CORPORATE HOSPITALITY IS BACK WITH A VENGEANCE. Posh boxes are jammed at events from Wimbledon to Royal Ascot, as well as top music venues. Business entertainment is doing rather well, thank you.
Take the Rugby World Cup, which took place at venues across England and Wales last autumn. The organisers claimed that corporate hospitality sales were more than 50 per cent higher than during the London Olympics – 90,000 packages were sold, compared to 60,000 for the Games.
“Hospitality season ticket and box renewal rates at Chelsea are also at a record level,” says Simon Hunter, head of venue and brand at the football club. “Ad hoc match day packages are increasingly popular and games have been selling out weeks in advance. Of those that bought a corporate hospitality package last year, 94 per cent of them renewed again this year, which is a record high.”
Corporate expenditure in this sector is heading north, but overall we’re not back to the levels before the financial crash, when spending thousands of pounds chartering private aircraft and yachts for sporting events was more commonplace. “I doubt we will see the likes of pre-2008 again,” says Jonathan Hutton, head of specialist services at Hillgate Travel. “Corporate hospitality is not so in-your-face these days. There’s more control and things like sponsorship are not as exuberant.”
LOW-KEY TREND
These days there are certainly more requests from buyers for low-key and simpler packages, with ticket-only options and fewer full-on days out. Clients are more likely to take their guests to a restaurant than fork out on a lavish corporate package. Above all, there is now an element of discretion, and price-controls are firmly applied. “There is certainly a trend for less formal hospitality,” says Adam Knights, managing director at ATPI.
One reason is because the Bribery Act a few years ago helped put the kibosh on those profligate events. The hospitality industry took a real hit when this nifty bit of legislation landed on the desks of quivering compliance departments across the UK. “Without doubt the act has struck irrational fear into many employees and companies,” says Clive Wratten, commercial director at CTI.
One bank, for instance, was so concerned about the limits of this act that its compliance department even questioned event organisers about the amounts of food and wine being provided.
“There was a lot of publicity at the time of the act about it being a sledgehammer to crack a nut. What it did do was at least make people think carefully about hospitality and probably create some well overdue policy and procedural changes,” explains Knights. Fast forward and it’s still having an impact today. The Bribery Act is quoted time and time again as a reason for companies not buying or accepting corporate packages, and not wanting to be away from a busy office appears to be another reason. The Financial Conduct Authority has also issued stricter guidelines on hospitality.
“People read the legislation slightly incorrectly though, assuming it negates everything, which was far from the aim,” says Ken McLeod, corporate director at the Advantage Travel Partnership.
Other corporate hospitality stories of woe help fuel the fire – such as BHP Billiton’s fine earlier this year from the US Securities and Exchange Commission, for breaking bribery laws at the Beijing Olympics. This was described as a renewed warning to the global corporate hospitality industry when BHP had to cough up US$25 million for entertaining 60 dignitaries, who received travel for themselves, their spouses and others, luxury hotel accommodation, as well as Olympic tickets and other trips worth up to £11,000 a throw.
“However, the fact that hospitality is still going strong suggests all this legislation and court cases probably cracked down specifically on the high-end corruption side, as well as lavish trips,” says Knights.
Certainly the fall-out from all of this is that hospitality these days appears to come with a corporate health warning, especially if it’s extravagant or overseas – then the warning lights really start flashing (see Case Study, p125). And all who accept or arrange trips have to have a much clearer business case and justification for them, with both transparency and signed approval up and down the line – any whiff of a ‘jolly’ and it’s out the door.
REASONABLE & PROPORTIONATE
The big question still remains – what is reasonable and proportionate when it comes to a corporate hospitality package? Taking a prospective customer to a Formula One race meeting and feeding him or her up may not be a problem, but paying for their entire family to come to London for a match certainly could be.
“The issue is often that this can be interpreted in different ways across an organisation – something suitable for a high-level executive and decision-maker could be deemed excessive for a more junior level person,” explains Ian Cummings, regional director for Carlson Wagonlit’s Meetings and Events.
Some firms will only now consider hospitality, such as entertainment, if it is in conjunction with, say, an educational workshop or a top-level networking event that happens to end in dinner.
The days of hospitality for hospitality’s sake appear to be long gone. “A corporate programme should be more than just a list of ‘happy events’,’” states Paul Wait, chief executive of the Guild of Travel Management Companies. “If clients need to seek approval to attend, then the objective of the event must be clearly set out and include elements such as commercial updates, product launches, networking and customer feedback. Hosts need to play an active part in delivering on these objectives and the guests need to leave feeling informed, recognised and having made new business relationships of value.”
In fact, cleverly intertwining a purely corporate get-together with some form of hospitality seems to be the way to blur the edges a bit these days. “Team building and activities, more competitive and collaborative events and memorable experiences are the more recent trends,” suggests Karen Avery, sales director at Eynsham Hall, a conference venue and country house in the Cotswolds.
CORPORATE-EVENT FATIGUE
It’s perhaps this type of language and offering where new grey areas in the field of hospitality could evolve. It doesn’t help that corporate-event fatigue is very much part of the narrative these days. Most executives have been to events, which are now much more accessible than in the past, so the ‘wow’ factor is harder to achieve.
“The fact is, business has for centuries been done over a drink or a dinner,” says Wratten. “I was recently asked to attend an evening drinks function with a number of other companies and was asked to sign a Bribery Act disclaimer before attending – to me, that’s unnecessary. Of course, have a sign-off process in place, but please inject some common sense into your company policy regarding corporate hospitality.”
This seems to be the consensus. There’s certainly nothing wrong with a good dose of hospitality, as long as it’s for the right reasons, it’s proportionate and has a clear, well-thought-out business plan.