• ARTICLES

    Outlook 2017: Asian appetites

    Cover Story | February/March 2017

     With business events in Asia projected to be driven mostly by neighbouring source markets, TTGmice finds out how Asian buyers are intending to spend their event budgets this year

    CAMBODIA

    Cambodian firms tend to prefer domestic destinations such as Siem Reap (Angkor Wat pictured); Picture by Banana Republic images/shutterstock

    Cambodian firms tend to prefer domestic destinations such as Siem Reap (Angkor Wat pictured);
    Picture by Banana Republic images/shutterstock

    Cambodia’s appetite for outbound business events has yet to reach its potential, claim industry experts.

    Such travels are few but is expected to pick up in the future as the Cambodian economy swells.

    Danine Samith, Exo Travel’s event department manager, said: “Local companies still don’t have the culture of spending much money on overseas events. However, they already have a culture for staff parties and outings, so I believe they will make the move to overseas events soon.”

    She added the few requests for overseas events had mainly come from local branches of international companies.

    Despite many Cambodian companies not looking abroad, domestic corporate travel is proving popular with large businesses organising annual staff parties and teambuilding events spanning one to three days.

    The coast of Sihanoukville remains the hottest choice, along with Kep, Kampot and Siem Reap, said Kimhean Pich, CEO and founder of Discover the Mekong.

    Those travelling overseas tend to stay close to home, said Samith, adding Thailand is a popular destination – especially Pattaya – because of its easy access. Vietnamese island Phu Quoc, which sits off the Cambodian coast, is another hit with Cambodian companies.

    “They rarely go farther than this,” said Samith. “Budget is an issue as well as visas if it’s not within South-east Asia.”

    Yulia Khouri, CEO of Innov8 Events, said: “As the Cambodian economy expands and new companies are opening their doors in the country, events become an excellent way of marketing new products and bringing brand awareness to the public.”

    Cambodia’s liberal investment policy that fosters foreign investment and encourages the creation of local branches is expected to stimulate interest in business events. The arrival of large European banks, such as BRED, and the opening of the new Coca Cola plant are examples of the prospective market.

    Samith said: “With the economy increasing by an average of seven per cent, we can bet in the near future outbound business events will become an important segment.” – Marissa Carruthers

    CHINA

    Spain (Madrid pictured) is gaining the favour of Chinese meeting and incentive groups

    Spain (Madrid pictured) is gaining the favour of Chinese meeting and incentive groups

    China’s outbound business event demand is expected to grow by more than 20 per cent, group size will also expand, and Australia, New Zealand and the US will continue to be the hot choices in 2017.

    According to Nicole Wang, director of resource procurement, CTS MICE Service, the number of outbound business event groups with delegates in the thousands and mega-size events with 10,000 participants are expected to increase.

    “More Chinese companies in the automotive and direct selling industries are turning to business events, particularly incentives, to drive business performance. As long as there are direct flights and safety is not an issue, Chinese groups will venture overseas. European destinations are OK, but not Turkey. Clients are also picking Japan, Africa and emerging Asian destinations. What appeals to clients are natural scenery, good beaches and culture,” Wang noted.

    Rubén Casas, senior director of sales & marketing Asia Pacific, Meliá Hotels International, said industries driving outbound event demand are pharmaceuticals, finance and insurance, fast consuming products/direct sales; IT, chemicals and Chinese national companies – in descending order.

    “Research conducted following IBTM China 2016 confirmed that 88 per cent of buyers expressed interest in Europe, including Spain, France, Germany, Austria and the UK,” Casas added.

    Robert Tan, executive director, sales and marketing, Lac Hong Voyages, Vietnam, also expects to see continued growth in Chinese incentives, which had a strong showing from Guangdong.

    “We saw 20 per cent growth in 2016 and expect the same in 2017,” he said.

    Lac Hong Voyages is organising new charters, possibly with Shenzhen Airlines and another Chinese carrier, to facilitate the arrival of more Chinese incentive groups in 2017.

    Demand for nearby destinations like Hong Kong and Macau among Chinese clients has unfortunately been waning the past two years, according to Julien Delerue, founder and general manager of procurement platform, 1000meetings.

    “Their drop in popularity is political and in the case of Taiwan, it is hard to get a visa. Around the region, safety and favourable currency exchange make Thailand, South Korea and Japan choice picks. However, Thailand is not perceived to be as safe as before but it is still more affordable to go to Phuket than to Sanya,” said Delerue.

    With the strong US dollar and an exchange rate of about RMB6.84, Kaci McAllister, deputy general manager, Destination Asia (China), revealed some Chinese clients are looking to hold most of their 2017 meetings and incentives at home. – Caroline Boey

    HONG KONG

    Global economic uncertainty continues to affect Hong Kong companies considering overseas business events.

    Nan Hwa (Express) Travel Service, executive director, Jason Shum, expects outbound business in the new year to be weaker due to tighter travel and event budgets but added that certain industries like direct sales, insurance and pharmaceutical will continue to hold events even in tough times.

    Shum said Australia, Dubai and Singapore are still in demand among Hong Kong clients.

    Rosanna Leung, head of business development and MICE with Towa Tours, also saw bright spots in Hong Kong’s insurance industry. She said: “(They) provide the largest traffic overseas. Popular picks for longhaul regions are Australia and Eastern Europe, while Osaka and Taipei are hot for shorthaul options.”

    When asked what could adversely impact Hong Kong client’s plans for overseas business events, Leung pointed to currency fluctuation, terrorist incidents, political instability and health scares.
    – Prudence Lui

    Dubaiskyline

    Dubai maintains firm demand among Hong Kong business event planners Picture by Luciano Mortula/shutterstock

    INDIA

    This year will likely see domestic destinations emerging as the darling of Indian corporate clients planning their events, according to Indian event organisers who credited a booming national economy and cost effectiveness of organising local events for the trend.

    “With new inventory being added in the hospitality market, cost of holding a business event in India has become a much more affordable option than (heading to) other Asian countries,” said Manpreet Singh, vice president and head, MICE, FCM Travel Solutions India.

    According to Karan Anand, head of relationships, Cox & Kings, the business events industry in India is growing at a rate of 15 to 20 per cent annually, of which a large part hails from the domestic market.

    “The reason for this growth is the expansion of the Indian economy which is growing at over 7.5 per cent per annum. This fuels opportunities for companies that incentivise their employees and dealers (towards better performance). The gradual improvement in domestic infrastructure has also allowed companies to focus on Indian destinations for their business events,” said Anand.

    Meera Charnalia, senior vice president, MICE, Thomas Cook India, believes that international movements will pace up from 2Q2017. “Banking, insurance and Indian consumer (product) companies will lead that demand,” she opined.

    Singh also identified fast moving consumer goods and agriculture industries as strong drivers of Indian business events, as they “are aggressively providing incentive trips overseas to dealers from the rural and non-metro areas of the country”.

    While popular business event destinations like Singapore, Thailand and Malaysia in Asia and Switzerland, London and Paris farther afield will remain favourites among Indian corporate clients, Anand said there is a “growing interest in exploring newer and off-the-beaten-track destinations (like) Spain, Finland, Istanbul, Greece, Egypt, Jordan and Turkey.”
    – Rohit Kaul

    Domestic destinations in India are becoming more affordable options for Indian corporate events (Palolem Beach, Goa pictured) Picture by Pikoso.kz/shutterstock

    Domestic destinations in India are becoming more affordable options for Indian corporate events (Palolem Beach, Goa pictured)
    Picture by Pikoso.kz/shutterstock

    INDONESIA

    A growing national economy and the continuous need for companies to motivate their staff and business partners with incentive trips are tipping Indonesian outbound business event players towards a positive outlook for 2017.

    Rama Tirtawisata, group managing director, Panorama Sentrawisata, said the government had reported an economic growth of 5.1 per cent, one of the highest in the world in 2016. That, along with a tax amnesty, have given local businesses more confidence in the new year.

    “These companies are in turn motivating their staff to achieve more. With that comes more incentive programmes,” Rama added.

    Vidya Hermanto, managing director of Orange Incentive House, told TTGmice that enquiries and forward bookings are painting visions of a good year, and expects corporate event budgets to return to 2015 levels. One of the big wins for his company this year is a gala dinner for 500 people at the American Museum of Natural History.

    Golden Rama has also welcomed 2017 on a positive note with groups heading to Japan and Turkey in January. Assistant manager-incentives, Victor Martawidjaja, reckons European destinations will continue to earn the favour of Indonesian companies, based on enquiries so far.

    Putu Ayu Aristyadewi, vice president corporate communications, Smailing Tour, said the business event segment is his company’s most stable performer because companies will always need to send staff out for meetings and reward staff and partners with trips.

    Putu said Japan is popular in Asia now, while Indonesian companies will continue to aspire to take groups and events to Europe.

    Smailing Tour expects business to grow by 15 per cent this year. – Mimi Hudoyo

    JAPAN

    The most worrying clouds on the horizon for Japan’s outbound business event industry are the same as those in 2016, said Japanese event agencies.

    Economic fluctuations with both short- and longer-term implications, political uncertainties, particularly given the terrorist attacks that have shaken European destinations in the past year, and growing tensions in parts of Asia are casting a shadow over Japanese outbound business events performance.

    Atsushi Seki, general manager of the meeting and conventions division of JTB Communication Design, expects “overall outbound business will be slightly smaller than in 2016”.

    Seki described the situation in Europe and the US as “worrying”, and said Japanese incentive groups as a result are preferring to stay closer to home, with destinations such as Taiwan and Hong Kong gaining in popularity due to their close proximity. Slightly farther afield, resort destinations such as Bali are seeing firm demand.

    “Companies with a big budget often go to Hawaii or cities in Europe because business event demand mimics what is happening in the leisure travel sector,” said Seki. “Europe is still weak because of the risk of terrorism.”

    Other operators say they are seeing an increase in incentive tours that combine an element of promotional work, particularly among industrial companies, such as those in the automotive sector. – Julian Ryall

     

    Taiwan (Sun Moon Lake pictured) is gaining popularity among Japanese companies that are increasingly preferring to hold their events in nearby destinations Picture by HTU/shutterstock

    Taiwan (Sun Moon Lake pictured) is gaining popularity among Japanese companies that are increasingly preferring to hold their events in nearby destinations
    Picture by HTU/shutterstock

    MALAYSIA

    Malaysian business event players are bracing for a challenging year in 2017, a result of a weak ringgit that has made outbound travels a pricey undertaking.

    Citing an example of how the ringgit’s decline had affected outbound incentive travel, Abdul Rahman Mohamed, general manager at Mayflower Holidays, said: “In April 2014, the ringgit was trading at RM3.15 against the US dollar. We had incentive clients from the insurance and oil and gas sectors travelling to Europe, as they could get a hotel, accommodation and airfare package for around RM7,000 (US$1563) to RM8500 per person.

    “When (the exchange rate depreciated) to RM3.75, the cost of travel became higher and organisers started to look at Japan and South Korea. In 2016, we saw incentive demand for longhaul destinations dropping by more than 40 per cent.”

    Another outbound player, Adam Kamal, CEO of Olympik Holidays, said: “In 2016, we saw corporate companies from all sectors cutting costs and revising travel budgets. We think this trend will continue into 2017.”

    As a result, domestic destinations will benefit from corporate incentive traffic. Olympik Holidays has been receiving RFPs for incentive trips to Sabah, Sarawak, Johor, Langkawi and Penang.

    “Bearing in mind that Malaysians are also seasoned domestic travellers, we offer new hotels and new attractions to inspire excitement,” he said, adding that numerous travel promotions emerging from the South-east Asia region’s Visit ASEAN@50 campaign this year will encourage even more requests for regional programmes.

    Syed Razif Al-Yahya, group managing director of Sutra Group of Companies, expects the cost-cutting fever that plagued companies and government agencies in 2016 will continue into 2017. Overseas meetings will involve fewer staff and a lower class of seat class will be preferred on flights. – S Puvaneswary

    MYANMAR

    More Myanmar companies are looking overseas for business events, and China is proving to be a hit, said VIVO Myanmar DMC CEO, Ye Tun Oo, citing the strong trade deals between the two countries as the catalyst.

    Other overseas destinations that appeal to Myanmar companies include South Korea, Japan, those in South-east Asia and Europe.

    Thida Myint, director of sales at EXO Myanmar, said domestically the coast remains popular with companies wanting to host training, teambuilding or incentive trips. “The beach is always a popular destination for Myanmar companies,” she said.

    Ngapali and Myeik are expected to be hot domestic destinations in 2017, especially as facilities and infrastructure develops in the two areas.

    Ye adds that interest in domestic events currently remains low, with attendance at exhibitions and events on home grounds minimal.

    However, as the country continues to develop at a rapid pace and more companies invest in Myanmar, interest in business events is predicted to pick up. “I expect this to become significantly bigger in the next three years at least,” said Ye.

    Until February 2015, tour operators in Myanmar were unable to offer overseas trips. The Ministry of Hotels and Tourism passed legislation that allowed travel companies to apply for licenses to offer trips abroad for Myanmar nationals.

    Luke Stark, general manager at ITS Myanmar, said: “The effects of this are being seen and will continue to grow into 2017 as the market becomes more sophisticated.”

    He predicts that as more international companies land in the country, the business event market will grow. “

    Myanmar’s natural resource exploration and gem mining sectors are currently driving business events domestically and internationally, while demand from telecommunications and fast moving consumer goods logistic sectors has expanded significantly over the last two years.
    – Marissa Carruthers

    THE PHILIPPINES

    Filipinos’ appetite for outbound business events is expected to remain undiminished this year although travelling abroad has become much more expensive with the US dollar gaining continuously against the Philippine peso.

    Marites C Pastorfide, assistant general manager/sales manager of Wayfair Tours said outbound events, especially incentive trips, will continue because companies – especially those dealing in multi-level marketing, investment, insurance, pharmaceuticals and law – need to keep rewarding and incentivising their champions.

    Brisk sales as a result of the growing Philippine economy also means more reward trips for top sellers.

    Pastorfide said Asian destinations will continue to flourish – they’re preferred over domestic destinations and are more affordable than longhaul ones.

    For companies opting for domestic destinations however, Boracay, Palawan and Cebu combined with Bohol are still top choices. Companies would choose luxury accommodations such as Discovery Shores in Boracay and Pangulasian Island in Palawan.

    Pastorfide said the most popular Asian destinations are Hong Kong, Bangkok, Seoul and across Japan, all of which are actively and heavily promoted in the Philippines.

    Simon Ang, managing director-operations, Celebrate Life TLC, said Asian luxury cruises are also an option. These floating resorts include Aqua Mekong cruise down the Mekong River with shore excursions in different towns of Vietnam as well as Aman Resorts’ Amanikan and Amandira cruisers off Indonesia. – Rosa Ocampo

    Cebu (Cebu Taoist Temple pictured) is one of the Philippine destinations favoured by local firms staying on home turf for incentive trips and events Picture by Curioso/shutterstock

    Cebu (Cebu Taoist Temple pictured) is one of the Philippine destinations favoured by local firms staying on home turf for incentive trips and events
    Picture by Curioso/shutterstock

    SINGAPORE

    Industry experts in the Lion City are predicting that outbound business event traffic will be sustained but group sizes may shrink and cheaper destinations will be chosen.

    Mice Matters’ director Melvyn Nonis, said: “Companies may reduce their group sizes to control their budget and perhaps even cut down the duration of trips by a day or two, but they will not stop rewarding their employees. Incentive trips are one of the highlights for many so (these events) will still continue.”

    According to Nonis, insurance industry clients have been visiting the UK for several years and are hence looking to explore newer places like the US and South Africa. Moreover, with the spate of terrorist attacks in Europe, Nonis added that clients are shifting interest away from popular cities like Paris.

    Theresa Lee, head of MICE, FCM Travel Solutions, has observed the same with her clients who are “deserting popular destinations for safer options like Fiji, Japan and South Korea”. And if they do go to Europe, Italy, Spain and Switzerland are preferred.

    Lee is optimistic that the industries such as automobile, insurance, direct-selling companies, pharmaceutical and professional associations will continue to have a healthy appetite for overseas events in 2017, albeit with slight modifications to their usual programme to suit market conditions. For instance, she said companies may shorten trips from five days to four.

    As for Michael Chiay, senior director, meetings & events, Asia Pacific with Carlson Wagonlit Travel, he said the weakening Australian Dollar and Malaysian Ringgit will work in the favour of corporates picking Sydney and Kuala Lumpur as destinations for meetings and events.

    Significantly less expensive cities like Hanoi, Beijing, Ho Chi Minh City, Jakarta and Bangkok will remain attractive spots too, Chiay added.

    According to Chiay, pharmaceutical companies will continue to drive MICE traffic.

    He explained: “The stricter regulatory environment in the pharmaceutical sector means these companies need to have more meetings before new products can be launched.

    “A healthy growth in MICE traffic is also expected from industries and organisations associated with the disruptive innovation movement, such as Fintech,” he added. – Paige Lee Pei Qi

    VIETNAM

    Asia is proving to be the most popular for Vietnamese companies planning their overseas events.

    While the majority of businesses stay on home turf for incentive trips and events, an increasing number – with the banking, pharmaceutical, insurance, automobile and beverages industries dominating – are looking abroad.

    Cambodia and Thailand are popular, along with Bali and the Philippines. Increased connectivity, competitive air fares and a rise in event facilities have helped boost the outbound market, said Robert Tan, business development director at Lac Hong Voyages.

    He predicts Taiwan, South Korea and Japan will be popular with corporate clients in 2017. He said: “We expect to see an increase of about 20 to 35 per cent due to visas being easier to obtain.” 

    The country’s growing appetite for business events has also seen Saigontourist Travel Service Company enjoy a 30 per cent YOY increase in demand. It dealt with 10,500 event tourists in 1Q2016, of which 1,500 went abroad.

    Thailand was the most popular destination, with 800 visitors from Vietnam, followed by South Korea (300 pax) and then Europe, the US and Japan.

    Company director Vo Anh Tai said the increase was down to Saigontourist cutting prices for outbound corporate tours in 1Q2016 – a move that is being replicated in 2017.

    Interest in South Korea is expected to continue, boosted after Vietravel signed an agreement with Gyeonggi province in April to attract business event groups from Vietnam. Under the move, Vietravel offers more tours to the destination and handles local administration. The company handled corporate trips for 5,000 Vietnamese to South Korea in 2015.

    Increased external promotion and marketing from other countries is also expected to stimulate Vietnam’s desire for outbound business events and travel.

    Jeff Redl, managing director of Diethelm Travel Vietnam, said: “Destinations around the world are stepping up their marketing efforts, giving rise to fierce competition. Several Asian destinations, including Hong Kong, Taiwan, South Korea, Singapore and Malaysia, have been proactively developing business event tourism and launching large-scale marketing campaigns.”

    Pham Ha, CEO of Luxury Travel Vietnam said domestically, Hanoi, Danang and Ho Chi Minh City remain the most popular destinations for business events. – Marissa Carruthers





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