With purse strings getting tighter, is there still a future for big-ticket sporting hospitality? Jonathan Hart reports
TIME WAS WHEN your hard-working correspondent would regularly share Centre Court seats with the likes of Lord Coe, rub shoulders with showbiz luminaries in a box at Royal Ascot or, sartorially decked out in boater and blazer, sally forth on private jazz boat cruises at Henley Royal Regatta.
Together with days at Lord’s or famous fairways in the company of sporting superstars, all these champagne or Pimm’s-fuelled outings came courtesy of carefree corporate hospitality. And, perhaps not surprisingly, all occurred during spendthrift, not-so-distant days before conspicuous company consumption fell prey to public disdain and the rigours of prolonged economic austerity. Not to mention the introduction of that deterrent to excess, corrupting influence and unethical practice known as the 2010 Bribery Act.
But despite all this, the post-2012 Olympics glow coupled with this year’s Ashes series, Open golf at Muirfield and a host of other summer sporting spectaculars are helping make sure the venerable tradition of corporate hospitality hasn’t been given the red card just yet. Through good times and bad, these classics have proved to be the ultimate cachet for top-level business entertaining – as are Twickenham, Wembley and Cheltenham in colder months.
Collectively, the UK’s pre-eminent events are reported by hospitality organisers to be frequently sold out and to have relatively few challengers boasting similar prestigious credentials. They are thus insulated to a greater or lesser degree from fluctuating market trends as well as quality sporting event alternatives.
THE RULES OF THE GAME
A key question facing companies since the global financial crisis has been how to balance pressured budgets with new ethical codes, corporate social responsibility (CSR) and the need to maintain a presence at these headline events. So how do they now view or employ them?
The short answer is like gold dust: treasured, brainstormed, painstakingly box-ticked and details pored over to extract every ounce of value. And although corporate hospitality is largely deemed as bona fide business practice, the Bribery Act has rendered participation at top events a contractual minefield. This, in turn, appears to have instilled a mood of caution or detached ambivalence among mainstream travel buyers.
“I can’t even buy a bottle of wine without first having it registered and approved as a legitimate expense,” says management consultancy Capgemini UK’s procurement manager, Roger Peters. However worthwhile the classics may be for building relationships, the cost of attending must always be justified against the value of that relationship, he says. When it comes to entertainment budgeting and the ramifications of the Bribery Act, he leaves it firmly in the hands of the sales and marketing teams.
Jane Baker is business development director for CWT Meetings and Events. She says: “Clients ask us to assist with their budgeting for these events or perhaps arrange an incentive in conjunction.” But given all the variables involved, such as internal strategising, personal guest targeting, branding, exclusive partnerships or piggybacking sponsors, she says key contracting is commonly handled directly between a company and a major hospitality broker.
STRATEGIC PLAY
The bottom line is that corporates no longer treat big-ticket events as ‘jollies’, according to James Clutterbuck, director of the hospitality division at VIP events organiser Paragon. Depleted discretionary spending means traditionally liberal guest lists have been stripped of middle managers or those deemed as merely commercially important contacts, he says. “It’s now all about inviting decision-makers only, building on relationships and qualifying every aspect of the day against return on investment.”
Although sensitive to public derision and consequently secretive, corporates are still prepared to spend handsomely – up to £4,500 per guest per day, says Clutterbuck.
“This would be for everything bespoke, including items like helicopter transport, although a more average £400 per head upwards can still buy a top quality day at a top quality mainstream event,” he says, adding that the primary challenge facing organisers is adapting the big events to more rigid corporate restrictions and demands, as well as catering for a wider span of budgets.
Ted Walker, head of marketing at hospitality and tours provider Keith Prowse, agrees. “To provide hospitality at a prestige event these days is a much more serious business proposition than it used to be,” he says. “For any company, it’s a prospect governed by stringent rules, endless scrutiny and sign-off procedures. It all has to be very closely tailored and targeted, and there can be no question of impropriety.”
TIGHTER FOCUS
In addition to seeking better value, corporates are demanding more flexibility, adds Walker. Alongside reserving exclusive ‘together’ space for large groups at Wimbledon, for example, this has also meant providing hospitality packages with tables for as few as two, four or six in addition to the standard ten.
“The overall trend is for more bookings and fewer covers,” he says. “The corporate demographic has changed. A wider variety of hospitality packages is required to suit a changing guest profile – something for SMEs [small- to medium enterprises] or special incentive parties, for instance.”
In addition to the prestige and entertainment, the relationship-building time incorporated at big-ticket events is crucial to keeping corporate favour, says Walker.
“Business decision-makers are time poor,” he says, citing a Keith Prowse survey of 166 company directors. “Compared to most office meetings averaging an hour, it boils down to good value if you can maximise face-to-face talks in relaxed surroundings – an average six hours with contacts you’re hosting at Henley Festival, for example.”
All in all, good news for decision-makers, but less so for employees still hoping to make up the numbers on a prestigious day out.
THE NUMBERS GAME
MARKET INTELLIGENCE SPECIALIST Key Note produced a Corporate Hospitality report last year that predicts a move out of the doldrums for the UK market: the report confirmed a 2.5 per cent compound drop in the market to a value of £1.2 billion in the years between 2007 and 2011. But it also predicted gradual growth in line with economic recovery, forecasting an increase of 8.5 per cent in the market during the current five-year period, to reach a value of £1.34 billion by 2016.
ON THE SUBS’ BENCH…the other main events
WHATEVER THE COST-SAVING or logistical advantages, it’s an uphill task convincing clients to switch from classic to alternative quality sports events for entertaining, according to hospitality providers. “We’ve been in business for 30 years and over that time have invested heavily in marketing attractive alternatives – to little effect,” says Chris Bruton, chairman of Cavendish Hospitality. “The classics are firmly fixed in the corporate mindset and anything else is commonly considered as secondary.”
He says accomplished alternatives, with excellent facilities and all the trappings, are available from about £150 per head per day compared to £4,000 or more for a premium day at a classic.
“With companies seeking savings, you would think there would be more take-up on these alternatives, but in our experience it’s rare,” he says. “Being associated with a classic is what seems to count, however much the day is trimmed or tailored.”
For many companies, there can be no substitution for a combination of prestige and quality, adds James Clutterbuck of Paragon. The alternative could be to damage relationships and risk losing business. “Let’s face it,” he says, “if you offer your guests, say, a less prestigious race meet rather than Royal Ascot as usual, what does it say about you as a company?”
Beyond the classics, and based on the most frequently recommended UK annual sports events by suppliers and buyers interviewed, the following are considered the primary contenders for top level corporate entertaining:
TENNIS
Boodles Challenge, Stoke Park
BNP Paribas, Hurlingham Club
Barclays ATP World Tour Finals, 02 Arena
FORMULA 1
British Grand Prix, Silverstone
POLO
Audi International Polo Day, Windsor
ATHLETICS
Diamond League Athletics, Olympic Stadium
RACING
Glorious Goodwood, Chichester
GOLF
Ryder Cup 2014, Gleneagles