Are the benefits of corporate hospitality worth the cost?
Can expenditure on corporate hospitality be justified? Company reticence about sums spent on entertaining suggests not. On the other hand, 'jollies' do seem to be growing in popularity with leading UK companies. More than half the 65 marketing managers surveyed by Millward Brown International believe that, in future, hospitality will increasingly have a place in an integrated marketing strategy. Moreover, 80% of the respondents currently have budgets for corporate entertaining.
It's estimated that British business already spends £600 million a year on entertaining. 'Hospitality can be used to build customer loyalty, develop business relationships, incentivise employees and build company morale,' says Jean Lee, executive director of the 120-member Corporate Hospitality and Events Association. But not all businesses view hospitality so favourably. J Sainsbury is unconvinced: 'The group view is that ... business can be satisfactorily conducted in the office or in business hours without any entertainment, hospitality or gift. The acceptance of presents, services or other benefits from suppliers may be seen to be placing group companies under some degree of obligation, and therefore should be avoided.' Others question the value of certain forms of hospitality, rather than the ethics. Jerry Starling, managing director of Kit Peters Extraordinary Events, which organises events for groups of up to 400, says that the worth of traditional, high-profile events is overestimated. 'With Ascot, Henley and Wimbledon you are promoting the event and not yourself,' he claims.
ICL, the leading UK IT supplier, is confident that entertaining pays. 'We use hospitality as a marketing tool to help sales people build informal relationships,' say Debbie Eldridge, the company's executive relations manager. ICL entertains 1,800 clients and staff a year, at events such as the last night of the Proms, rugby at Twickenham, and the Grand National. An invitation to an event in which a prospective customer has an interest can be the beginning of a working relationship. 'Some of our sales people have returned from an event to say that doors which have previously been shut, locked and bolted are now open and that they are on first-name terms with a prospective buyer. It only needs one good deal to arise from that relationship and the whole hospitality programme is paid for.' BOC Group, too, is taking an increasingly positive attitude towards hospitality. 'Our view is much warmer now that it was in the past,' BOC's Nigel Abbott explains, because 'we have undergone a major change programme which drives through focus on the customer. Getting to know the customer socially is an important part.' This positive view is at odds with the poor image which has long bedevilled the industry. Nevertheless, the market is in transition, according to Starling. 'The roots of the industry lay in indulgence, which smacked of excess and champagne. Now the market is maturing. Entertainment is increasingly seen as an accountable marketing tool, and purchasers want measurements of its effectiveness.' So finding a way to measure the value of a free lunch could be all that stands between hospitality and respectability.