Asian appetite

The outlook for outbound MICE is a mixed bag of market projections, with Indonesia, the Philippines and China corporates still keen on longhaul destinations while others are less enthusiastic

Chinese outbound incentive trips are expected to rise in 2020; Chinese travellers enjoying the moment at Marienplatz in Munich, Germany

China
China industry observers report sustained growth in 2020 for outbound business events and travel, driven largely by the need to cater to the country’s millennial workforce and businesses impacted by the US-China trade war.

Chinese outbound incentive trips are expected to rise in 2020; Chinese travellers enjoying the moment at Marienplatz in Munich, Germany

Julien Delerue, general manager of meetings and events procurement solutions company 1000meetings, said demand “is expected to increase”, adding that companies are more inclined to explore destinations further afield or newer ones.

Delerue continued: “The trend in 2019 was already showing more demand for off-the-beaten-track destinations compared to renowned and established ones of the past. There is interest in the Mediterranean islands off Spain, or beach destinations in Vietnam such as Nha Trang, with more companies incorporating teambuilding or ecotourism elements to their meetings, incentive and conventions trips.

The number of incentive trips and conventions are expected to increase as more companies expand their businesses internationally.

“Overall, outbound is expected to grow a minimum 20 per cent, but with businesses stringent on cost management as a result of the prevailing world economic outlook,” Delerue remarked.

Starry Wong, deputy general manager, Shangpin Tour Shenzhen, part of the Century Holiday Group, said “educational” trips were expected to grow rapidly in 2020, as more Chinese businesspeople saw the need to attend exhibitions to market their products.

Aggressive destination campaigning by foreign CVBs in China will “have a positive impact on outbound business”, noted Vivian Zhang, director, MCI China.

However, optimism is being tempered by the US-China trade war where travel to the US has dropped, and strong currency exchange rates that have made travel to Europe expensive.

Zhang noted: “Business performance in the past year will impact event budgets for 2020. For example, China’s direct selling market, a major outbound spender, has undergone large-scale administrative reform which has put the whole industry at stake in the past year.”

Wolfgang Georg Arlt, CEO of COTRI China Outbound Tourism Research Institute, said spending in 2020 was expected to grow at the same rate as travel. The corporate meetings sector would fare the best in 2020, he projected, as China was establishing many new business contacts to replace those in the US, in places like Brazil, Iran, and the European Union and in industries such as high-tech. – Caroline Boey



Indonesia

Signs of business recovery are clear for 2020, following a challenging 2019, as stability returns to the Indonesian political environment and new policies by President Joko Widodo are put in place to prioritise development.

Donny, managing director of Adonta Group, a local event and travel company, shared that client budgets will “be back to normal” this year, allowing his company to enjoy a “robust 2020 and beyond” that would be unlike 2019 when many clients cancelled their events due to political concerns.

Pauline Suharno, managing director of Elok Tour, said incentive programmes will grow in numbers, driven by infrastructure, pharmaceutical, automotive and insurance industries.

Fuelled by business confidence, Indonesian companies are turning to longhaul destinations to reward and motivate their staff and partners.

Eddy Efendy, director of Synergy Production Travel and Events, said Eastern European destinations are winning hearts with their exotic appeal and affordability compared to the more established Western European cities.

Ary Leonardo, vice president for the incentive department of AntaVaya, said the new year has gone off on a great start, with bookings for incentive trips secured until the end of 1Q2020. He will be handling a group of 20 top achievers from a cosmetics company to Greece and Turkey in March, and a 150-pax reward trip by an insurance firm to Dubai in April.

Ary observed that more Indonesian companies are favouring experiential programmes. – Tiara Maharani



Japan
Against the excitement and shine of the 2020 Olympic and Paralympic Games in Tokyo, Japanese outbound event agencies are bracing themselves for reduced overseas activities in the new year as local companies choose to stay home and weave Games-related programmes into their incentive and teambuilding events.

Working against Japanese outbound event agencies is also a weakened event budget for 2020.

A sales representative for Tobu Top Tours, who requested for anonymity, said 2020 budget for overseas events is lower than that of 2019.

His revelation was echoed by Lucky Morimoto, president of Event Services Inc., who told TTGmice that budgets for 2020 are “flat.”

Destinations with a higher chance of winning these limited budgets are those with a strong reputation for safety and security, have a good selection of unique venues, and can offer a strong package of activities and experiences via local companies, he said.

Tobu Top Tours’ sales representative agrees that destinations must offer “something out of the ordinary” to score Japanese corporate movements, and pointed out that Hawaii is a firm favourite, while Cambodia and Vietnam are gaining popularity.

Morimoto predicts that Japanese incentives, ceremonies, galas and teambuilding activities will perform the best for overseas destinations. He also expects strongest business opportunities to lie in the IT, financial, insurance and automobile sectors. – Kathryn Wortley

Malaysia
Demand for outbound business events will continue to be soft in 1H2020, say Malaysian agents whose projections are influenced by ongoing trade tensions between China and the US; Brexit; a weak Malaysian currency; and other global uncertainties impacting the business environment.

Asian female traveller in Japan

Mayflower Holidays general manager, Abdul Rahman Mohamed, is expecting “smaller incentive group sizes partly because there are fewer people who were able to meet their sales targets (in 2019)”.

He also noted that clients were paying more attention to the price of the programme and not so much on the experience. “In the past, companies used to ask for quotations from four players, usually the ‘big boys, during the bidding process. Now, it is not unusual for them to ask from eight players as companies shop around for the cheapest offer. Travel companies desperate for business are also dumping rates.”

Budgets for incentive programmes have been cut by some 10 to 15 per cent compared to 2019, he added. As a result, fancy optionals, such as a gala dinner or a Michelin-star feast, have been abandoned.

Syed Razif Al-Yahya, managing director of Sutra Group of Companies, shares a dull outlook for 2020, as his expectations of a local economic rebound in 3Q2019 had failed to happen.

He said Malaysian companies had cut costs in 2019 due to uncertainties in the business environment as well as lower profits – an unfortunate development that he predicts will continue into 2020.

“(Besides slashing event budgets for 2020), companies are reducing the number of staff attending events, as well as being more picky with airfares and hotels,” Syed Razif said.

He added: “Sectors like insurance and financial sectors are still fulfilling their obligations to top achievers, but Small and Medium Enterprises (SMEs) have yet to even determine a destination for their reward trips. Some SMEs are looking at destinations in the region, while others are rewarding staff with cash incentives instead of all-expense paid incentive trips.”

Raaj Navaratnaa, general manager, New Asia Holiday Tours & Travel, has also seen a small number of SMEs opting for cash incentives, and he believes this may catch on with multinational firms in the future. – S Puvaneswary



Philippines

Outbound business events from the Philippines – still comprising mostly incentive travel – is expected to remain robust, influenced by several positive changes in the marketplace.

These changes include destinations like Europe becoming more affordable; NTOs actively promoting their packages; non-traditional carriers like Saudia and China Eastern providing better accessibility to far-flung destinations at affordable rates; and the advent of low-cost carriers that fly from many parts of the country.

Long-established MICE destinations of Thailand, South Korea and Japan will remain on the radar because aside from granting attractive perks to corporate groups, they also dangle the lure of new products, activities or locations.

Turkey will remain in the rat race given its jaw-dropping promotions in the Philippines, direct Manila-Istanbul flights, as well as affordable packages made possible by government subsidy for hotel operators and earnings from optional tours that cover low net rate and service fee, said Angel Ramos Bognot, owner of Asian Afro World Events.

Bognot also expects newcomer Vietnam to be one of the most-favoured South-east Asian destinations because of its extensive marketing promotions and planner incentives in the Philippines, while Malaysia is seen to follow Thailand’s lead of offering cash subvention depending on the size of the event group.

Other corporations, however, are looking for new and exotic destinations. Israel, Kazakhstan, Georgia, Armenia, Morocco, and Russia, among others, have come up on their shopping list.

Budget remains a major factor for corporate outbound and this has been factored in clients’ 2020 programme. Benjie Bernal, Sharp Travel Services tour operations manager, said the event budget varies among their clients, but as travelling becomes more affordable, there are also company heads that bring along their lower-ranking staff on more focused programmes. – Rosa Ocampo



Singapore

As the waves of economic downturn crash onto Singapore’s shores, local business confidence has taken a hit and companies are clamping down on discretionary spend, of which the MICE sector is largely considered a part. Planners and agents alike report tightening travel budgets across the board, shrinking the distance and scale of events and incentive trips.

This is compared to last year’s buoyant forecasts, whereby 80 per cent of planners in Asia were found to have expanded event budgets, according to the 2019 Cvent Planner Sourcing Report Asia Edition. Now, Singapore’s companies are retreating into more conservative travel spending for 2020.

Diana Ho, general manager of Royal Wings Travel, observed: “Companies are tightening their travel budgets and cutting down on longer trips. Groups that used to go longhaul are now looking at nearby destinations.”

Popular destinations include perennial favourites like Thailand, Vietnam and Malaysia, while some TMCs report a growing interest in Cambodia and Myanmar.

“(Besides being accessible), these destinations have infrastructure to support mid- to large-scale events at a cost-effective price, which allows planners to achieve better return on objectives with lower investments,” explained Petrina Goh, senior business development manager, CWT Meetings & Events.

Whether MICE spend and travel distance will bounce back in 2020 will depend on the status of geopolitical developments.

Goh noted: “We’ve noticed that the list of approved destinations for outbound business events has been shrinking. Event planners naturally want to avoid cities or countries that are at greater risk of being impacted or do not have adequate infrastructure to cope with such incidents.” – Pamela Chow

Thailand
Thai MICE groups, armed with a stronger currency and therefore greater buying power, have become the darling of many destinations.

Dave Chang, managing director, Asia MICE Planner, said Japan and other South-east Asian destinations stand to benefit most from Thai corporate travel, and DMCs and hotels are “happy to offer competitive rates to attract more business from Thailand”.

“While the 2020 budgets of upscale clients have remained consistent with last year’s, (cost-conscious clients) are trying to save even more money,” Chang observed, adding that for the latter group, travel budgets for European destinations have shrunk.

Corporate clients are also increasingly relying on social media to make their travel decisions, although airfare and the safety of the destination remain the most critical decision influencers.

Meanwhile, Addy Ritthirong, managing director of Eventage (Thailand), is keeping his eye on political and economic developments in the world as well as new destinations in season, festivals and national grand sales, which he believes will impact 2020 outbound MICE demand for his Thai clientele. – Anne Somanas



Vietnam

As Vietnam’s business event offerings continue to grow, infrastructure improves and domestic air routes expand, the domestic market has emerged as the destination’s biggest source of business events.

Jackie Han, deputy director general of Hoa Binh Group, said: “The majority of events are still planned for within Vietnam. There are many new exciting destinations, venues and opportunities opening that (local corporates) want to explore.”

Bruno Simoes, executive director of smallWORLD Experience, also noted an increase in domestic-driven demand. He said Hanoi remains a “trendy” destination, with the company receiving a rise in enquiries for the Vietnamese capital in 2020.

For Vietnamese firms that do consider overseas events, regional destinations are favoured.

Han said destinations closer to Vietnam are most popular “in order to meet clients’ budgets”, budgets which have risen slightly for 2020.

Pham Ha, CEO of Luxury Travel Vietnam, noted that outbound MICE is a “rapidly growing segment”, with growth seen in 2020 compared with 2019. He added: “Big enterprises now have a combination of travel with seminars and accompanying events.”

Simoes said the main factor expected to impact Vietnam’s outbound MICE market in 2020 is the Chinese economy. He said: “We are quite concerned with the current economic 2020 outlook in China. The economy is slowing down and the whole world’s economy, namely South-East Asia, will be affected.” Ha added that the currency exchange rate may also have an impact. – Marissa Carruthers

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