.”
This explains why lead times, though more relaxed than during the recession, have not crept back to pre-recession levels.
Angie Galli, travel operations manager at Carlson Marketing Group, says: “Clients want their pound to go further. Before the recession they would plan events 18 months ahead. During the lean times this was cut to last-minute planning, often four months or less. This year lead times are easing off and extending a bit, giving more time for planning and therefore more choice of venues and activities to offer your clients. But the greater awareness remains, making us more competitive, which is good for the whole industry.”
For some companies a new, and therefore tighter, attitude to targeting is one of the lasting effects of the recession.
Richard Hoare, a management consultant specialising in corporate entertainment, says: “Targeting is much more effective than it was. Companies used to buy the entertainment off the shelf and then work out who to give it to. Now they pick who they want to look after and find the right entertainment to suit them. They are making efforts to target individuals and find out what they specifically enjoy.
“Instead of simply taking 75 people to the races, a company may decide to take 12 of them sailing and ten golfing. You can’t throw client entertainment at your whole client base, so it makes sense to offer hospitality against a specific part of your business and really pick and choose which client companies to target.”
Fisher adds: “Companies are better able not only to ask: ‘Is this the right person to be inviting?’, but also: ‘Is this the right sort of event to take them to?’ The Wimbledon tennis championship, for example, is usually a great event because it is prestigious and you can sit next to the client for two hours while nothing much is going on and talk business. In the theatre, on the other hand, you can’t talk at all.”
Targeting is not the only area to be taken more seriously; measuring the effectiveness of events has also become a priority. Galli says: “Measuring gets better every year. Clients are more aware of how to do it.”
The ease or difficulty of measuring event effectiveness varies tremendously. A client targeting sales people and motivating them to sell more by promising a trip as a reward can measure how much effect it had financially by auditing attitude and performance before and after the entertainment programme. Measuring the value of entertaining clients can be harder.
A long-term approach, involving the investment of several years in corporate entertainment, may be the best way to measure its effectiveness. Of course it is possible to look at an order book and guess at the percentage of deals achieved at events or through the relationship building that happens because of the hospitality, but the process is, at best, a little vague.
Fisher says: “If you track year on year you can see the effect of corporate hospitality. Lead times with clients can be two or three years so it’s hard to see effects much earlier than that. It takes a long time to build and develop a database of contacts and the hospitality itself is never as crass as ‘come to our events and do business with us’. After a few years you should know more about what they want anyway. There is no other way to build a relationship than to spend time with people.”
Hoare adds: “Corporate hospitality for clients is looking to increase both orders and loyalty. Even being asked by them to pitch for business more often may be a result of careful entertaining. You can measure this by using a control group where you oil the wheels and see how it affects change.”
Improvements in targeting and measuring have been made, but it is fair to say that the advances have not come from companies across the corporate entertaining board. According to Hoare, companies which are making significant strides often have a well-organised salesforce which is collating information and passing profiles of top clients back to their employers. Obviously well-structured systems that make use of the latest technology help and it is unsurprising that IT and telecoms companies are among the best at using and analysing events of all kinds.
“The industries that have changed are the younger markets which are more aggressive in their marketing and under more pressure to come up with results, perhaps because they are driven by a US parent company or by shareholders”, says Hoare. “Also, thanks to good applications of IT, they are more aware of their markets and who their customers are. Financial services companies often have this kind of information and do good corporate hospitality by default, not because of methodical planning but simply because they happen to carry a lot of data on their customers.
“Companies which have yet to see the light when it comes to the changes include large manufacturing, engineering and construction companies who are still doing what they have always done when it comes to corporate entertainment.”
Very little research has ever been done on the corporate hospitality sector and there is a distinct lack of information about the latest developments. A recent qualitative report by Page & Moy Marketing showed that some interesting information is for the taking. The research reveals, for instance, that 70 per cent of clients want to bring their partners with them, and to go to events during the week rather than at weekends.
The Corporate Hospitality Association exists to advise and help buyers of corporate hospitality, but is unable to fund new research. Spokeswoman Linda Patterson – who is also director of CSS Promotions – says: “One of the biggest problems with hospitality is that it is emotive and though clients are by and large far more aware of the importance of targeting their entertaining, you do still get the chairman saying ‘I want to go there’ without considering whether that is what his clients want. So it is still hard to get people focused and following a strategy, let alone prepared to invest money in research.”
Ultimately, improved targeting and greater effectiveness must lead to better communication between clients and agencies and between corporate hospitality buyers and users.
As more companies recognise the benefits, there will be a move away from the defensive mentality of “everyone has to keep spending in order to keep up with each other”, towards a new confidence in, and respect for, the corporate hospitality industry as a valid and effective marketing tool.