Dinner, deals and dancing

Changing working practices and recent events have hit the corporate hospitality sector hard. No longer do executives spend long weeks lounging on yachts, quaffing champagne. Nowadays hospitality has to produce results

With the World Cup kicking off in Japan and Korea in June, Britain’s corporate entertainment industry is hoping that this festival of football will help to draw a line under the events of the last year. While South-east Asia may be an experimental venue for the football championships, an expenses-paid trip to one of the England games is seen as a great opportunity for companies to cement relations with clients or employees. It is early days yet, but many in the corporate entertainment industry have already begun snapping up tickets and are promoting the event as the biggest hospitality opportunity of the year.

If the Cup turns out to be as popular as many are hoping, it could provide a boost to an activity that has been seen as almost an embarrassment over the past four months. Since the September 11 attacks, many companies – particularly those in the City and financial sectors – have been reluctant to splash out on corporate entertainment, lest it be seen as a mark of disrespect to dead colleagues. And the rounds of redundancies that have hit some sectors have made corporate freebies seem even less attractive.

Shilpa Pujara, a director of Corporate Hospitality International, which organises events for City banks and financial institutions, says: “We have found that since September 11 there has been quite a difference. We usually do Christmas parties for thousands of employees, but companies we have done that for in the past cancelled parties – they did not want to be seen to be entertaining when it has been such a difficult year. They did not feel it was right to be seen to be having a great time when they know people who had died.”

Pujara estimates that CHI’s business is down by 30 per cent since September 11. “Things were slowing down already, but not to that extent,” she adds.

There are hopes that this year will see a resurgence in corporate hospitality, as budgets which were frozen last year are released and pent-up demand is fulfilled. To an extent, this may depend on an improvement in the overall economic situation.

According to many in the sector, corporate hospitality is not what it used to be. The industry is seeking to shed its sleazy image – built up through the Eighties when week-long junkets to the sun, with lashings of champagne, were used as an unsubtle way of leveraging new business from clients. But, according to those working in the industry, the nudging and winking and popping of champagne corks has been replaced by a far less entertaining spectacle. Now you are more likely to hear companies using phrases like “customer relationship marketing” and “assessing effectiveness” when talking about corporate hospitality than you are to hear the splash of suntanned bodies in a Mediterranean swimming pool.

The new puritanism

This is partly in response to the new puritanism which arrived with the recession of the early Nineties, but it is also due to the increasing pressures of work. As a result of Nineties downsizing, executives are often doing two people’s jobs and no longer have time to idle about on yachts in the Aegean – even if it is with a top client. The tales of excess that emerged from the dot-com boom are now firmly in the past as well.

To cap it all, the Law Commission has published guidelines about “corruption” and corporate entertaining, suggesting a clear distinction between entertaining in order to build business relationships with existing customers – which is acceptable – and entertaining which seeks to win new business by offering covert “bribes” in the form of corporate freebies. In spite of all of this, the good times are still rolling for some and the amount spent on corporate hospitality in the UK rocketed from &£300m in 1994 to &£700m in 1999.

Tony Barnard, marketing director of the Corporate Events Association and strategic director of hospitality catering business Sodexho, says there is still strong demand for the “big five” events in the corporate hospitality calendar – Royal Ascot, Wimbledon, the British Open Golf tournament, Henley Regatta and the Chelsea Flower Show – but adds: “There is a significant trend towards spending the same amount of money but doing fewer events and doing them better.”

He says corporate hospitality budgets are under pressure in the same way as the rest of companies’ marketing expenditure: “The evidence shows corporate entertaining is not being squeezed proportionately more than other parts of the marketing budget. The first thing you want to do when there is a downturn is to hang on to the customers you have. CRM becomes even more important.”

Let us entertain you

Entertaining is a key part of a CRM programme, says Barnard. He adds that entertaining staff is also becoming more common, particularly in London and the South-east. This is a result, he believes, of the recent skills shortage, as companies seek to build loyalty and hang on to staff. Another trend involves combined entertaining of the staff of two different companies, such as a hosting organisation and a service provider.

And Wayne Moss, managing director of corporate hospitality organiser Jarvis Woodhouse, says: “You have to make sure any relationship marketing campaign is measurable – you don’t just spend &£50,000 on Ascot.” He says a marketing plan has to contain the means by which to measure the success or otherwise of the entertainment, and how it benefits the company.

As CHI’s Pujara says: “People are trying to do something unique that the client will remember – we’ve been getting more requests for white-water rafting and similar challenging activities like diving.” She says it can be more cost-effective to take people on a golfing weekend to Spain than to buy corporate tickets to, for instance, the Ryder Cup. Last year, a table for ten people at the Ryder Cup cost &£22,000, and the entertainment was spread over four days. She adds that the organisers cut prices quite heavily before the tournament because of a lack of demand, but this was too late for many people who had already booked cheaper alternatives.

Everything at once

It was not just the dot-com crash and September 11 that made last year a difficult one. For some corporate hospitality specialists, the foot and mouth outbreak also took its toll. Leading Edge managing director Gary Dunkerley says business declined by 43 per cent last year because many of the events the agency planned had to be cancelled due to the closure of rural areas to the public. Activities such as team-building exercises and puzzle solving required the use of land which was put out of bounds by the outbreak. But Dunkerley is optimistic about the coming year: “People are booking for 2002. We have 18 or 19 events planned this year for up to 250 people.” He gives the example of Chase Manhattan, which had planned activities every other week, involving a total of 740 staff. It cancelled these after September 11 but it has now rescheduled for March.

But the Leading Edge missed out in another way. It was unaware that the Department for the Environment and Rural Affairs was offering grants of up to &£15,000 to businesses that had suffered as a result of the foot and mouth outbreak and the resulting closure of land. The company only found out about the offer when it was too late, missing the deadline for submitting claims.

Fun is a serious business

The corporate hospitality sector is eager to be taken as seriously as any other part of the marketing industry. Yet it is still an area that is open to abuse and is often seen as a “perk” for many executives – why, after all, should a trip to the World Cup be a necessary part of a business relationship? But it has a serious side, which is to inspire clients and staff alike and build relationships. Striking the right balance between the two is the art of good corporate entertainment, and it is a fine line. There has been strong growth in “outward bound” activities, but the classic sporting events, opera at Glyndebourne and days at the races are still top of the agenda. In the light of all this, it will be interesting to see whether hard-pressed chief executives have the time to take a few days out to visit the World Cup – and to see how many companies have budgets which stretch as far as whisking executives off to Japan and Korea for a week.

The Forum

The Forum, the Corporate Event Association seminar for corporate hospitality professionals, is on March 18 at Gibson Hall, London EC2. The event offers prominent industry speakers, including:

Sodexho strategic development director Tony Barnard, discussing corporate hospitality’s role in today’s business environment.

Manchester 2002 Commonwealth Games non-sport venues manager Trish Tracey, analysing the logistics of hospitality provision.

Leeds Metropolitan University senior lecturer in events planning Glenn Bowdin, talking about education in the events industry.

World Event Management sales and marketing director Graham Keene, discussing activity and motivational events.

The day starts at 9.30am, with lectures running from 10.15 until the supplier exhibition at 4pm. Further information is on the Corporate Event Association website, at www.eventassociation.co.uk

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