A now international Pacific World aims to triple its size and revenue by 2017. Its global managing director, Hervé Joseph-Antoine, spills the gameplan to Raini Hamdi
It’s a sign of the times that TUI has rebranded all its DMCs in Europe – Ultramar Event Management Spain, Travel ScotWorld Scotland, TUI Hellas Corporate Services Greece and Miltours MICE Division Portugal – as Pacific World and this global organisation is now based in Singapore under you.
Yes, 60 per cent of the business is already in Asia and with the continued growth of this market, it makes sense that our headquarters is here. Usually, you (cover the region) with an affiliate in China, Singapore, etc. For us, it’s the other way round. We look at the world from where the main business is.
TUI also separated the MICE business from Hotelbeds, whereas both used to come under the Accommodation & Destination platform. Why?
The business model is changing fast. Hotelbeds is growing rapidly. The FIT/individual business is now online, less tied to the local industry and more transactional. Your portfolio is in one place, contracting in another, the product is sold elsewhere and all this is connected, so the nature of the business has changed.
MICE remains tied to the local industry and is also changing fast. TUI acknowledges that the business model is in flux and allows the companies to follow what’s right for them. That’s why the separation.
What difference does it make being on your own?
We are the MICE platform within the group. So we have the strengths of group functions like legal or HR but are recognised as a very specialised business within the group. Our people, like Jeff Amato (regional director, Thailand and Indochina) and Cindy Zhang (regional director Greater China), have worked in the MICE business all their lives.
Who do you report to?
The TUI board, every quarter.
What is the advantage of being a global organisation?
Your perspective is richer, because you have people of different cultures working with you. Your clients today are also more global and have people of different cultures working for them too. You can’t have one culture or country dominating the decision-making anymore. We don’t have a Europe or US mindset. We have a global mindset.
As the MICE platform of TUI, has your parent set you higher targets?
The mandate is growth, to multiply our size and revenue threefold by 2017. We’re going to grow all segments of our business, which is 65 per cent DMC and the rest split equally between corporate/association and PCO.
What’s your revenue now?
I won’t say (laughs). Size-wise, we have a staff count of more than 200.
What will you do to triple your size?
Open new destinations and source markets while growing existing ones.
Pacific World fully owns all its 12 offices in five geographical areas – Europe, Greater China, Singapore/Malaysia, Thailand/Indochina and Indonesia. Will you be opening, acquiring or partnering up to set up new offices? And where?
Our presence is very balanced worldwide but there are still places in Europe and Asia (we have yet to reach). In Asia, this is namely Japan and South Korea.
We’re signing papers for legal entities – I can’t say where yet – and if we find partners with the right level of operational excellence, offering top service, creativity and places which others have not opened – all this is our DNA – we will team up. If we can’t find the right partners, we can open our own offices, acquire or postpone.
There are also some MICE businesses within the TUI group, which is a large organisation, that can be integrated into Pacific World if they are at the right level of maturity.
Going forward, do you foresee most of the growth coming from Asia?
Yes, if you look at the additional MICE market growth between 2012 and 2017, 80 per cent comes from Asia as a destination or as a source, because of the region’s economic growth. So if you are a global MNC headquartered in the US or Europe, you’re going to be doing more conferences and business meetings in Asia.
There is a correlation between MICE and the economy. If GDP grows two per cent, the multiplier effect on MICE is three times, thus you can expect six per cent growth. If GDP is down, the multiplier effect is about 10 times. So if GDP is minus two per cent, your business collapses 20-25 per cent. It’s true, I’ve seen this myself.
In a recession, the first thing that gets cut is the marketing budget. If a company (usually) holds two big conferences, it will do one or none. That’s why US incentives disappeared in 2010/2011, though they are now coming back, as are incentives from Brazil and South Africa, but not so much for Europe.
As you know, the MICE industry has seen many fluctuations since 2006 – up in 2008, down in 2009, that sort of pattern. MICE is vulnerable to economic changes and is not as resilient as the luxury travel business. It’s also very fragmented because when you have a crisis, a lot of companies disappear.
Ninety per cent of the business in Europe, the US and Asia are small companies with five to 10 pax that can lose 20-30 per cent of business in a crisis. That creates a change in the marketplace – the small companies are becoming more fragile while the big, international players who have a certain stability because of their shareholders or size, are growing bigger.
As a company owned by TUI, you benefit.
We need to see how the market evolves in Europe as the economic crisis in 2009 and the (debt-crisis) now add another layer of impact: What’s going to happen to the boutique agencies and DMCs in Europe?
The market, from the corporate and association point of view, is looking for stability and reliability. You don’t want to give your big conference to a company that will disappear in six months. You look for people who have good insurance cover. MNCs also have a strict compliance policy as they want to safeguard themselves against legal or credit risks.
There is also the impact of new laws, such as anti-bribery laws. An agency with a local owner and five to ten people may do things to facilitate immigration or entrance to venues that the client does not want it to. Although that may have been alright two to three years ago, such arrangements are high-risk now.
Major companies want to make sure we have controls in place. So relationships are still important, yes, but the traditional relationship model as we know it has changed.
What’s the biggest challenge in multiplying your size by three?
I don’t know yet, but I think it is related to generational change. The interaction with clients or hotels is different because project managers belong to Gen Y, so your communication with them has to change. They do video conferencing, look at what we do on Facebook, look at pricing differently, i.e., quicker and more of a procurement type discussion. We are preparing ourselves for this.
How?
More empowerment. I’m not the ‘father’ of the Pacific World organisation, with the team under me. The team is empowered to make decisions. Cindy (Zhang), for example, is in charge of global marketing and empowered to come up with our strategy for tradeshows, budgets, marketing approach, etc. It’s a big change but one we must make.
Who do you view as your strongest competitor?
The business is so fragmented. If you look at the biggest players at the country level, each has a seven or eight per cent share. It’s not like some industries where it is clear-cut, with the number one player holding a 20 per cent share, number two 15 per cent and so on. We are all very small in a big market.
You handled MICE at Carlson Wagonlit Travel (CWT) before joining Pacific World. What best practices would you take from CWT in your new role?
The region is different, the market dynamics are different. I can’t think of a good example – probably its diversity. CWT is an MNC present everywhere. It’s not a monoculture and it’s good to bring that experience to Pacific World. We want to take that diversity further.
Why did you join Pacific World?
It’s the future.
