Party spirit squashed at World Economic Forum
Companies and banks will be cutting back on lavish late night soirées at this year's World Economic Forum in the light of deepening recession fears.
Participants to the annual forum in Davos have been criticised by WEF’s own founder for spending too much money on sealing business deals and cultivating contacts at expensive parties.
Klaus Schwab has urged attendees to focus their efforts this year on trying to solve the current financial crisis that has spilled over into the real economy at the expense of profits, jobs and reputations.
“The partying crept in. We let it get out of control, and attention was taken away from the speed and complexity of how the world’s challenges built up,” he told Bloomberg news agency in October.
WEF chief operating officer Kevin Steinberg added that participants at events at one top hotel were “more interested in entering into bidding wars to secure the biggest party room than they were in attending sessions held there”.
The finger of suspicion for excessive entertaining has been pointed at major United States banks and other companies. But the message appears to have sunk in, with banks cancelling parties and hotels reporting less money being lavished on hospitality compared to previous events.
Cheese instead of caviar
US investment bank Goldman Sachs has reportedly pulled the plug on its usual wining and dining programme while other institutions have cut back on the size of delegations they will send to Davos.
The prestigious Steigenberger Belvédère hotel said entertainment budgets of its clients have dropped 30 per cent from last year. “Instead of caviar and lobster, there is cheese and ham on the menu,” Ernst Wyrsch, the hotel’s director, told the Sonntagszeitung newspaper.
Swiss banking giant UBS may have been criticised for setting aside SFr2 billion ($1.73 billion) in bonuses for staff this year, but it has never been named as one of the forum’s biggest party animals.
The bank told swissinfo there would be no changes to its WEF attendance this year and no “extravagant events”. Credit Suisse bank said it also has the same programme.
Image no problem
Jürg Zurcher, general manager of the Sunstar hotel and president of the Davos hotel association, told swissinfo that the increased number of participants at this year’s forum has made up for a tightening of budgets.
A record 2,500 participants are attending the 2009 forum. While some financial organisations may be sending smaller delegations, there is wider interest from politicians and non-governmental organisations.
“Hotels are organising more meetings and events than last year. I would not describe them as parties, but as working lunches and dinners,” he said. “Last year we saw more expensive food on the menus, but we are organising so much this year that we really need more facilities.”
One public relations expert, however, believes this has less to do with image and more to do with facing up to the reality of shrinking budgets after a succession of financial shocks and disappearing assets.
“We are advising a number of financial institutions and global companies and they have all scaled down their whole [WEF] budget,” said Peter Knobel, of the Swiss PR agency bearing his own name.
“This is 100 per cent due to the very tight economic conditions.”
swissinfo, Matthew Allen
The World Economic Forum started life as the European Management Forum in 1971. Formed by German-born businessman Professor Klaus Schwab, the forum was designed to connect European business leaders to their counterparts in the United States to find ways of boosting connections and solving problems.
It is a non-profit organisation headquartered in Geneva that is funded by the varying subscription fees of its members.
The forum took its current name in 1987 as it broadened its horizons to providing a platform for finding solutions to international disputes. WEF claims to have helped calm disputes between Turkey and Greece, north and south Korea, east and west Germany and in South Africa during the apartheid regime.
WEF conducts detailed global and country specific reports and conducts other research for its members. It also hosts a number of annual meetings – the flagship being Davos at the beginning of each year.
Davos has attracted a number of big names in the world of business, academia, politics and show business. These include: Nelson Mandela, Bill Clinton, Tony Blair, Bono, Angela Merkel, Bill Gates and Sharon Stone.
As the forum grew in size and status in the 1990s, it attracted rising criticism from anti-globalisation groups, complaining of elitism and self-interest among participants.
The 2009 WEF in Davos will be held from January 28 to February 1.
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