Photo: World Economic Forum
If you turn on the tube this week and see a correspondent reporting live from Davos, you’ll probably get the impression that folks here are talking about the problems in Europe, the growth of emerging markets, or the challenge of climate change.(I just watched a UK correspondent report that that’s what people are talking about).
And it’s true that some folks are talking about those things–namely the folks who are speaking about them on panels.
Everyone else, meanwhile, is talking about Andrew Ross Sorkin’s article about how much it costs to come to Davos, the details of which I’ve included below.
And, interestingly, the reaction to these astronomical costs here in Davos is quite different than the reaction to them everywhere else in the world.
Instead of guffawing at the stupidity of the folks who pay such prices, as everyone on Twitter is doing, the people here just shrug and nod and then explain why it’s still a bargain and why they’ll be coming again next year.
Before we get to the reasons for that, though, let’s review what Andrew Ross Sorkin reported:
- An annual membership to the World Economic Forum (required if you want to buy a ticket to Davos) costs $52,000
- A ticket to Davos itself costs $19,000, plus tax (That’s $71,000 for one person to come).
- If you want to go to the private industry sessions, which everyone here agrees are where the real value is, you have to become an “Industry Associate,” which costs $137,000 a year.
- If you want to bring a colleague, you can’t just buy another ticket for $19,000–you have upgrade your membership to “Industry Partner,” which costs $263,000 (vs $52,000). Then you have to buy the two tickets, for a total cost for 2 people of $301,000.
- If you want to bring a bunch of colleagues (max. 5 per company) you have to upgrade the membership to “Strategic Partner”, which costs $527,000. Then you have to buy the 5 tickets for $19,000 apiece. So bringing 5 people costs $622,000. (And if you bring 5 people, you’re required to bring at least one woman, to make the meeting less of a sausage fest). (And to even consider becoming a Strategic Partner, you have to be one of the world’s 250 biggest companies and be based in China or India).
- And that’s just the cost of the conference. If you want to throw a party at Davos, which every self-respecting corporate attendee does, it will set you back at least $210 per guest. And you have to get here, which will cost $1,000 – $100,000 depending on what size plane you fly in and whether you want to drive from Zurich or fly in a helicopter ($3,400). And you have to stay here: The crappiest hotel rooms are $500 a night, and a private chalet costs $140,000 for the week.
So it’s no surprise that some companies spend “millions” on the Annual Meeting each year, as a senior executive at one big Davos sponsor confirmed for me yesterday.
Photo: World Economic Forum
So why do they do it?Well, first, because as I realised this morning when I showed up at the Congress centre in my “sporty” attire–following the instructions in the Davos Book–the value of Davos to the folks who pay these fees has very little to do with the “themes” of the conference (“sustainability,” and so forth).
Instead, the value is the ability to efficiently conduct global business.
I realised this instantly when I saw that I was violently underdressed in my sweater and khakis and that just about everyone else here was wearing a suit. (I’ve got one, thankfully, and I’ll be wearing it tomorrow).
And that’s because Davos is now primarily a huge, high-level business conference, in which senior executives from the world’s largest companies take advantage of their physical proximity to meet in person with partners and clients and would-be clients–meetings that can end up being vastly more valuable than the price of admission.
One executive of a major multi-national told me this morning that he and a colleague will meet with 100 clients in the next three days. Their company sponsors the conference, too, because the branding and association is helpful, but there’s nowhere else in the world that they can cram so many high-level meetings into so little time with such efficient travel.
And think of Davos from the perspective of Michael Dell of Dell or Sir Martin Sorrell of WPP, both of whom I passed in the corridors this morning. Where else can you take a single plane flight and meet with the CEOs of dozens of global companies that buy tens of millions of dollars worth of your products and services every year? Persuade a few of those clients or potential clients to increase their budgets and spending $622,000 plus T&E is a bargain.
Photo: World Economic Forum
And while you’re here, of course, you can also meet with senior officials in countries you’re doing business in, and regulators, and so on. And you can also speak on a panel, which most of the big corporate sponsors do, and increase your visibility and authority on a topic that is important to your organisation. And, if you want, you can take a break from meetings and step into a conference session to hear some some interesting people say some interesting things about topics everyone agrees are important (if incidental).
So that’s why everyone keeps coming to Davos: Because it’s great for business.
And that’s why the World Economic Forum has built such an amazing $185 million-a-year business that is centered around a single business conference. Because no one else can get so many high-level people to visit one tiny town at the same time year-after-year-after-year. And global corporations will happily pay through the nose for that.
(And now I have to move, because Kofi Annan just sat down next to me to talk quietly with someone, and the TV camera crews and photographers are annoyed that I’m ruining their shot. I don’t know what Kofi and friend are discussing, but I’m pretty sure it’s not global warming.)
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