There’s something wrong with the events sector and it’s all our fault, says Brad Foster.
Junket is an ugly word. It carries undertones of something being not quite right. A little sneaky and underhanded. Pleasurable maybe but in an unpleasant way.
Unfortunately for the events sector it gets mentioned in the same breath far too often.
It illegitimises what is a legitimate string to a marketer’s bow. And nobody seems to care.
The Australian Financial Review included the word in its heading about a report of Hostplus chief executive David Elia fronting the banking royal commission in early August:
“Banking royal commission: Hostplus cops a serve over tennis junket”.
ABC News wasn’t much different with its headline: “Banking royal commission: Hostplus entertained employers and staff with $300k of sporting tickets.”
And the SMH: “`I wish I didn’t have to do it’: Hostplus chief defends wining and dining at Australian Open”.
Of course newspapers are meant to create headlines that capture the reader’s attention and make them want to read more. But funny how the journalists reporting on the banking royal commission and who wrote these stories all focused on the same thing.
Why is that?
Only later in the ABC News story – not the other two – does Mr Elia say that the money spent at the Australian Open was a fraction of the company’s overall budget.
“Every dollar counts, but in relation to tennis it is $250,000 in a budget of more than $100 million.”
That’s $99.75 million that is, as I take it from his comment, spent on other areas. Advertising perhaps. And telemarketing. And public relations. And who knows what else.
And yet, Mr Elia was questioned about why his company used $250,000 for entertaining and the journalists zeroed in on that. There was no mention of where the rest of the $99.75 million budget was spent.
Clearly, something is wrong with the perception of the value of events to a company. Sadly, it’s nothing new. Following the global financial crisis, banks and other financial institutions came under intense scrutiny for holding what were described as lavish events, meetings and incentives. One wondered whether these were actually the cause of the GFC rather than other factors, like the subprime mortgage lending undertaken in the U.S. which actually led to the U.S. recession (2007-9).
At one stage the U.S. President even suggested companies and government departments stop holding meetings to save money.
In response, an industry-wide coalition was established in the United States under the “Meetings Mean Business” banner to help demonstrate the value that business meetings, trade shows, incentive travel, exhibitions, conferences and events bring to people, businesses and communities.
Today the coalition of more than 50 members continues to push the Meetings Mean Business cause, commissioning and releasing reports on the value of the business event sector to the U.S. economy.
Despite this initiative and some small research papers conducted in Australia, there remains a perception that events are frivolous and a waste of money.
It is interesting that this is deemed to be the case by mainstream media journalists in the case of Hostplus at the royal commission when Hostplus is in fact a superannuation fund designed for people working in the hospitality sector. Ironically, those who work in hospitality would work at events like the Australian Open.
So why does Hostplus do it?
At the royal commission, Mr Elia said corporate hospitality was used for the sole purpose of retaining the membership of Hostplus.
“It’s a great way certainly from my perspective and the executive team’s perspective to establish very early on and retain the relationships that are absolutely critical in terms of retaining the default fund status of our members and therefore retaining members,” Mr Elia said.
Speaking on hosting key employers, key stakeholders, and alliance partners at the Australian Open in 2017, he said Hostplus worked in a competitive marketplace.
“Our competitors are doing exactly the same thing. In fact they were there [at the Australian Open].”
He said he wished that he didn’t have to spend as much money on hospitality “but the reality is that it is a competitive landscape that we are dealing with. Unashamedly we utilise entertainment and corporate hospitality in order to strengthen the relationships we have with our employers.”
So there you have one of the top CEOs of an Australian company which manages around $34 billion in funds, has more than one million members, and is considered one of the best-performing super funds in terms of member returns, being questioned about sending a small proportion of the company’s budget on “wining and dining at the Australian Open”.
So why bag events?
Because events continue to be regarded as less than serious. Because really there is no evidence to prove that they work.
Those working in the events industry know they do. But until someone or some organisation commissions some real research and then develops a campaign to spread the word about the effectiveness of events, we will continue to see headlines about the apparent frivolity of events for years to come.