by Keith Thomas, CEO, Petersham Group Ltd.
It’s also a term all too regularly misused, so maybe, it’s worth stating that it actually applies to “services supplied by a range of providers and agencies for the purpose of improving business relationships’.
Those agencies may include the venue, event management company, a third party client, contract caterer or others. In the UK, it’s a business worth around A?1 billion per annum, although it’s been a somewhat fragile beast through the course of the recession.
The business is vulnerable to economic downturn as it is seen as an area that is at the front of the queue when cuts to budgets are being considered. However, it can be a very effective way of building client relationships. One thing is sure, there are a number of fundamental factors which are changing the nature of this sector and which will result in a very different animal emerging from the other side.
Clients, unsurprisingly, are becoming more demanding and discerning, and more value conscious. This is a trend expected to continue as the economy moves out of recession according to industry experts Sodexo Prestige and Allegra Group, who shared their thoughts with us recently. In the UK, the impact of recent legislation in the form of the Bribery Act 2010 is also having a real impact, placing an additional administrative burden on providers, many of whom are quite unclear as to what is and is not allowable under the terms of these new regulations.
Encouragingly for our sector, there is a trend towards informality, interactive rather than passive entertainment and real experiences ‘ ring any bells there? Also of great significance, the customer profile is changing. There will be increasing number of international clients seeking unique packages, unique both in terms of venue and the experience delivered.
A greater proportion of clients now are woman compared to before the recession and indeed, 56% of new jobs created post-recession are projected to be held by women. They are also increasingly prominent in senior management positions and this is clearly a welcome trend that will continue. However, their tastes are often rather different to those of their male colleagues and not only do they appreciate different types of events but they like to experience them in a different way. Instead of private boxes at marquee sporting events, there is increasing demand for more informal dining and for experiences, for arts and cultural events, ranging from the Chelsea Flower Show through to theatre and gallery shows.
Rather than being so much part of the sales process, corporate entertainment is becoming more of a thank you to clients who have placed their business with the host company, as well as a way to keep the relationship strong throughout the course of the contract period.
While major events such as Silverstone, Ascot, Wimbledon and Goodwood will always sell well, feedback from the industry suggests that packages will need to be more keenly priced. Additionally, many of the old tried and trusted packages are increasingly perceived as tired and less interesting and the market is seeking more entertainment and a greater degree of interactivity. Luxury is welcome but clients want it presented in a simpler, less stuffy way.
There will be greater scrutiny of packages and they will need to be fully justified if they are to form part of the client relationship. Clients want to be treated as individuals and appreciate the time that is spent with them by the host company and by the entertainment provider. Again, some interesting parallels!
The good news is that both Sodexo Prestige and Allegra expect a modest, inflation lead recovery in this market over the next 3-5 years and taking all of the above together, we believe that a market opportunity clearly exists for visitor attractions to work with providers of these packages to make the most of this opportunity. At Petersham Group, Jonathan and I will be keeping a close eye on this market and helping our clients to do likewise.