Time to act out of your comfort zone

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Outdoor event organisers are facing up to the challenges of an overcrowded market, competition from unofficial providers and a new anti-bribary law.

The market for corporate entertainment has rebounded, according to a report by research company MBD, which projects 11% growth in the market between 2010 and 2015. However, attitudes towards the industry have changed, while competition from unofficial providers and the uncertainty around new anti-bribery legislation are creating extra pressures.

According to Brett Tonkyn, sales director of The Open Official Hospitality, which sells corporate events for the golf championship, more companies and individuals are showing an interest in buying hospitality packages.

However, big companies are likely to entertain fewer people than previously and are also demanding a wider range of options when they make a booking.

“The market is saturated,” says Tonkyn. “Prices are coming down because there is so much for people to choose from. The major tournaments will continue to be strong and popular, but it becomes less cost-effective for the less prestigious venues to run a hospitality option when there isn’t the demand for it.”

This means that event organisers need to work harder to distinguish themselves through their hospitality. Tonkyn argues that this requires improvements in the quality of service and catering, with food being the core offering of much hospitality. However, some organisers differentiate themselves by creating experiences for guests that are nothing like the alternatives on the market.

Big companies are likely to entertain fewer people than previously and are also demanding a wider range of options when they make a booking

At the Keswick Mountain Festival, for example, companies are offered the opportunity to get their hands dirty, with activities such as mountain biking and wild swims. Event director Kate Thomas says: “It is taking people out of their comfort zone, but putting them in stunning places and different situations.”

Companies entertaining guests at events also have their own ways of making the hospitality they provide distinctive. Lorraine Blake, sales manager for the Chelsea Flower Show Official Hospitality, says this has been a common request from companies hosting guests at the event. Options available to them include having their own branding on private chalets in the show’s hospitality village.

At horse racing’s Cheltenham Festival, meanwhile, alcohol company Diageo runs the independently branded Guinness Village, which features bars to buy drinks and fast food, as well as live music behind a giant inflatable entrance.

Cheltenham Festival director Peter McNeile says: “Through the Guinness brand, Diageo brings a lot of energy to an event like this. Clearly, there are occasionally some operational issues in the way people want to pursue their entertainment, but provided these are manageable I am all for allowing people the creativity to differentiate their own event from someone else’s.”

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Royal St George’s: Where the British Open 2011 is being held. Major events remain strong

The imperative to provide differentiation in the hospitality experience comes as the industry faces additional challenges, among them the threat of unauthorised resellers and confusion about new legislation to prevent bribery.

With cost efficiency now of much greater concern for those buying hospitality packages, businesses are likely to be attracted by lower prices. This has led to the creation of a valuable market in unofficial hospitality, which often involves independent agencies buying tickets and reselling them as part of their own hospitality service – often cheaper than packages bought from official providers.

The legality of doing this, however, depends on the terms and conditions of tickets to individual events. Where an event deals with its own authorised resellers, it will often forbid third parties from selling tickets on, or at least from using the event’s logo and other intellectual property to advertise their services.

Caroline McEleney, head of hospitality sales at Manchester United Football Club, says stopping this happening is tricky: “Wherever you are and whatever stadium you are in, it is always difficult to police it.”

The measures taken by the club include the requirement that all season tickets be registered to a name and address, and that any resellers must sign up to an agency code of conduct before being authorised to sell tickets for hospitality boxes at the club’s Old Trafford stadium.
McEleney says: “We come down quite hard on anyone who we find has managed to source box tickets and resell them when they should not.”

At the Open, the conditions on the tickets mean they cannot be resold or sold as part of a promotion or a package that has not been agreed by tournament organiser and golf’s governing body the R&A. Tonkyn estimates that the market for hospitality sold through unofficial providers runs to seven figures, with some independent agencies selling up to 4,000 packages during the four-day competition. Like McEleney at Manchester United, he agrees that policing the market is very difficult. This challenge, he suggests, is a higher priority for the industry than concerns about newly introduced anti-bribery legislation, which some fear could impact negatively on the market for corporate entertainment.

It is important to convey that this is a business relation-building tool. It is not a jolly

The Bribery Act 2010 makes it a criminal offence to offer rewards or financial inducements to commit improper acts in the contexts of a business or other organisation.

Westfield Stratford shopping centre, which will host corporate hospitality during the London 2012 Olympic and Paralympic Games, has been more rigorous than many venues in addressing the issues raised. It has its own formal compliance procedures in place and requires clients to demonstrate these as a condition of making a sale. Nonetheless, even at such a high-profile event as the Olympics, it is not a prominent concern, or one that is currently harming business, according to the centre’s head of Olympic brand alliance Mark Zimmer.

“We are dealing with big blue chip clients, and they have satisfied us that they have procedures in place. They are very much aware of it, but the issue is not at the forefront of conversations we have had with them.”

Blake at Chelsea Flower Show Official Hospitality says that most companies are likely to avoid difficulties if they bear in mind what the purpose of corporate entertainment should be. “It is important to convey to people looking at hospitality that it is a business relationship-building tool. It is not a jolly.”

Yet companies still do not appear to fully understand the implications of the law. According to a report commissioned by solicitors Russell Jones & Walker, only 16% of businesses have training on the act in place for staff, while only 22% plan to implement a policy in response to it.

Though there is no suggestion that the event hospitality routinely enjoyed by companies and their clients should fall foul of the new law, it is an area where uncertainty remains, and where legal precedents do not yet exist. It represents yet another changing aspect of a market with plenty to think about.

Viewpoint

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Kate Thomas
Director

Keswick Mountain Festival

Keswick Mountain Festival is a five-day event that includes talks, activities and competitions. There is an emphasis on healthy lifestyles, which is something the big corporate clients are buying into quite considerably. Corporate hospitality that’s about flashing money around is not the best thing to do at the moment. We work with brands to create slightly different experiences for their customers, specialising in the outdoor and leisure market. Ours are more grassroots events than flashy racecourses.

Every brand wants something different. There are a variety of budgets and targets in terms of what they want to achieve. We have worked in the past with agencies but we find it better to sell direct because brands that get involved with us have the benefit of being associated with the festival rather than being out on a limb.

The anti-bribery legislation does not really affect us. I have previously worked in medical events where bribery policies were in place, such as not being allowed to give away gifts worth more than £5 and not being allowed to hold a conference in what is classed as a tourist area. But clients have not brought the issue up with us, although it is something we have discussed internally. We decided to keep abreast of the information, but we do not feel at this stage a formal policy is something we need to take on board.

This is not an issue for our current clients and those we are pitching to. If we did get a client that we felt needed advice on the anti-bribery legislation then we would give them that advice.

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Brand in the spotlight

Q&A: Mark Zimmer
Head of Olympic brand alliance
Westfield Stratford

Marketing Week (MW): What hospitality facilities will Westfield Stratford shopping centre offer during the London Olympics?

Mark Zimmer (MZ): We have a number of rooftop sites that are immediately outside the entrance to the Olympic park and overlook the stadium, aquatic centre and the park as a whole. We have been marketing those to Olympic sponsors for about nine months. The focus has been on selling these individual sites to tenants, which would allow them to build their own temporary structures.

MW: Did you lose out on money you could have made by initially offering space to non-sponsors?

MZ: There are non-sponsors out there who would have been very interested in taking space. Had we decided to take a strategy designed to inflict maximum damage on the Olympic Games, we would probably have made more money. Commercially we may not be maximising the value of the site by adopting the strategy that we have, but we believe instead that we are optimising it. It is the best solution for everybody. Any downside in the commercial gains still satisfies our position of wanting to be an integral part of London 2012 and not to spoil them for everybody.

MW: How will you go about selling hospitality space to non-sponsors without infringing on the rules set by Locog?

MZ: Locog (organisers of 2012) set us criteria for opening up the remaining inventory to non-sponsors. Provided we satisfy those criteria, Locog will not raise any objections. The guidelines mainly refer to ambush marketing. We have always taken a very clear stance that we are not going to allow Westfield Stratford to become the centre of ambush marketing. We are here to add value to the games, not detract from it.

MW: What would be the consequences for unofficial hospitality providers that use Olympic logos without authorisation, or for their customers?

MZ: We are very clear about what the Olympic marques, rights and intellectual property are. We have no intention of infringing those in any way. Ours will not be an Olympic hospitality offering and it is not ticketed, so we are not competing with that market. If an unscrupulous third party wants to do it, I would say good luck with that – someone has already been arrested for the selling of tickets. I do not think Locog will take anything other than a zero-tolerance policy on this. If I were thinking of going to a non-authorised hospitality provider that is implying some sort of Olympic association, I would think really hard before committing any budget to that because that provider could get shut down.

MW: How has the Westfield venue responded to the new Bribery Act?

MZ: Westfield has put compliance procedures in place. We are very much aware of our obligations. It is something we factor into the decision of who is occupying our space. We have been in the enviable position that demand has exceeded our supply, so one of the criteria we have looked at is to ensure that our tenants are fully compliant.

Topline trends

The hospitality market is projected to grow by 11% in real terms between 2010 and 2015, according to research firm MBD.

The number of event hospitality options available is on the increase, while customers are becoming more selective about the quality of packages.

Event organisers are having to work harder to differentiate themselves through their hospitality offerings, either by improving the quality of service or by offering unique experiences.

Unofficial resellers are undercutting official hospitality packages, in some cases against the terms and conditions of the tickets. This market can be worth millions of pounds at certain events.

Uncertainty still remains about the application of new anti-bribery legislation in relation to event hospitality. It is having limited impact on the industry with only 16% of companies providing training on the law, according to solicitors Russell Jones & Walker.

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