Your Questions: Answered - Written by on Thursday, September 1, 2011 23:56 - 1 Comment

Ask Barry & Richard – corporate hospitality the topic that just keeps giving

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Dear Barry & Richard, We are a business travel management and events management company, we organise hotel reservations, conference bookings and travel reservations as well as event manage sales incentive trips, corporate hospitality and large scale conferences.

I have 4 examples that I am unsure about: [Ed: thank you.  We’ve given our view in italics after each question – it’s worth highlighting that the answers to these questions will be heavily fact specific. Having said that, read on!]

1. We are often invited to familiarisation trips to hotels/venues both in the UK and overseas in order for us to be able to sell the product to our clients. A recent example was to a hotel chain where we saw 2 of their hotels in London, we had 2 nights complimentary accommodation, complimentary dinner and lunch, and they paid for our train travel. There were 7 staff that attended altogether, 6 being booking agents and 1 being a member of our accounts department.

Our view.  Hard to see how this should/could be construed as bribery.  For the hotel, provided that they are demo’ing their product to an organisation which is being asked to sell it then there should be justification for it.  Care will need to be taken with travel, for example flying the team first class and placing each team member in a presidential suite could be perceived to cross the line.  However, broadly speaking, this is your business and employees need to know what to expect so that they can sell it to your clients.  This type of arrangement is not far removed from travel agents visiting the hotels that their customers might want to stay in so that they can tell them what it is like.  On the other hand, if the venues gave individual employees free luxury weekend breaks with employees, their spouses and maybe even children then the offer would appear more questionable.

Another example of possible bribery could be a customer promising to give the agency a job, if the person in charge of organising the contract received a dozen free tickets to an event.

2. Another example would be for our potential clients. We have been invited to a newly opened hotel in London for dinner and complimentary accommodation to take some of our clients to. One of the clients attending is a company that we haven’t done business with previously, but we would like them to use our services.

Not far off the first example.  Provided the focus is on business, in other words your business is present and is busy selling its services on the visit, as opposed to a freebie absent any business input, then hard to see the bribe!

3. We receive incentive vouchers from hotels & venues after an event has taken place as reward for booking with them. Basically, the more the event is worth, the more we earn in vouchers. Is this seen as them bribing us?

Could be.  The key here is likely to be transparency with your employer.  We have written about these sorts of arrangements here and here before!

4. One final example is commission that we receive from hotels & venues. For clients that have used our event management services, we give them a commission kickback which is taken off the final bill. Not sure if this would fall into the guidelines?

Using the word kickback is always a bad idea!  However, given that the discount received from the hotel is passed on to the corporate client – again hard to see the bribe.  Of course if the commission was shared with the individuals rather than the corporate client then the position could be different.

The SFO has provided useful guidelines when it comes to considering corporate hospitality.  If in doubt consult these or ask your adviser!

Hope this helps!

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James Vine (@JamesPSVine)
Sep 2, 2011 1:44

These questions touch on the thorny question of “incentives.”
I don’t disagree with any of Barry and Richard’s answers but would like to throw another real example into the mix.
There is a well known stationery company that has an online business, backed up by very regular catalogues. I shall call it “Saxons” to ensure complete anonymity.
Assuming that stationery ordering is the preserve of a designated individual in the office with a taste for Quality Street, or a yearning for a new MP3 player, where does that leave the Saxon’s “incentive” scheme, whereby anyone ordering goods from a catalogue over a certain value will receive specific advertised freebies?
In the event that it could be established that the designated individual was deliberately choosing items that he/she knew to be inferior to that which the company required, purely to grab the freebies, then that person could be said to be effecting an improper performance of their function, i.e the choice of envelopes.
Then take it to another level…oh dear, I feel a blog coming on. Watch this space

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