Cloud over knees-ups as war looms

THERE were some very disturbing advertisements in the Racing Post last weekend. With just days to go to the Cheltenham Festival, the horseracing extravaganza that is the opening gambit on the annual corporate hospitality circuit, you could still hire glass-fronted boxes overlooking the course, reserve luncheon tables in the restaurants or even take over an entire chalet in the tented village for your company.

Two years ago, just before foot-and-mouth struck, you could not even buy a ticket to watch the racing at Cheltenham let a lone lay your hands on a prime vantage spot, and in the mid-1990s the demand was such they had to turn people away, according to commercial business director Peter McNeile.

Chris Coley has been supplying corporate hospitality packages for 20 years through his company, Coley Racing. He said: 'Life is difficult and getting more difficult. Many of my clients not attending this year are City clients. There has been a noticeable drop in numbers and the corporate market is down on last year. That is how life is at the moment.'

Jonathan Newell's Champion Events company is newer to the game. This year, for Cheltenham, it advertised in trade publications and even distributed fliers around the City. That resulted in few bites and he says the business is only doing well because existing clients have returned. In the industry overall, he too notes a downturn: 'Companies are not prepared to spend £500-£600 a head. There are constraints on the budget that never used to be there.'

Cheltenham is the top end of the corporate hospitality business. Something about the competitiveness of the racing, the huge sums of money wagered and the 14,000 bottles of champagne the course estimates will be consumed attracts City folk like few other events. If Cheltenham is suffering, then the business as a whole is in trouble.

Extravagant budgets

TALKING to events organisers and ticket agencies, you hear of companies in trouble, that have bought boxes for the top events but cannot sell them on or have over-expanded on the back of extravagant City budgets only to find themselves frozen out in the economic downturn. Talk to these companies and they tell you about restructuring and refocusing or, in the case of one of the bigger companies, nothing at all as the phone just rings out.

As they are struggling, so too are the ancillary businesses, the ones that bought into Quad bikes, mini-hovercrafts or go-karts or spent thousands on clay pigeon shoots that no one wants to pay for any more.

David Bland, director of The Event Business, a healthy marketing company with £1.7m that tailor makes days out for a wide range of clients, points out that the nature of the business has changed: 'A lot of people have done all the jollies and frankly have had all the jollies up to their eyeballs. Once you have done Henley two or three times you don't want to go again, once you have done Wimbledon it's the same, so now it's let's try and find something else to do.'

'It does need to be more focused and companies want results from it. It is not good enough to have a great day out and a hangover at the end. There needs to be a reason behind it.' And that seems to be the major change in the whole ethos of hospitality.

Sued over warm beer

ONE City type, who asked not to be named in case he did not get his invitation for next year, was a guest of a major bank at the recent England-France rugby match at Twickenham, said: 'Usually you go down and get a bit pissed and have a good fun day out. This year they were actually hard-selling us their bank and its products. Bloody hell.'

Indeed, such is the serious nature of modern corporate hospitality that UBS Warburg is at the moment suing events organiser Sport Mondial in a dispute over 'warm beer and cheap white wine' allegedly served in a £90,000 box at the football's Champions League final in 2001.

The suspicion is that, even a year previously when everything was going tickety-boo, the only dispute would have been over the quantity, not the quality. Today, companies do not want to be seen having almighty booze-ups when bonuses are down and they are firing people left, right and cetre.

'It's bad for image,' one senior foreign exchange trader said. 'But the cutbacks are really only at the bottom end of the market. It remains part of our business. Thanks to our clients, we are making money and we have to make sure those clients feel they are important to us. The last thing we want is them buggering off because someone else has taken them to the World Cup final.'

Stronger relationships

THE focus from the City is on value for money, business returns and not simply a day out for the boys.

Cameron MacMillan, who runs South Kensington-based RBI Promotions, which deals with several City firms, said: 'It is very much about building a stronger out-of-office relationship with top clients. The value is not necessarily taking 100 people to an event but the 10 key people you want to talk to. Corporate hospitality should be seen as an investment.'

It is a view shared by Cheltenham's McNeile: 'In this political climate, when people are being laid off and there is the prospect of war, companies don't want to be seen having a major knees-up. The real result is that your typical party has changed in size. Companies used to have boxes for 30 people and now the tendency is to have tables for 10 in the restaurant. I myself am doing that this year. The upside is you can talk to your clients and be more intimate and discerning with them.'

One person who is completely unfazed by any downturn is Piers Pottinger, the jovial racing-mad chairman of Bell Pottinger Financial, whose useful horse Geos runs in the Queen Mother Champion Chase next Wednesday. On each of the three days of the festival, Pottinger will entertain 60 people for lunch and 20 for dinner, including leading investment bankers and chief executives.

He runs a waiting list and, with fewer companies to splash out in anything like the style he does, you suspect his waiting list of clients eager to enjoy the festival can only get longer and longer.

Pottinger's City guests are among the lucky ones because, if event organiser Coley is correct, those unlucky, uninvited ones left behind in the Square Mile, thinking hopefully of future days at Royal Ascot or Wimbledon, are destined to be stuck to their desks for a bit longer yet.

Coley said: 'Cheltenham is probably lucky coming now rather than later in the year. It will get worse before it gets better.'