Brands are not turning to smaller, tailor-made events because of budget cuts, rather such money-can’t-buyexperiences deliver far more bang for their buck.
Corporate hospitality has always seemed a little like the marketing family’s poor relation. If sponsorship was often termed the “chairman’s whim”, hospitality was referred to as the “PA’s punt”. It was a case of keeping the suppliers and buyers happy by giving them a glass of fizz and wheeling on an out-of-date comedian for an hour or two.
But in recent years corporate hospitality has become big business. These kinds of events were worth an estimated £1bn to the UK economy last year, according to the Market and Business Development research report UK Corporate Hospitality. This may be only a 1% rise on 2009, but the outlook for the industry is generally positive, as previously its value fell 5% to £933m.
So how is an industry that was largely regarded as frivolous and a “nice to have” surviving the business sector’s austerity measures? Corporate hospitality seems to be evolving, with a trend towards smaller events, more tailored to the audience and designed with a tangible business outcome.
Alison Willis, director of International Confex – the exhibition for event organisers – explains: “A reason for more bespoke, smaller events is return on investment and not being seen as extravagant in these austere times. At the height of the recession, we saw event organisers from all sectors swapping champagne for cava and the banking sector is still cautious about being seen to be enjoying hospitality at all.”
- 2009 saw the hospitality industry shrink 5% to £933m
- 2010 will see a return to growth by 1% to £1bn
- The Olympic Games in 2012 and Commonwealth Games in 2014 should generate growth in the industry of 8% and 4% respectively.
- 2013 and 2015 will see declines of 3% and 1% respectively.
Indeed, Barclays has an extensive programme where it visits stakeholders all over the UK but is very reluctant to host what it terms corporate hospitality, with all its frivolous connotations, preferring instead the more business-driven “customer engagement” (see Brand In The Spotlight, below).
Events catering for a smaller number of guests that employ greater attention to detail is perhaps one way that the hospitality industry is retaining its slice of the marketing pie. Jonathan Ford, chief executive of the Football Association of Wales and formerly responsible for Coca-Cola’s European hospitality programmes, says: “Like any part of the marketing mix, corporate hospitality is suffering because until now it hasn’t been used in a compelling way. To survive it has got to move away from the old style of doing things.”
For many brands, this “new way” means changing hospitality events that previously might have catered for an audience of hundreds and reducing that figure to just a handful.
Agencies that arrange hospitality have already begun to address this and the most popular events now range from money-can’t-buy experiences for a hand-picked group of executives to using the traditional sporting or music properties in much more tailored ways. For example, oil company BP – no stranger to scrutiny about its expenditure even before the Deepwater Horizon disaster – still uses traditional sporting venues like The Belfry. But instead of taking a lot of people for a few shots on the matchplay golf course, it arranges a full day of golf, quizzes and other events that encourage guests to interact more closely and for longer.
I don’t expect anyone to go to jail for taking someone to the tennis at Wimbledon
“Smaller scale events make it easier to network and spend time with each person,” says Willis at International Confex. “This works especially well when creating new relationships, but can also strengthen existing relationships, particularly if there has been a prolonged absence of contact.”
Sally Fee, retail marketing manager at Paramount Home Entertainment UK, feels that an intimate event is key to laying real groundwork for future business deals when launching new films. She explains: “We present to our customers all through the year but the fourth quarter presentation approaching Christmas is where we showcase our biggest properties so we really like to make this an ’event’. It’s important to create an intimate setting that encourages free-flowing discussion that lays the groundwork for future negotiations.”
Ford believes that clients have to be still more rigorous when selecting the recipients of hospitality. “The Spanish division of Coca-Cola never took existing customers to hospitality events. In a way it sounds stupidly simple. But it was very effective.”
Barclays Retail head of marketing Sue Whelan believes there is still an argument for using hospitality across all stakeholders, choosing each on their merits: “We never just invite our own customers. We work with business partners to bring in a mix because it makes for better debate. This strategy forms part of what we’ve been doing for many years – keeping in contact, meeting, introducing.”
Providers are recognising the need for more intimate surroundings with a business bent and are investing accordingly. Luxury department store Harrods has recently completed its new tasting room that accommodates only 16 to 18 people at the heart of the Knightsbridge store’s wine department.
Brands can use the space to treat their guests to an exclusive wine-themed event or, in the case primarily of drinks brands, to enhance their own brand experience. Both Martell and First Drinks, owners of numerous alcohol brands including Glenlivet whisky and Remy Martin cognac, used the venue last month to showcase their own products.
These experiences don’t come cheap – Harrods’ tasting room comes with an all day minimum spend of £5,000. And if you’re wondering what possible client activity could be worth a £2,000 bottle of wine and dinner in a department store, there is a sticky new issue that faces the corporate hospitality industry. The Bribery Act 2010 will shortly come into force and is causing concern as to what constitutes bribery (see The Bribery Act, below). Will treating a supplier to a box at Aintree for the Grand National see your marketing director hauled up before a judge?
The Bribery Act
Alison Geary, associate at Taylor Wessing
The Bribery Act does not prohibit reasonable and proportionate hospitality or similar business expenditure. However, the new law defines as bribery any hospitality intended to induce a person to perform a function improperly – no matter how low the expenditure is. Therefore, organisations need to give clear guidance on what is reasonable and proportionate hospitality expenditure and should prohibit the offering or receipt of gifts, hospitality and expenses that could affect or be perceived to affect business decisions. All gifts, hospitality and expenses given and received must also be fully documented and monitored.
“In my last company they were so concerned about any accusations of bribery that they’d put a £1 coin on the table if they were offered a drink,” laughs the Football Association of Wales’ Ford. “I can understand the concern but hospitality is all about relationship building, whether that’s buying someone a coffee or taking them to something far more high level.”
Willis at International Confex is much more cautious. “There are so many grey areas that need to be fully explored,” she says. “At the moment the act stipulates that hospitality must not be excessive, given too often, have a low level of business content or leave the attendee in a position of obligation.”
It would seem, therefore, that the safest course of action now that the trend for much more results-oriented events is gathering pace is to stick with it. Easy to prove business credentials are the best form of defence. That said, one legal expert told Marketing Week: “I don’t expect anyone to go to jail for taking someone to the tennis at Wimbledon.”
So it is unlikely that corporate hospitality will now forever be accompanied by a PowerPoint presentation, a minimum of five follow-up calls and a risk assessment by the legal team. “There are a lot of events that compete for high-level business executives’ attention,” claims Jenny Love, corporate communications manager for Ascot Underwriting, an insurance company under the Lloyds umbrella. “What we do has got to be fun.”
A relative newcomer to the hospitality game, Ascot Underwriting’s broker party is in its third year. Love explains its appeal: “The focus is on fun and entertainment. It’s the opportunity to spend quality time together and socialise.
“We don’t plan the event with return on investment in mind, although it is certainly an opportunity for people who don’t normally meet to get to know each other. But because we don’t evaluate it in terms of business benefit, we are also prudent with our spend.”
Although the corporate hospitality trend appears to be heading in the direction of small and beautiful, the old-style hedonistic hot tickets still exist and it is predicted that the London 2012 Olympic Games and 2014 Commonwealth Games in Glasgow will play a significant role in accelerating the industry’s growth by 8% and 4% respectively.
Brand in the spotlight: Barclays takes one small step towards customer engagement
Barclays recently relaunched a customer engagement campaign it first ran in April 2010 targeting small to medium-sized businesses around the UK. Called Take One Small Step, the bank visited customers to discuss the challenges they faced in a recessionary economy. This was followed by a reception for networking.
Created by its in-house marketing and events teams, Barclays put forward several of its financial advisers as well as inviting local experts to present seminars on such topics as effective business management, seeking investment and using local partnerships to boost sales. Seminars targeted groups of between 50 and 100 people in up to three sessions per day per region. Guests were encouraged to attend by a competition that ran parallel to the campaign and promised a £50,000 business investment to the winner.
Despite delivering essentially the same message, Sue Whelan, head of marketing for Barclays retail, explains why the bank chose to use a more intimate setting. “Our customers want to know that they can access professional advice and have the opportunity to talk through their own unique circumstances. We like to give our customers options and so offer smaller meetings as well as the large-scale business events that provide a forum for open questions where business professionals can learn about what competitors, partners and service providers are doing.
“Our teams have ongoing relationships with local business organisations, lawyers and accountants. The lorry [where the forums are held] is cost effective and mobile in the true sense of the word. It means we can host community events for youth groups, internal staff meetings and meetings tailored to the local demographic,” she adds.
Whelan insists that the heavy business focus of these events is in tune with the current climate of efficiency and maximising return on investment – for both the bank and its customers. “We still have a nice reception after the business seminars but even then our staff use the opportunity to help guests network and make the most of their visit. The days of lukewarm wine and tired canapés for the sake of it are very much over.”
Top trends 2011 predictions
Sally Fee, retail marketing manager, Paramount Home Entertainment
Client engagement is all about delivering value for guests. Business people attending our events have to make time in the day to attend, so we have to deliver more value than just a chance to chat over a glass of wine. We believe that projects that deliver more of a direct business benefit to clients will be the way forward. Trade spends are coming under increased pressure so there is a requirement for smart solutions that are cost effective yet still “tick the box” on event objectives.
Jonathan Ford, chief executive, Football Association of Wales
Every aspect of marketing needs to justify its expenditure. The onus will be on agencies to deliver value for money. There will be increasing amounts of follow-up – have we improved sales? Are we developing relationships?
Jenny Love, corporate communications manager, Ascot Underwriting
Too much on offer out there is still too boring-looking. The assumption that if you are in financial services you will want a seminar or conference. I don’t get inspiration from that. Agencies will have to keep their fingers on the pulse so that they can deliver exciting, energising packages that break down perceptions.
Alison Willis, director, International Confex
Many companies will be offering packages that include more so they are seen as providing value from hospitality. I also think that intimate hospitality rather than the lavish will be the norm for some time to come because businesses which had to cut back in the recession have got used to this. Suppliers have to react with their offerings.
Think about what you want to achieve – will a noisy or busy atmosphere detract from closing a deal? Or if you are an innovative company, then you need to find a property to match.
Assessing return on investment is tricky when dealing with relationships. Measure ROI in terms of the number of follow-up conversations that were beneficial, or perhaps whether the event attracted the calibre of people you were hoping for.
Intimate events give you the chance to have longer conversations with guests – so make sure you have something pertinent to say.
The Bribery Act 2010 – as long as you can show you are not inciting someone to act improperly, this should not impact the hospitality industry.