Davos corporations swallow sharp increase in fees

It looks as though Klaus Schwab can rest easy. The world's biggest companies may grumble about a coming increase in the fees for membership of the World Economic Forum, which the former academic founded in 1971, but they still reckon the benefits of trekking to Davos again next year will outweigh the increased costs.

In October, the WEF sprang a 20 per cent increase in the cost of "strategic partnership", its highest corporate membership category, on 120 multinationals, causing concern among some chief executives that the elite gathering's appeal had peaked.

But despite the recent sudden appreciation of the Swiss franc, which has made membership and the ancillary entertainment, travel and accommodation costs even more expensive for non-Swiss companies, none of a dozen strategic partners the Financial Times contacted during last week's conference said it was planning to pull out.

From July, if they resubscribe, strategic partners will have to pay SFr600,000 ($680,526) annually to send five people to the Davos conference, the 2015 edition of which concluded on Saturday. For that price companies can also send delegates to other WEF events around the world.

The chief executive of one European multinational - speaking on background, as they all did - said: "The process [of announcing the fee increase] wasn't well handled, prices are increasing, and security costs are significantly higher. But overall it's still a terrific event."

A senior executive of one professional services group and strategic partner said: "It's expensive: we perpetually have to justify it. But you get a lot done."

Another senior executive at a technology company said the cost of attending Davos was "nothing compared with the amount we used to spend on customer days", which brought clients together for a conference at a resort hotel.

Most executives said that coming to Davos, even at the higher price, was less costly than flying to meet far-flung clients, who instead come to Switzerland for an intense few days of meetings.

Mary Barra, attending her first forum as chief executive of General Motors, which is a strategic partner, told an on-the-record session of the conference that it was an efficient way to have a series of "face-to-face interactions". Ms Barra said: "It's an important place for GM to be part of: to learn, to listen, to have others' perspectives and then to have a voice."

Many of the strategic partner company executives do not go to any of the formal sessions on issues such as geopolitics, economics, science and culture. Instead, they schedule back-to-back meetings with customers, suppliers and media at the surrounding hotels during the day, and host and attend corporate dinners and receptions by night.

Off the record, a few executives - including ones at lower corporate membership levels - said they had not yet decided whether to resubscribe, or were keeping the decision under review.

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But the WEF, run as a not-for-profit foundation, says that the number of strategic partners has actually risen since October. The fee increase is the first since strategic partnership was introduced in 2005. The forum also told strategic partners in October that "the average Editorial Marketing Value" of the 2014 summit - in other words, the news generated by the many journalists attending Davos - was alone worth $440,000.

Among the many financial services companies attending, executives said they still thought it was the most cost-effective way to meet clients, regulators, and peers. But then - a bit like the legend that when the ravens leave the Tower of London, the UK will fall - if the bankers quit Davos, Mr Schwab's empire really will be doomed.

Additional reporting by Martin Arnold

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