Corporate hospitality: Alternative invitation

Marketers using event hospitality to cultivate client relationships are now looking beyond the traditional sporting day out, says Richard Gillis

Sports event-based hospitality is overpriced, male-dominated and many clients fail to remember who took them to the event because of the number of similar offers they receive over the course of a sporting summer.

This sums up the feelings of a growing number of marketers who are striving to offer their key clients something different to the regular diet of tennis, Grand Prix and golf. Brands such as BT, Virgin Mobile and Orange are carving out their own version of the corporate entertainment experience and shifting the boundaries of what constitutes hospitality.

The UK corporate hospitality market is valued at £750m by industry body the Corporate Event Association, and a recent report estimates that 60%-70% of that figure is spent around sports events. The same piece of research, commissioned by SportBusiness Group and carried out by Sodexho/NOP, highlighted the rapid growth in non-sport-related areas, including major horticultural shows, arts exhibitions and film awards.

The trend mirrors the sponsorship market, as marketers strive to associate their brands with live music, artistic and cultural events. Not surprising, given that much hospitality spend is tied in to individual sponsorship deals.

What is clear is that these alternatives to big sports events are attractive to brand managers because they offer a point of difference in a crowded market, and a significant financial saving.

Financial services consultancy Ernst & Young follows a wholly arts-based hospitality strategy, and head of sponsorship Nicky Major oversees a portfolio of exhibition partnerships. 'Art offers a personality - a different face to the firm,' she says. The firm supports two or three high-profile exhibitions a year, including the current Art of the Garden exhibition at Tate Britain, Matisse and Picasso at Tate Modern and the Art Deco exhibition at the V&A.

Major describes the difference in cost between a high-profile art exhibition and its sporting equivalent as 'enormous' and values the ability to spend time with clients she feels such an exhibition offers. 'A box at Twickenham or Lord's is just so expensive,' she says, emphasising the ability to entertain significant numbers of clients over an exhibition's run, 'while sports events are often horribly macho'.

Her approach reveals much about Ernst & Young's use of sponsorship as a marketing tool. 'The majority of the public don't need to know who we are, so we aren't using it to generate mass profile,' she says. 'But we are in a relationship-based business in a market where we all offer relatively similar products.'

Cost management

Orange also bases its hospitality spend on its sponsored properties, mainly in the film and arts sectors. 'We aim to exploit all our sponsorships in a relevant and compelling manner,' says a spokesman. 'Hospitality might take the form of journalist entertainment, promotional prize fulfilment, corporate entertainment or employee engagement.'

This close link between sponsorship and hospitality makes it important to allocate costs, he says. 'We don't put monetary values on our hospitality properties, as it varies. We are the headline sponsor of the BAFTAs and tickets to events such as this are often thought of as something money can't buy. Our internal sponsorship and PR teams manage the relationship side of sponsorships and cross-fertilise with other disciplines.'

It seems the cost of corporate entertaining can easily get out of control.

'Many companies don't know how much they are spending on entertainment or how to measure return on investment,' says Richard Waddington, chief executive of events company First Protocol. 'Much activity has not been strategically thought through. It smacks of fun for the boys.'

Waddington believes companies should invest in hospitality auditing to co-ordinate spend. He tells of one company that entertained more than 80 people in different parts of the ground at a rugby international because the various departments did not know the others were at the event.

'It doesn't take much thought to take 10 people to the rugby and the department head thinks he's done his bit, without questioning why he's taking those clients. There should be a mixed offering, then you can entertain a broad range of clients.'

Balancing act

The notion of companies providing a portfolio of events to suit all tastes makes good sense, but it raises the question of how to manage guest expectations.

'Spend too much and the client can assume you're making too much money and that they are being ripped off,' says Waddington. 'Put them in a three-star hotel and they'll think you don't value their custom very highly.'

Paul Leonard, commercial sponsorship director of BT, agrees. 'People expect a certain level of expenditure when the reality is that BT has faced enormous financial challenges. We don't want shareholders watching BT employees "larging it" - we have to be careful about how the whole thing is perceived.'

The findings of the SportBusiness Report show that much preparation is advisable when matching hospitality venues to business types. The retail sector is seen to be less than enamoured with art exhibition hospitality.

None of the respondents had chosen this vehicle for entertaining clients, whereas 63% had taken contacts to a motor sport event.

The growth in the commercialisation of music events, with sponsors becoming an accepted part of the scene, has brought with it creative opportunities to entertain key contacts. 'These days the smart way into any music festival is a platinum invitation from the sponsor or supplier,' says Adrian Pettett, director of Cake, a brand entertainment agency working in the music sector.

'At V Festival 2004, Virgin Mobile will invite more than 1000 guests to hang out backstage in its exclusive area, rubbing shoulders with a host of Heat eye-candy. Nothing beats being at the event itself and if you get it right you get two whole days to schmooze and hang out with your clients,' says Pettett.

Matt Rogan, sponsorship director for MTV Networks Europe, handles the needs of companies such as Replay Blue Jeans and L'Oreal in their sponsorship of the MTV Europe Awards. 'Trade objectives tend to be overlooked when assessing the potential value of a sponsorship,' he says. 'It is ironic because these are often more easily linked back to sales and ROI.'

Rogan feels that unlike the sporting world, which is dominated by powerful rights-holders, the music business offers a more flexible approach to the needs of commercial partners. 'What we provide can be a great deal more interactive than most sports events,' he says. 'Music is very different from sport in the type of hospitality opportunity it can provide. It's a great deal more flexible to the needs of the brand concerned.'

This flexibility can include bespoke events. Rogan cites the example of the launch party for Puma's involvement with the Jamaican athletics team at the World Championships in Paris. 'It wasn't sitting around having canapes - it was a proper party. It's easier for us to create meaningful events away from sports spectatorship that can be tailored to the needs of the client.'

Hospitality's highest value comes in offering something unique to a valued client. As Pettett says: 'It isn't a question of just getting a guest pass, it's a question of getting the right pass. Get the key components in place and you can create memories that will last far longer than 90 minutes at a football ground.'

If Pettett is right, the choice on offer to marketers and their clients is limited only by their own imagination. It's a shift neatly summed up by MTV's Rogan: 'We don't sell tables to the event - we don't have tables.'

CASE STUDY - BT AT THE TATE

'Our association with arts and entertainment gives us a better return than sport,' says Paul Leonard, commercial sponsorship director of BT. The telecoms company's hospitality strategy is based largely on its commercial support of the Tate Britain and Tate Modern galleries, which forms part of an entertainment programme taking in more than 100 events a year.

'Sport is priced at the top of the market and from a hospitality point of view it's tough to get the exclusivity that patronage of the arts can bring,' adds Leonard.

A key element is the inclusion of guests' partners in many of the invitations.

'Most of our events take place midweek, because people value their weekends,' says Leonard. '(We invite) partners because this is about relationship-building rather than hard business.'

But does it work? 'I'm not stupid enough to think that people will sign £20m contracts on the basis of us taking them to an art venue,' he says.

'But it does help to push things through more quickly.' Measurement of the effect of hospitality is one of the sector's major shortcomings, according to Leonard. 'Its reputation is of fat cats enjoying themselves at the company's expense,' he says. 'We collect empirical data that we can show to the board to prove it works'.

HOSPITALITY

The cost

- Madonna, Earls Court, includes pre- and post-concert party as well as dinner. £775 a person.

- Glyndebourne Festival, £450 a person.

- Henley Festival of Music and Arts from £415 to £260 a person.

- BBC Proms in the Park, £395 a person.

- Summer Swing at Kew from £200 to £285 a person.

- Hampton Court Palace Flower Show from £145 to £265 a person.

- Holland Park Opera champagne and canapes package £185, full dinner package £265 a person.

- Lionel Ritchie, Wembley, £255 a person.

- BA London Eye plus river cruise and dinner from £125 a person.

- BA London Eye plus theatre from £220 a person.

- Tatton Park Flower Show £125 to £135 a person.

WHICH EVENT?

Business sector Art exhib Opera Sport Theatre

(%) (%) (%) (%)

Comms/Telecoms 0 33 39 33

Construction 0 0 43 21

Financial 16 5 36 21

Manufacturing 12 5 40 17

Media/PR/Ad/Mktg 15 8 40 23

Public services 50 0 25 33

Retail 0 13 38 50

Transport 0 0 47 20

Source: The National Corporate Hospitality Survey 2004

WHO GETS THE INVITATION?

Target audience Priority

invites (%)

Current customers/clients 91

Potential customers/clients 78

Clients who will generate new business 74

Own employees 49

Clients who might leave 34

Suppliers 29

Local professionals 2

Public figures/politicians 2

Financial backers/investors 2

Source: The National Corporate Hospitality Survey 2004

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