As the economy rebounds, toned-down corporate events return
Thanks to corporate belt-tightening, the Great Recession turned out to be a boon for Dennis DeYoung, the former frontman for the '70s rock band Styx. In 2009, DeYoung performed at more than 15 corporate shows for clients such as Honda Motor's (HMC) U.S. unit and Resurrection Health Care, offering hit songs such as Lady, Come Sail Away, and Mr. Roboto without the Styx price, says Tim Orchard, who manages the star. Unfortunately for DeYoung, the number of his corporate bookings continues to be a reverse indicator of Corporate America's fortunes. This year the singer, who charges about $50,000 a show, will do only six to eight corporate gigs as company entertainment budgets grow—allowing event planners to tap more expensive talent. "The $1 million corporate events are coming back," Orchard says. "There are fewer people looking for value."
Event planners agree that chief financial officers are finally loosening the purse strings for corporate events and retreats. General Electric (GE) in January returned to the tony Boca Raton (Fla.) Resort for its annual leadership meeting of top executives. For the previous two years, GE held the gathering at its in-house training center outside New York City. Software developer Ipswitch, whose sales increased during the recession, this year spent about $1 million to take some 500 employees and guests for a long weekend at The Breakers in Palm Beach, Fla., to celebrate its 20th anniversary. With resorts still hurting from the downturn, Chief Executive Officer Roger Greene says, the affair was a bargain compared with what Ipswitch paid when it took employees on an ocean cruise to mark the company's 10th birthday.
Although spending is picking up, there are differences this time around. "On the corporate side ... people are definitely more careful about being flashy," says Steve Einzig, owner of BookingEntertainment.com and a former agent for the late singer James Brown. Vocus (VOCS), a maker of Web-based public-relations software in Lanham, Md., isn't bringing back the annual party cruise for 300 employees it stopped doing in 2009, even though sales growth has recently rebounded. "It was a lot of fun," says Chief Operating Officer Bill Wagner, but "there's no more boat trip." Vocus is instead retaining its quarterly nights out at a rented bowling alley or Dave & Buster's arcade while adding a massage center, half-court basketball court, and game room at its new offices.
Spending on corporate events likely won't recover to pre-2009 levels until 2012, says Brian Ludwig, vice-president for Cvent, an Internet service that matches event planners with venues. Even if profits have rebounded, companies are wary of extravagant shows, says Bob J. Grabow, CEO of Grabow & Associates, an entertainment booking agency. "If they had to lay off 10 percent of their people or more, how does it look to hold a big event?" he says.
Engineering giant Fluor (FLR) will fly about 600 executives to Texas in August for a "low-key" meeting that will likely include entertainment, says communications chief Keith Stephens, who declined to give details. Fluor normally holds the meeting every 18 to 36 months but has let five years elapse since the last one because of the recession and cost-cutting, Stephens says. "We were focused on weeding out nonessential or discretionary expenses," he explains.
Corporate cuts caused hunting customers to drop by half at Rough Creek Lodge and Resort in Texas during the recession. At $645 per person to hunt quail and pheasant for three and a half hours on weekends, companies found the activity an easy one to cut, says Teka Paul, wildlife manager at the resort in Glen Rose, Tex., about 85 miles southwest of Dallas. To draw new business, the resort now offers less costly activities such as a GPS scavenger hunt at $152 per team of five or less and horseback riding at $62 an hour.
The bottom line: Corporate entertainment spending tanked during the Great Recession. Its gradual return has squeezed discount acts.