Corporate entertainment

UK companies are thought to spend £750 million a year on the business of hospitality. Where does the money go, and is it well spent? Mike Fletcher has the statistics. Nelson Mandela once said: 'Sport unites people in a way politics never can.' The former South African president was likely to be referring to the bond formed among hordes of travelling fans singing football chants or the combined will of the Wimbledon faithful, as Tim Henman plays out a fifth set on Centre Court.

by Mike Fletcher, the editor of Haymarket's Event and RSVP magazines
Last Updated: 31 Aug 2010

But Mandela could just have easily been talking about the business of hospitality at sporting events. In today's world, it is estimated to cost four to five times as much to acquire a new customer as it does to maintain an existing client relationship. Face-to-face hospitality therefore has a vital role to play in developing and sustaining customer and employee relationships within all types of business.

So how much is a sector normally associated with suits supping on Pimms and prawn sandwiches worth? According to the Corporate Event Association (CEA), the UK corporate hospitality market is valued at about £750 million a year, but this figure includes all forms of hospitality as well as corporate entertainment.

Given the dominant position that sport occupies in sponsorship deals, it could be argued that a global hospitality market can be calculated by estimating how much is spent on sport sponsorship, worth between $19.25 billion and $23.1 billion worldwide, and then calculating what proportion of that figure forms hospitality activity.

Ardi Kolah, author of the latest report from Sport Business entitled Maximising the Value of Hospitality, says: 'It works out somewhere between $6.7 billion and $13.9 billion a year. But these are estimates based on rough assumptions and don't take into account stand-alone corporate hospitality at sports events that do not form part of a brand owner's sponsorship programme.

'The truth is that very little information on hospitality exists within the public domain, as brand owners and sponsors are never keen on providing enough reliable data in order to place a value on the market.'

The most recent data on corporate hospitality expenditure in the UK is contained in the third NOP/Sodexho hospitality survey published in January (see tables). For its National Corporate Hospitality Survey 2004, 200 senior managers with specific responsibility for corporate hospitality expenditure of between £10,000 and £200,000 a year were interviewed. In addition, the survey also conducted 100 in-depth interviews with the consumers of corporate hospitality in order to determine whether expenditure on hospitality was meeting the stated business objectives of hosts compared with the expectations and experience of guests.

Both reports establish that corporate entertaining and hospitality can be an effective way of creating networking opportunities and cementing business relationships - if a brand owner knows what it is doing. On the other hand, the result can be a complete disaster that damages a corporate reputation if corners are cut or ill-informed decisions are taken.

Simon Gillespie, CEA director and marketing director of agency Sportsworld, the official ticket and tour operator for the Athens Olympics, warns of seemingly attractively priced packages often made available due to 'a late cancellation'. The industry in the UK is very competitive, he says, 'and it's certainly worth shopping around, but there are no short cuts. Any offers well below the market value need to be considered long and hard, as the consequence to a business of being let down by an unofficial agent are too great. What is the source of the tickets? How far is the hospitality facility away from the venue? These are two of the most basic questions to ask.'

Arena Events provides packages at Silverstone's Vale and Copse Corner during the British Grand Prix. Managing director Charles Webb also works alongside other providers at Cheltenham Racecourse, Aintree (for the Grand National) and the Burley Horse Trials, while enjoying exclusive status for the World Match Play Golf at Wentworth during October. 'For peace of mind when entertaining guests at any of the hot-ticket events,' he says, 'it's best to phone the venue and ask to be directed to one of its appointed agencies. If in doubt, the CEA can provide details of official hospitality sources.'

The ultimate goal of any hospitality is to generate a close bond between the client and the brand owner. To avoid guest assumptions that they're on a jolly or that they're being subtly bribed by the provision of hospitality, a real strategic business objective needs to be in place. That, combined with the expertise of official suppliers, will ensure a momentous day out against a backdrop that always has the potential to throw up a piece of sporting history into the bargain.

TOP SPORTING EVENTS AND HOW MUCH THEY COST TO ATTEND

Cost per

Event Facility person

(pounds)

FA Cup Final, Millennium Stadium Executive restaurant 650

Private boxes 899-1,000

Power Test series, Lord's The Lord's Experience 149

Grandstand restaurant 250-475

Open Golf Championship, Executive restaurant 345-475

Royal St George's Private suite 355-475

Tennis championships, Wimbledon Gatsby Club 485-650

Six Nations Rugby, Twickenham Orchard Enclosure 575

River Suites 599

Ascot Royal Meeting Meadow Village 245-295

Bessborough Suite 645-875

Seagram Grand National, Aintree Martell Mood Bar 40-140

Empress boxes 192-361

Fairway Village 495-2,575

F1 British Grand Prix, Silverstone Brooklands Suite 139-999

F1 Paddock Club 2,213

Cartier International, Smith's Lawn Enclosure 345

Guards Polo Club Private chalets 345

SOURCE: THE CORPORATE HOSPITALITY PARTNERSHIP/SPORT BUSINESS:

'MAXIMISING THE VALUE OF HOSPITALITY'

 

HOSPITALITY EXPENDITURE (UK)

Expenditure p.a. South North Scotland

Less than £10,000 29% 36% 29%

£10k-£25k 11% 24% 10%

£25k-£100k 20% 16% 22%

£100k-£150k 9% 4% 2%

More than £150k 20% 5% 6%

SOURCE: NOP/SODEXHO 2004

 

THE A, B AND C LIST - MOST IMPORTANT INVITEES

Group Importance to host

Current customers 91%

Potential customers 78%

New business prospects 74%

Own employees 49%

Clients at risk of being lost 34%

Suppliers 29%

Other local professionals 2%

Public figures 2%

Investors 2%

SOURCE: NOP/SODEXHO 2004

 

WHO PREFERS WHAT? (% OF RESPONDENTS WHO HAD ORGANISED AT LEAST ONE OF

EACH TYPE OF EVENT WITHIN THE PAST YEAR)

Horse- Motor-

Sector Golf Football racing sport Art Cricket Opera

Retailers 25 50 50 63 0 13 13

Manufacturing 51 54 20 34 12 22 5

Financial services 68 37 32 11 16 11 5

Legal 29 43 14 0 43 14 14

Transport 80 60 40 40 0 20 0

Construction 64 79 36 7 0 21 0

IT 70 70 20 20 0 0 0

Media 46 62 31 31 15 8 8

Public services 33 42 17 17 50 8 0

SOURCE: NOP/SODEXHO 2004

 

HOST'S REASONS FOR CORPORATE HOSPITALITY

Generate goodwill 30%

Build relationships 25%

Generate business 25%

Meet new clients 19%

PR 14%

Client enjoyment 13%

Thankyou to client 13%

Boost client loyalty 11%

Raise staff morale 10%

Clients expect it 5%

SOURCE: NOP/SODEXHO 2004

 

GUEST PERCEPTIONS OF HOST'S REASONS

Wants to build relationship 44%

Wants to generate business 38%

Networking opportunity 22%

Thankyou from host 17%

Generate goodwill 16%

PR for host 13%

Expect an invitation 1%

SOURCE: NOP/SODEXHO 2004

 

CRITICAL SUCCESS FACTORS FOR GUESTS

Meet host 82%

Pre-event communication 81%

Food quality 76%

Food service 76%

Venue 75%

Presence of host execs 74%

Recognition of own interests 73%

Entertainment 71%

Venue staff 66%

Quality of bar service 64%

Formal reception 57%

Travel arrangements 56%

Invitation for partners 55%

Souvenir gift 39%

SOURCE: NOP/SODEXHO 2004

 

WHAT'S GOT BETTER SINCE LAST YEAR?

(GUEST RESPONSES)

Food 31%

Organisation 18%

Choice of events 15%

Food service 10%

More relaxed 10%

Better venues 8%

Business focus 5%

SOURCE: NOP/SODEXHO 2004

Find this article useful?

Get more great articles like this in your inbox every lunchtime