By common consent, London's famed wax museum Madame Tussauds has been through a sticky period as an event venue. It may even have lost ground to other premier locations in the capital such as the Natural History Museum and the Science Museum.

Over the past couple of years it has been battling hard to turn this around in a competitive event catering market where the venue plays an ever-increasing part in attracting the corporate buck.

Its battle has been helped by introducing new areas and exhibitions, such as a glam area called Blush, full of celebrity waxworks, and a Pop Idol singing stage complete with Ant and Dec and the withering criticisms of Simon Cowell.

The areas are dual-purpose, being open during the day for the punters, but also acting as ideal areas for staging drinks receptions and corporate dinners. They are part of a strategy to update the Tussauds image and prevent revenue from drying up when it closes its doors at 6pm.

"Corporate events are now a key part of the business," says Michael Aldridge, the venue's events manager. Last year Madame Tussauds generated about £1.8m in turnover from about 150 events. It held 18 events in December alone, which brought in sales of £450,000.

Madame Tussauds has been holding events since 1965, but it is only in the past six or seven years that it has really sought to make itself the venue of choice for corporate events, launches, private parties and weddings. Of course, it's not the only venue in London to think that way. In fact, the corporate event market has become far more crowded.

Aldridge reckons there are something like 30% more event venues in London than there were 10 years ago, and there are now fewer events than there were before, particularly on the corporate side, which has definitely downsized.

You speak to any event venue manager, and the number of Christmas parties being held last December was definitely down on a few years ago, he says. Companies have re-evaluated how they run events, and the days of throwing a massive bash for all your staff every year are gone. Nowadays, companies want a reason to celebrate, such as hitting targets or winning big new business.

Aldridge has been in the events business for about 10 years and says he has seen the market change radically in that time. Most corporate clients have shelved their events divisions, outsourcing them to an entertainment specialist or agent. "We have listened to clients and what they wanted," says Aldridge.

This has seen Madame Tussauds introduce dynamic pricing, with events being cheaper if they are held at the beginning of the week. It also has its own furniture stock, which comes as part of the venue hire, and guests can order red wine. The venue has also done away with a cancellation policy that used to charge customers if they cancelled within 10 weeks of an event.

He says that many people won't have visited Madame Tussauds since they were children, so it's really important to market the venue to new people.

It is important to keep evolving, says Aldridge, as this is one of its distinct advantages over other venues, hotels for example. Recently it unveiled a new Jonny Wilkinson area to celebrate England's Rugby World Cup triumph. Later in the year the venue plans a Euro 2004 theme.

"We are always updating what's on offer. Hotels cannot begin to compete with us in that area." But don't all other museum venues - such as the Science Museum, the Victoria and Albert, and the Natural History Museum - do the same?

Yes, of course they do. But this doesn't bother Aldridge. "I never look at any of the other unique venues as our competitors, because if clients don't come to me this year, they will next year," he says.

One way he believes Tussauds can gain a competitive edge is by being seen as a glamorous venue, closely associated with celebrities. Last year it hosted GMTV's 10th birthday bash, and the Pop Idol party (featured in Hello magazine) was held there towards the end of 2003.

"We are very hungry for PR all the time, and we have to be. Now the obsession is with celebrity, and hence why Blush works, because you can get up close to a star, which of course you never could in real life," says Aldridge.

Despite the additional attractions that make for an event's overall experience, Aldridge claims that top-quality catering remains absolutely essential, and he wants his catering partners to push the boat out and sell up to the client.

"My buzz word is upsell. If you had pre-dinner canap‚s and a great four-course meal and you told 10 people how amazing your night at MT was, this is great for us. Word of mouth is still our best marketing tool."

View from the event caterer Most event venues have a list of eight to 12 preferred caterers to accommodate a wide range of budgets. Payne & Gunter, one of the leading event caterers in the capital, is listed at more than 60 venues and sits in the middle-to-top end of the range, says Bethan James, the company's special events director. She believes the relationship between caterer, client and venue is a crucial ingredient in mounting a successful event. The key, she says, is to understand what the client wants to achieve, and then the event and menus can be tailored to their requirements, budgets and numbers. Most of Payne & Gunter's events involve a three-course dinner. It offers set menus or bespoke, depending on the budget and the theme, and James says it is essential to keep the food fresh and exciting. "It is about developing food ideas with a twist," she says. Circadia executive chef Phil Stocken plays a major part in developing new ideas, says James, as does Compass's chef forum, but there is also a heavy influence from the high street. "Our menus and concepts are driven by restaurants. We will take an idea and develop it so it is suitable for a certain venue. So I try and dine out regularly at restaurants like Gordon Ramsay's to see how menus are developing," James says. - Payne & Gunter is part of Compass Group's All Leisure division, which contains the group's leisure and sport businesses. It includes other names such as Letheby & Christopher, Leith's, FMC, Nairn's Anywhere, Express Cafes and Circadia.

Payne & Gunter's Top tips for successful event catering - Communication is key - ask open questions to establish client aims and objectives for the event. - Never promise what you cannot deliver. - Nobody wants surprises on the night - visit the site and walk the course before the event with all the stakeholders (venue management, suppliers and client) to ensure all expectations are understood, delivered and exceeded. - Check, check and check again! - Employ a team with exemplary interpersonal and social skills. Detailed briefings on the night ensure efficient service. - Remember, first impressions count - see the event from the guest's perspective and strive to achieve the wow factor. - Always have Plan B (and C and D) up your sleeve. - Be ahead of the game - know what's new and innovative and how it can be adapted to suit each unique venue.

Menu for 11 February 'Let us Direct' event (a Madame Tussauds and Payne & Gunter showcase for corporate customers) - Tomato ni‡oise salad - Skewered monkfish and tiger prawns with a braised lamb pie, saut‚d Savoy cabbage with wild mushrooms and red wine glaze - Bento box dessert collection - Coffee and truffles

Facts and figures - Madame Tussauds generated about £1.8m in turnover from about 150 events in 2003. It held 18 events in December alone, which brought in sales of £450,000. - Selected caterers include Mustard, the Admirable Crichton, Payne & Gunter, Crown Society, Moving Venue Caterers, Turtle Soup, Vama, and Dish Catering. - Basic venue hire costs £8,500 - plus drinks, entertainment package and food. - Drinks packages: wine, beer and soft drink package from 7pm to 1am costs £25 per head; Champagne reception costs £10 per head.