Spending the afternoon quaffing champagne with clients while watching horse racing in a corporate box is much harder for businesses to justify these days. Entertainment budgets have been slashed and in some cases scrapped altogether because many top executives – especially those in the financial services sector – don’t want to be seen to be having fun and splashing the cash in a period of austerity.
The corporate hospitality industry is still suffering from the economic crisis, confirms René Proske, managing director of corporate hospitality provider PROSKE. “Since last year, we’ve seen a lot of unsold tickets and free seats because corporations weren’t able to place their own hospitality. Clients wouldn’t take it, were not allowed to accept it, or compliance rules didn’t allow it.”
But as talk of the recession dies down and businesses tentatively resume their marketing activities, corporate hospitality is returning to the mix. However, demands on the industry have multiplied. Gone are the days of just providing tickets for a rugby match or hosting a lunch overlooking a racecourse. Brands now want added value with more targeted, flexible hospitality options in order to get their message out to consumers and to maximise the potential for partnerships with clients.
With marketers having to justify every penny of their spend, return on investment (ROI) is of paramount importance, says Heather Bowler, global communications director at sports satellite and cable network Eurosport Group. “People will no longer go to a corporate hospitality event just to have a nice lunch.
They need to come away with something that benefits them on a professional and personal level.”
Face-to-face time with clients is cited by 82% of users as the reason they use hospitality providers, according to the Keith Prowse Customer Survey 2010, while 51% say they use it specifically to discuss new business.
Marketers are now looking for more personalised, audience-oriented programmes by identifying their target clients and then selecting their hospitality package to suit that audience.
Eurosport organises corporate hospitality at sporting events it features on its television channels so that clients who might want to sponsor the event, advertise around it or distribute it on their pay-TV platform get the best possible experience of the brand.
Bowler says: “We really want them to engage with the brand, so getting them to a sports event is the most powerful experience they can have. Those sports events are broadcast on our channels, so a direct association is made between our brand and the event itself.”
The team will often decide which event to take a client to according to that client’s affinity or passion. This ensures it’s a good fit, adds Bowler. “We would invite the global marketing director of a brand that advertises on a channel to the Tour de France, for example, because we know he’s a cycling fan.”
To ensure optimum value, brands have also become more discerning in their choice of guest, says Anna Fenten, marketing director at hospitality provider Sodexo Prestige. “A corporate host has to be very selective about who they invite because they’re working on ROI principles,” she says.
The trend for tailoring corporate hospitality to the audience has prompted many brands to organise bespoke events or to seek out “money can’t buy” experiences in order to strengthen their bond with clients.
Proske adds: “We are seeing more and more people doing a broader range of smaller activities instead of buying a load of tickets for a football match and then sending everybody one. The top executives are swamped with invitations to every kind of event. The trend is differentiating yourself from what the masses are doing.”
Robert Wicks, commercial director at Powerboat P1, a company that holds the rights to the Powerboat World Championship, claims the innovative experience his company offers is proving popular with companies looking for something different to do with their clients.
Sport is still the number one event on company lists with 80% that use corporate hospitality choosing sports, according to the Marketing Week 2010 Corporate Hospitality Survey. Keith Prowse marketing manager Ted Walker says that sporting events have proved extremely popular in 2010. At Wimbledon this year, the company catered for close to 10,000 people and between 18,000 and 22,000 people for rugby at Twickenham.
Proske adds: “We see brands using large sporting events on a business-to-consumer level to get the brand and the messaging out and the hospitality to incentivise their own staff, or on a business-to-business level to get business partners engaged with the brand.”
With brands having to go the extra mile for their clients, they are now expecting hospitality providers to do the same by adding value to their packages. Many of the established events that make up “the season” have incorporated extra elements to enhance their traditional offering in the past couple of years. “At Royal Ascot we’ve introduced a fashion show into the top tier packages, showcasing designers such as Vivienne Westwood and Matthew Williamson,” explains Fenten.
An official ambassador also works well, adds Fenten. “When a golfing ‘great’ comes to shake hands with your hospitality guests, there’s an element of surprise and delight.”
Similarly, this year hospitality provider Keith Prowse added a menu designed by Albert Roux and celebrity tennis speakers, such as Jeremy Bates and Peter Fleming, to its top end Gatsby Club hospitality packages at Wimbledon. “There’s a need to really add value for companies,” explains Walker. “The price doesn’t go up, they just get more for their money.”
Brands are even using their contacts to add value to their client’s experiences. Eurosport’s Bowler says: “The wow factor is really important in corporate hospitality, but that doesn’t necessarily mean that it has got to cost more. We use our savoir-faire and on-site presence to bring our clients to meet the players or the production crew, and we also get them behind the scenes.”
Middle East airline Emirates is an official partner of the 2010 Ryder Cup and will entertain agents from the UK at the tournament in October (see Brand in the Spotlight, page 35). The brand always upgrades from the standard corporate hospitality package as part of its contract, explains Roger Duthie, head of global sponsorships at Emirates.
He says: “We look for sponsorship that includes a corporate hospitality package and try to give clients the first-class Emirates experience.”
As well as adding value, brands are also calling for more flexibility within hospitality packages, not just in terms of price, but also with regards to approach.
For the British Open at St Andrews this year, a flexible Clubhouse package has been introduced, which means that people don’t have to rush to get to a set meal on time, explains Fenten at Sodexo Prestige. “You can follow your player all day if you want to and then come back and have some food. It’s giving people the opportunity to come to us whenever it’s convenient for them.”
The Ryder Cup has always been sold as a four-day package, but this year organisers are selling one-day tickets to cater to a broader range of businesses, explains David Watt, hospitality sales manager at the Ryder Cup.
He adds: “The financial services sector is conspicuous by its absence this year. That creates quite a big gap in the market, but the void has been filled by local companies that would never have previously come to the Ryder Cup.”
His team is also providing a more relaxed offering alongside its traditional hospitality, with a central bar where companies can network more easily. “Clients have shied away from the more formal sit-down lunch in favour of a more contemporary, informal feel,” observes Watt.
Walker at Keith Prowse has also noted this more informal trend. “We’ve introduced informal hospitality products at events from Cartier International to Lord’s to target companies that perhaps haven’t done a lot of entertaining before or have younger staff who don’t want the formality of a sit-down dinner with their clients.”
Brands are also changing the way they use corporate hospitality, offering consumers a wider choice of packages. Bowler at Eurosport says: “We’ll be looking at offering packages to competition winners and creating more consumer promotions around corporate hospitality packages with our advertisers.”
Providers have mirrored this trend and many are now selling corporate hospitality packages to fans who want to upgrade their ticket. “We’re getting a lot of private individuals who want to trade up from a match day ticket. They want somewhere to go in the intervals, to create a whole experience,” says Walker.
This flexible approach to corporate hospitality is helping the industry to bounce back. But brands have to work a lot harder to justify a hospitality offering that is not only unique for their clients and consumers but offers a substantial return on their investment.
Brand in the spotlight: Emirates and Corporate Hospitality
Roger Duthie, head of global sponsorships at Emirates
MW: Why does Emirates use corporate hospitality?
RD: We use sponsorship to promote the brand and penetrate new markets. If we enter a new market, we’ll go there and see what sponsorship opportunities are available. We look for sponsorship that includes corporate hospitality.
MW: How do you add value for your clients?
RD: We upgrade from standard hospitality packages to provide a true reflection of the Emirates experience. This includes using the china and linen napkins that we have in our first class lounges and cabin crew from the airline, who will offer guests hot towels.
MW: What is your strategy?
RD: We theme our chalets/suites after a new destination that we will be flying to that year. Earlier in the year we chose a Japanese theme for the Dubai World Cup as we launch Tokyo in March. Europe is a key destination for Australia, so we used a Spanish theme to help promote our new services to Madrid. As luck would have it, Spain won the World Cup and our partnership with FIFA gives us access to the actual trophy, so the FIFA World Cup will be on display during the Emirates Melbourne Cup in our Spanish-themed chalet.
MW: Does corporate hospitality provide return on investment?
RD: Corporate hospitality is about maintaining relationships and establishing new ones in new markets. It’s difficult to put an actual number on the return of our investment with hospitality, but it plays a key element in the negotiation of any sponsorship agreement. We rarely sign on a new sponsorship if there is no hospitality element involved.
What is corporate hospitality?
Corporate hospitality is entertainment provided by an organisation. This form of face-to-face marketing was initially designed to help an organisation build relationships with current and potential clients or customers but is now increasingly used as a staff incentive.
How is corporate hospitality carried out?
Activities can range from entertainment packages to sporting events, such as sailing a Grand Prix Racing Yacht at Cowes Week, or afternoon tea at the Chelsea Flower Show.
Corporate hospitality in numbers
82% use corporate hospitality because it allows them to have face-to-face time with their clients.
51% use corporate hospitality specifically to discuss new business.
80% of companies using corporate hospitality choose sports.
72% of brands are spending less on corporate hospitality than they did two years ago.
51% of football fans would consider buying a hospitality package at their club.
The corporate hospitality market is anticipated to be worth £1.2bn by 2014.
Source: Keith Prowse Customer Survey 2010, Marketing Week 2010 Corporate Hospitality Survey, The Football League Supporters Survey 2010, Market and Business Development (MBD) UK Corporate Hospitality Market Research Report 2009
Top tips for corporate hospitality
- Match your corporate hospitality to your target audience, not the other way around.
- Look for added value and unconventional options to differentiate your corporate hospitality from the mainstream.
- Choose more informal packages that give flexibility to your clients or customers.
- Make sure guests come away with something that benefits them on a professional and personal level.
René Proske, managing director, PROSKE
The industry has learned a lot from the World Cup in South Africa. The expectations were extremely high, but the sales figures were not what everybody expected. We need to work harder than we did in the past.
We need to be clever in our use of social media sites such as Twitter and Facebook. It’s not enough to build a website for your corporate event any more. You need to design something that people will engage with.
We also need to be more consistent with CSR. Big companies we work for have extensive CSR programmes and they’re asking us to incorporate their CSR strategies and goals into their hospitality.
Heather Bowler, global communications director, Eurosport Group
You’re probably going to get really high level corporate entertainment, and at the other end of the scale there will be a move towards opening up VIP and corporate hospitality to consumers.
It’s not just about offering those corporate hospitality packages to high-end business stakeholders, it’s also about offering them to fans who can afford it. This will open up a higher level of opportunity for those people who are really passionate about that event.
Anna Fenten, marketing director, Sodexo Prestige
We have seen people coming back to us in 2010, but companies have to justify their ROI. They are measuring how their investment is working for them. Everybody is looking at how much revenue is generated as a result of corporate hospitality.
We’ll hopefully see a slight improvement this year. The Government’s reduction in spending will probably not affect corporate hospitality as much as it will the meetings industry or conference business.
Dom Robertson, managing director, RPM
Demonstrating value in corporate hospitality is not only crucial for companies to secure budgets but also for guests to justify time out the office.
As budgets are reduced, with some disappearing altogether, the corporate hospitality industry comes under increased pressure because it is one of the first areas of spend to be reduced as a non-essential cost within organisations.
To survive, suppliers must add more value to the experiences and not just in terms of cost reductions. Clients are looking for something more engaging than just spectator sports and live events. They expect inspirational speakers and leaders, or an experience they can take back to their workplace and use as stimulation.
Chris Clarke, head of events, P&MM Events & Communications
There is a conflict of opinion with the high-profile events stating that attendance is where it should be, and that sponsorship is not a problem, while the lesser known events are clearly admitting that there are less of both around.
We are finding the trend has been for lower spend, lower profile marketing and much shorter lead-in times for those wishing to buy corporate hospitality for their channel partners, customers or staff.