KEY POINTS:
The New Zealand leg of the A1 Grand Prix is the latest sporting event to be hit by tough economic times as corporate hospitality numbers are expected to be 25 per cent down on last year.
A1GP New Zealand chief executive Gary Dawson said the downturn had come
when organisers were at the peak of selling its corporate packages and many companies had decided to make cut-backs.
"Companies, like all of us, have become very nervous about 2009 and budgets have tightened. They are saying 'We just want to be a bit careful about 2009'."
Dawson said some had cut guest numbers in half and others had down-graded the level of their hospitality.
Some had decided not to come at all to this weekend's Taupo event.
Dawson said the organisation was being creative to meet company budgets. "Instead of having a table, we have a hospitality area where people can have sandwiches and a beer."
Dawson said the Taupo A1GP's revenue was down but its costs had also reduced as it was not having to put up as many tents or facilities as in previous years.
"I think it is important to remain positive - the market is not all doom and gloom."
The event would still attract more than 500 people on the corporate hospitality side and more could join in.
"A lot of companies are coming back from Christmas and maybe still looking at it ... so it's a bit of a moving target."
No teams had pulled out of the racing and ticket sales were on par with this time last year, although they had been slower to sell before Christmas.
"This week coming up, if the trend is the same as last year, we will see a big uptake," he predicted.
Last year around 65,000 people attended the weekend event.
But Premier Hospitality Services managing director Ian Fraser, who is helping to organise it, said it was not just the A1GP event which had seen a drop-off in corporate hospitality.
"There has been a downturn and that is very much understandable. We are very much in a discretionary dollar industry."
Fraser said the drop-off varied from event to event depending on the demand from the corporate market, but ranged between 5 per cent and 40 per cent, although some smaller events had not seen any effect.
Fraser said his company had been noticing a decline since last April. "It has been a gradual process."
But there had been a much higher cancellation rate for bookings made before April/May than in previous years.
"It's very much a symptom of tougher times."
He has been in the hospitality industry since 1995 and has never seen it so tough.
He expected the industry to face a challenging time this year, although some businesses were increasing their corporate hospitality spending for events.
"Not all industries are affected. In New Zealand a lot of companies are owned offshore, they are not being affected in New Zealand but have been told to rein in expenses."
He was confident corporate hospitality spending would be back on track for the Rugby World Cup in 2011.
"2011 is a totally different situation."