Drumming up a bigger bang for less buck

Brands may be spending less on corporate hospitality but the real issue facing suppliers is laying on tailor-made experiences that exceed expectations.

Seventy per cent of marketers have cut their entertainment budgets, according to Marketing Week Corporate Hospitality Attitudes research. But they are demanding suppliers offer them more personalised programmes than ever. In other words, they want plenty of bang for their buck.

Marketers are particularly keen that hospitality packages should now go beyond merely entertaining staff or clients. More than half of marketers want their programmes to encompass “training” or “education” elements. One marketer reports: “I’m looking for individuality and stand-out from our corporate hospitality programme.”

Another marketer says that they want to see “more focused events giving an educational insight as part of the package”. Getting creative seems to be a theme. One respondent describes how their company is offering “increased customer visits to the factory” as a way of replacing more expensive entertainment options. Others report that taking clients to awards ceremonies or even hosting awards for suppliers is a bigger part of their operations than ever before.

These and other innovative approaches appear to show that while 23% of marketers claim they are using cheaper forms of entertainment as a way of saving cash, the need to offer hospitality of some sort has not disappeared altogether. Brands simply need to be clever about how they carry it out.

A minority of clients even claim to be using more expensive forms of hospitality than ever before. Indeed, 5% of marketers say they are using costlier methods than previously. One respondent says: “There is now more expectation from clients to be entertained as a thanks for placing their business with us.”

When it comes to choosing exactly what type of entertainment to provide among the more traditional hospitality options, sport comes out on top. Eighty per cent of marketers say they use sports to engage people, while 53% use arts options, such as theatre trips. Sixty-six per cent say they use food or cuisine packages.

This perhaps reflects the fact that although marketers are keen to try new and less expensive methods of entertainment, the tried-and-tested packages remain popular. But one marketer warns: “There are too many people too keen to provide off-the-shelf football and film packages. I’m bored with the majority of responses.”

This aside, 57% of client-side respondents think corporate hospitality is taken seriously by their business, while 79% of agencies feel the same way. “Face-to-face is the best way to develop and maintain relationships,” says one agency executive. Another adds that hospitality is an “excellent tool for relationship building”.

The hospitality programmes that agencies perceive to work best with clients at the moment include those which “deliver face time” with hard-to-reach people or have an ethics message as part of the marketing. One marketer from a company that produces Fairtrade goods says its association with sustainability is “a huge reason why we are selected to supply various accounts”.

“Ethics by association is becoming very important, especially in companies’ marketing departments,” they add. This seems to be a far bigger focus for agencies working in the hospitality area than their clients. When asked about the biggest trends for the year ahead, clients tend to focus heavily on costs. Marketers also expect budget reductions will be another big theme for 2010, although 66% feel positive about how this year will turn out for their business.

Many marketers also mention bespoke and personalised activities as a trend for this year, but just one picks up on the idea of responsible hospitality. This executive expects to see a move to “socially responsible” hospitality – events that put something back into the community while at the same time allowing companies to hold quality events. “Hospitality will be seen as more acceptable if it gives back.”

Green venues

Agencies have a lot more to say about this. Cause-related issues, such as using green venues, are likely to become more vital as the year goes on, says one agency respondent. Another executive picks up on sustainability as a big theme. He expects to use far more recyclable, compostable and biodegradable products. “This is something we’re working very hard on,” he adds.

However, the trend for reduced budgets has not gone unnoticed by agencies. Ninety-one per cent of corporate hospitality agencies think client budget cuts are having an impact on their industry. One agency respondent expects to see corporate hospitality being done “on a smaller scale and budget” this year.

And 24% of agencies also report that reduced staff numbers are having an impact on the industry after redundancies in 2008/09. Perhaps a lack of available staff to carry out programmes effectively accounts for 15% of agency executives reporting delays in projects.

The main worry for agencies offering hospitality programmes, however, may not be the lack of money available. Only 3% of agencies think clients want training to be incorporated into packages and 6% think education is important to them; yet more than half of marketers themselves want these elements involved in any hospitality packages.

The biggest challenge for the corporate hospitality industry in 2010 may not be about providing clients with more entertainment for less money. The real issue may be suppliers understanding that marketers need more personalised and bespoke services, no matter what the price band.

CORPORATE HOSPITALITY

About this survey

  • This research was conducted during February 2010 among readers of Marketing Week magazine and users of MarketingWeek.co.uk.
  • Seventy-two per cent of respondents are client-side marketers, and 28% are agencies.
  • Twenty-two per cent of client respondents work for organisations in the financial sector, while 16% work in the technology industry.
  • Twenty-six per cent of client-side respondents work in organisations employing between 101 and 500 staff, while 18% work in organisations with more than 5,000 staff.
  • Thirty-one per cent of client respondents are marketing managers, 22% are marketing directors, while 35% hold a range of titles from “business development manager” to “head of sales”.
  • Thirty-eight per cent of agency respondents work for companies with less than 50 employees.
  • All results have been rounded up or down to the nearest full percentage point. Not all tables add up to 100 as there may be more than one answer given.

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