When the economy is threatening to kick your business where it hurts, it is even more crucial to nurture and develop relationships with clients.

A considerable amount of recruiter money pours into the corporate hospitality sector as key HR directors are wined and dined to say 'thank you' for their business.

Recruitment decision makers within those organisations who might one day be on the client list are also wooed, with tickets for top sporting events such as Wimbledon or the lure of a glass or two of Pimms and a leisurely river cruise at the Henley Regatta.

In fact, being able to mix business with pleasure has always been one of this industry's strengths.

Staff are not ignored either. In such a competitive and pressured environment there is an ongoing need for consultants to bond and be challenged in equal measure at team building and motivational events, such as Recruiter's Recruitment Regatta this September. A night or two under canvas 'surviving' in the Lake District on a wet and windy November night can tell a company a lot about its employees.

Yet with the economy teetering on the brink of recession the cost of corporate entertainment has come to the attention of the company accountants. As a result there is a growing pressure to prove a real return on investment from taking people away from their day job at such a difficult time.

A study by NTC Economics published in April confirms how this market is being hit. It suggests spending on corporate entertaining across the UK economy has been cut for two successive quarters.

Market researcher MBD is forecasting that the corporate hospitality market overall will experience only subdued growth over the next three years. It valued the sector at £1.05bn in 2007 and says spending will not pick up substantially until 2012 when activity around the London Olympics kicks in. By then this should be a £1.24bn market.

The dilemma for recruiters is that the benefits of meeting important customers face-to-face or bringing staff together away from the office are the same whether the economy is faltering or not. In fact, it is arguably even more important now to nurture relationships with the top 20% of your clients.

Alex Hewitt is managing director of AOK Events, which organises corporate entertainment for a number of recruiters including the former Imprint, Morgan McKinley, Hays and Spencer Stuart & Associates. He says if companies must make savings they should cut the amount of money they spend on events rather than reduce the number of hospitality days they organise.

"Much of a recruiter's business is customer development and relationship management, but clients will understand if they see a recruiter entertaining on a smaller scale. You can still make an impact by spending less," says Hewitt. "For example, organising a private viewing of the Queen's art collection and dinner is about half the cost of tickets for some big sporting occasions, but both ideas are top-end and aspirational."

He adds that the cost of staff events can also be trimmed without employees feeling they are missing out and are no longer being rewarded for their efforts. He warns that cutting staff social events completely could have a serious negative impact on the emotional ties some people have with their employer.

"For those not at the top of the food chain in a recruitment company, staff events can play a big part in keeping them loyal and can be one of the reasons they stay," says Hewitt. "Even if you cannot take them away for a weekend, how about a game of rounders in the park followed by a slap-up barbecue? This shows staff they are still valued."

While it is important to still spend money looking after the most profitable clients, Hewitt says recruiters must not neglect HR directors who are potential clients within their sector.

"The best thing to do is to mix up the old with the potentially new. Hopefully your existing clients will do a fantastic sales job for you," he says.

AOK Events says many venues set their current prices for corporate events before the credit crunch took hold and costs rose this year by between 5-8%. Hewitt expects prices to be at least frozen for 2009 and urges recruiters to hunt for bargains, especially if they book early.

At IT recruiter Jenrick:Computer Personnel International (CPI), sales director Phil Fanthom agrees it is crucial to spend on corporate entertainment in a downturn. Although he warns that companies must be clear about the business reasons for organising any event.

In June the company hosted a 'guest speaker' event at the Institute of Directors in London. More than 120 people, representing both current and potential clients as well as contractors, listened to polar explorer Pen Hadow give an inspirational speech. He is the only person to trek solo to the North and South poles.

"I also gave a speech that night about ROI [return on investment], which for us means getting return on 'involvement' from your recruiter — but it was not a hard sell," says Fanthom. "Corporate events should be memorable and about letting your guests learn something about your company which they would not otherwise know."

In July Jenrick:CPI launched a golf society which Fanthom believes is the perfect way to network with small groups of influential decision makers. The society is based at Hampton Court Palace Golf Club.

Another recruiter concentrating on entertaining small groups is Chadwick Nott, the legal recruitment firm. Director Simon Chadwick says corporate hospitality remains a driver for new business. "Building relationships with clients and candidates is a long game for us so we won't be reducing our budget," he says.

FiveTen Group, the multi-sector recruiter backed by the private equity firm Englefield Capital, is also determined to continue investing in corporate entertainment. Head of marketing for FiveTen Group EMEA, Oliver Hone, admits it is hard to measure what works and what doesn't, but he insists entertaining clients and staff must be an integral part of a recruiter's overall marketing strategy.

"Corporate entertaining is about saying 'thanks for your business, let's do more'. The key is to balance serious business matters with less formal social peer socialising," he says.

"When budgets are scrutinised or cut that is when a good marketing department comes into its own. You have to work creatively to make the most of the money you do have to spend."

Ultimately getting the right people to come along to an event should not be affected by the economic climate. If a recruiter has a credible event — whether extravagant or not — that people feel they will get value out of, then they will attend, and business relationships will flourish in the bad times as well as the good.