24 August 2016
What is the Corporate Hospitality Industry?
Corporate hospitality is defined, according to the Oxford Dictionary, as “the entertaining of clients by companies in order to promote business, especially at sporting or other public events.” Therefore, the corporate hospitality industry can be defined as the production of goods/services within this industry.
The corporate hospitality industry is worth well over £1 billion pounds per year in the UK and has grown to become a major part of relationship building for business people and their clients worldwide. In the past, hospitality used to be as simple as a ticket and some stall food for your client, but it has grown to incorporate many more elements such as behind the scenes tours at stadiums, celebrity speakers at events, sharing a table with sporting legends and even Michelin star quality food, or a private helicopter to a Grand Prix!
The main purpose of purchasing corporate hospitality ultimately is to get a return. But how do you quantify it? And how much is acceptable? Chairman of REaD Group Mark Roy says the golden ratio is 5:1, meaning if a company spends £1,000 on corporate hospitality for a business partner, ideally they want to see £5,000 back in return, above what they would already be spending with the company.
Spending trends in the industry vary wildly from year to year and are affected by the major sporting/cultural events going on in that year. In the UK for example, the industry had a bumper year in 2012 due to the Olympics and grew by 8% when compared with 2011. The industry is also affected by its current economic climate, and is not averse to recessions either. In the UK, there was a recession which peaked from Q2-2008 until Q2-2009 and according to research conducted in London in 2010, this resulted in many companies opting for more price conscious, deconstructed hospitality packages. The downturn in the UK saw a cut in spending in 2009 although, from 2010-2014, this industry grew consistently, and continues to (fingers crossed that triggering Article 50 doesn’t affect it too much).
There can be no doubt that the modern day corporate hospitality industry plays a vital role in relationship nurturing and general networking for businesses. The industry looks only set to grow in significance in the coming years as relationships between companies becomes ever more important in a more competitive and globalised marketplace.