Fewer Corks Will Be Popping at This Olympics
Salt Lake City should be party city for corporations bankrolling the Winter Olympics. The last Olympiad on American soil for at least the next decade seems like the perfect occasion to pamper key clients and reward top-notch employees.
Make no mistake: Booze will flow, tables will groan with lavish spreads, and the hospitality show will go on. But because of a lagging economy and the effects of September 11, the corporate schmoozathon on the slopes won't be what it might have been.
"The number of hospitality events is down significantly," says Bob Williams, president of Burns Sports & Celebrities Inc., an Evanston (Ill.) agency that supplies athletes for corporate clients. And so is the call for former Olympic heroes. Stars such as figure skater Peggy Fleming and speed skater Bonnie Blair are still in demand, though "it's not like previous Olympics in the U.S., when corporations had much larger or unlimited budgets," says Williams.
How the slower-than-expected party scene will affect the overall success of the Winter Games is "the great unknown at the moment," says Thayne Robson, a University of Utah professor who is advising the Salt Lake City Olympic Committee on the economic impact of the games. "People who collect taxes, units of government that provide services--they're all concerned about total revenues."
Some signs are ominous. Maxine Turner, president of Cuisine Unlimited catering service, which is preparing food for 12 different corporate clients during the games, says she has seen companies cut their guest lists by a third, though in the final days, some are adding back names. "It is still possible to get a hotel room here," says Robson. "The town is not sold out." In fact, with a month to go before opening ceremonies on Feb. 8, about 1,000 hotel rooms in the Salt Lake City vicinity had vacancy signs, says Jason Mathis, a spokesman for the Salt Lake City Convention & Visitors Bureau.
Hospitality junkets can be lavish and expensive affairs (table), which explains why companies limit their invitations to several hundred VIPs. Standard offerings include round-trip airfare, a posh hotel for three or four nights, and tickets to sought-after events--a package that can cost $18,000 per guest when the games are half a world away.
For games on U.S. soil, cheaper travel can cut that price by two-thirds. But adding to the tab for corporate hosts and giving pause to even the most carefree revelers are security concerns. Many corporations will issue photo IDs for their guests. And local businesses supplying services for corporate affairs are putting workers through elaborate security checks, including fingerprinting. "Nine-11 has had a tremendous impact. Security measures will be very, very tight," says Turner.
It's mostly the struggling economy, though, that has companies skipping the jumbo shrimp. Xerox, a worldwide Olympics sponsor, reduced its hospitality budget and the number of customers it is bringing to Salt Lake City after it cut some 1,500 jobs last year. Bank of America and Qwest Communications also have shrunk their programs, say industry sources. Neither would discuss their entertainment plans with BusinessWeek.
Of about 40 companies entertaining at the games, including McDonald's (MCD ), Coca-Cola (KO ), Visa, Delta Air Lines (DAL ), Marriott (MAR ), and Sun Microsystems (SUNW ), most are counting their pennies. "We don't see clients backing off entirely. But they are cracking down on their budgets," says Jan Katzoff of SportsMark Management Group Ltd., a Larkspur (Calif.) company that orchestrates Olympics parties. "What I'm hearing is `Let's hire Tara Lipinski, but for an hour instead of two,"' says talent booker Williams.
Still, Sports Illustrated has a guest list of 800, largely key advertisers. AT&T (T ), which gives the red-carpet treatment mostly to business partners, will be entertaining about 200 execs. And General Motors Corp. (GM ) will reward dealers who have beaten sales goals by giving them "a once-in-a-lifetime experience," says Matt Pensinger, GM's manager for sports marketing. Yes, Corporate America will party, but for the most part, it won't be that hearty.
By Mark Hyman