Hospitality: bribery or an essential business tool?
LOVE it or loathe it corporate hospitality has become a key feature of “The Season”, the collection of traditional English sporting occasions that have become an annual fixture. From Royal Ascot to Henley, Lords to Wimbledon, City bankers, investment managers and other finance professionals will be heading in their droves for the most popular events this summer.
While there is no doubt that bookings are below last year, anyone enjoying the racing at Ascot this week would have been forgiven for thinking “what recession?” as they quaffed champagne among the crowds.
Demand for events such as Wimbledon is down slightly on 2008, according to hospitality companies including the Mike Burton Group. But still they point to the unique attractions of the major events as the reason why bookings continue to come in even amid a recession.
Take Wimbledon, for example. It has a new roof over the famous Centre Court meaning that play will never again be interrupted whatever the vagaries of the English weather. And with a capacity of just 15,000 people, Centre Court continues to attract premium prices because demand is high for the limited places available. Similarly the British & Irish Lions rugby tour of South Africa retains its position as one of the most popular hospitality events because it only comes around every 12 years. The Lions tours to Australia and New Zealand are less popular due to the greater distances involved.
While institutions are conscious of avoiding accusations of largesse – particularly those banks rescued by taxpayer funding – entertaining in the right environment remains among the most successful ways of doing business.
Senior City executives who regularly use hospitality say it is about building relationships of trust and getting beyond talking to people on the phone. And a meaningful relationship is much more likely to be built in an informal atmosphere away from the office environment.
A leading stock-broking firm that chooses to entertain clients in a box at Old Trafford believes the expense is cost-effective, highly targeted and focused because the firm knows exactly who it is inviting .
Another seasoned schmoozer gave up the blue-chip box at Twickenham after years of occupancy in favour of trips to the theatre with fewer guests. Others have opted to book just seats at major events instead of a box, even urging guests to bring their own wine or beer for a picnic.
But perhaps the biggest single reason why corporate hospitality is holding up amid the downturn is the cachet attached with cancelling any bookings.
Any dealmaker who has been wining and dining the same clients for years would agree an unexpected cancellation says terrible things about the state of one’s business.