While Asia’s exhibitions sector is galloping, the outlook for other MICE sectors is generally ‘trotting’. But good fortune still awaits those who ride the trends. Here’s our report on what to expect in 2014
CORPORATE MEETINGS & EVENTS
Discipline sets in
Goodbye exuberance, hello control. Meetings spend is flat this year, but firms that provide solutions to manage the expenditure see opportunities. By Raini Hamdi
The outlook for Asia-Pacific’s corporate meetings and events is flat this year, thanks to a more cautious overall business sentiment in the region, heightened regulatory scrutiny and increased awareness of safety and security issues.
Following two years of predicted increases, American Express (AMEX) Meetings & Events 2014 Global Meetings Forecast predicts a slight decline (-1.2 per cent) in the number of meetings in the region, but the largest decline among all regions in overall meetings spend per organisation (-3.6 per cent). As well, a 2.4 per cent decline in the number of attendees per meeting.
Meeting planners it surveyed expect to hold more meetings within their region and/or their own facilities. Compliance, cost and travel time are all noted as top drivers. The bottomline is, said, AMEX, companies are likely to seek alternative ways to control costs and reduce time away from the office.
The approval process for meetings is also expected to become increasingly complex and more rigorous across all regions as a result of expected delayed approvals and a likely shift toward more revenue-focused, external meetings. Senior level executives must often approve meeting programmes above a certain budget or attendance number threshold, further delaying the approval process, AMEX added.
Carlson Wagonlit Travel (CWT) Meetings & Events is just a tad more optimistic than AMEX. CWT expects a modest overall growth in meeting volumes of two to five per cent in the region, mostly driven by increased spending in China, India and Indonesia.
For events, it expects clients to continue to hold them, but on a smaller scale, and in domestic or shorthaul destinations compared with the longhaul favoured in the past. But large corporates may tap into major events in 2014 such as the World Cup in Brazil and Olympics in Russia, it said.
Structural change
But while volume growth of corporate meetings and events is lame, this belies an active structural change which appears to be occurring, reshaping the way meetings and events are approved, processed, planned and conducted.
At least that’s what the major meeting solutions providers want us to believe. Having long waited for the Asian market to manage the meetings and events spend – often described as the last frontier of corporate travel management these providers said they are seeing “a real desire on the part of our clients for a new degree of rigour around meetings”, in the words of Kelly Kuhn, president, Asia-Pacific, CWT.
At Hogg Robinson Group (HRG), roughly over 60 per cent of clients in Europe/North America already seek advice and consolidate their meetings, groups and events programmes globally, while another 22 per cent seek to integratethese with their transient corporate travel business, according to Amanda Hanlin, director of global sales for HRG Meetings, Groups and Events (see the four stages of maturity below).
The trend is now spilling across to Asia-Pacific, said Hanlin. Whereas corporates typically operate without contracts in meetings and events, clients have now signed up to work on a contractual basis for three to five years, she said.
The scope is also increasing, with bids including requests for venue sourcing, meeting registration, small events and payment solutions.
“In some cases we’re seeing RFPs for both transient (corporate travel) and meetings/events as companies look to get full leverage from their suppliers,” Hanlin added.
“This has resulted in stricter and clearer SLAs (Service Level Agreements), KPIs (Key Performance Indicators) and a more focused approach for risk management, escalation and 24-hour support. A consistent pricing model across multi-markets, where feasible, is also a growing requirement,” she said.
Danielle Puceta, director, AMEX Meetings & Events, Asia-Pacific, said: “This region is following a similar path in relation to how meetings and events activity has evolved in the US and Europe. In particular, we are still seeing significant opportunities to further formalise and clarify meeting policies, particularly around payment procedures.”
Senior managers are recognising that complacency in the meetings planning process can have serious financial, legal and reputation consequences, Puceta added.
Providing more
As companies pay serious attention to meeting programmes, demanding better outcomes and lower prices, providers will have to improve their offering or be forced out of the market entirely, predicted CWT’s Kuhn.
Typically, providers start a strategic meetings management programme for clients by giving them “clarity” and “visibility” over their overall spend. Using their back office technology system, they then consolidate the client activity, destination analysis, budget breakdown and hotel spend, in an attempt to give clients a holistic view of their spend.
“If you ask a travel manager about their company’s annual travel spend, they will know it to the nearest dollar, but ask them the same question about their meetings spend and you will usually draw a blank,” said Kuhn. “Without that level of visibility and understanding, it is impossible for companies to make smart decisions about the future of their meetings programmes.’
AMEX’s Puceta said adjustments are made for different regions. “For multi-national companies, it is important to be realistic about the local environment in each country. For example, the entire supply chain in some of the more remote areas within Asia might not be as advanced as in the US. In these areas, adjustments may need to be considered in keeping with the local business environment and technological capabilities, while still be mindful of the organisation’s overall goals and regulations.”
Payment solutions, service and technology – to automate bookings, consolidate pre- and post-trip meetings data, etc – are key areas these companies focus on to come up tops in the competition.
HRG, for instance, recently integrated its global meetings services with a Citi Virtual Card to help clients manage meeting-related costs more effectively.
Like AMEX’s Puceta, CWT’s Kuhn also identifies the need to work with clients to manage and improve the legal and regulatory compliance of their meetings programmes as a focus for 2014.
“The recent scandals in the industry relating to non-compliant behaviours have brought this issue to the forefront for meetings and events agencies, and our focus in 2014 is working with our customers to develop meetings programmes that achieve the highest levels of compliance,” she said.
With the increasing role of corporate procurement departments in the decision-making process, the onus is being placed more firmly than before on agencies that can offer a higher standard of accountability, responsibility and transparency over meeting programmes, she said.
Kuhn predicted a consolidation of agencies, as has happened elsewhere in the world, as a result. But as bigger agencies emerge, they will need to retain their creativity and nimbleness in order to compete with niche players, although the greater buying power and wider networks will be a boon for clients.
Corporate planner’s role
What then is the role of the corporate meeting planner vis-a-vis agencies that provide meetings management solutions?
Said Puceta: “Meeting planners must focus on collecting information for reporting purposes at an enterprise level. They need to get a holistic view of where M&E activity is occuring for internal and external reporting purposes, and to ensure the safety of their meeting attendees in times of disruption or crisis, for example. To get a sufficient view of where M&E activity is occurring, there will also be a greater focus this year on more sophisticated data collection.”
“The meeting planner will still have a role,” added Hanlin. “The majority of the time, they own the relationship between the venue and their company. (We) take away the admin function of the venue sourcing – for example, the T&Cs and the negotiation of the venue. This means that the client/company is better protected, as the risk of an employee agreeing to T&Cs that maybe they don’t understand is minimised while he/she still gets to keep the relationship with the venue.”
Kuhn summed up: “The role of a good agency should be to support and enhance the work of the meeting planner and to enable them to deliver outstanding events. The end client still wants that personal touch and see a familiar face throughout the meeting process, and the meeting planner is the person in that space.”
Small rise in virtual meets
Companies in Asia are using virtual meetings or hybrid solutions to meet, but these lower-cost alternatives will not replace the real thing.
“In our 2013 forecast, 56 per cent of the audience projected that virtual or hybrid meetings would represent more than 10 per cent of their meetings activity, however, this year only 26 per cent of the planners surveyed reported so,” said American Express Meetings & Events Asia-Pacific director, Danielle Puceta.
Said Carlson Wagonlit Travel president Asia-Pacific, Kelly Kuhn: “In a market such as Asia, in which business is driven by face-to-face relationships, the ability to meet in person is crucial to getting business done. However, we are seeing an evolution in how technology can enhance the meeting process. Virtual meeting technologies have been around for quite some time, but as Internet-based solutions are now coming to prominence, we are able to add this technology into our meetings, for so-called ‘hybrid meetings’, combining some in-person attendance with virtual components.”
HRG Meetings, Groups and Events director of global sales, Amanda Hanlin, too said such solutions, though growing, remains a small portion of a client’s overall meeting portfolio. “With the increasing sophistication and ease of videoconference and telepresence solutions, our global clients are already substituting videoconference for face-to-face meetings. It tends to apply to small meetings or those occasions where it just doesn’t make sense to jump on a plane due to time, cost and discussion content.
“In the more mature Asian locations, we are also seeing clients use laptop technology more, such as document sharing through Microsoft Outlook. For example, contract discussions or presentations which would typically have been held face-to-face are now performed through document sharing, Webinars and conference calls,” she said. – Raini Hamdi
Managers exercise restraint
Rita Tandon
Senior manager, special events
Amway India
Considering the present economic scenario, we have restrained our budget for meetings and travel. Economies of scale are being worked out with our regular partners. We are now using different categories of hotels including five-star ones for meetings and events, depending upon the requirement.
We are also observing the ROI we get from MICE activities. The focus now is to calculate the spend vs objective achievement. We calculate the ROI at two levels: organisation and participation. A combination of both gives us a holistic view. At the organisation level we aggregate all costs, compare this to a value that is estimated by the organisation, then determine the financial benefits of the event. At the participation level, we estimate the value on a per participant basis, then view its benefits.
However, going forward, we expect the economic scenario to improve and this will have a positive impact on our meeting spend.
Kok Siok Mei
Assistant to CEO
Continental Automotive Components, Malaysia
We had a slight change in the budget last year, so we have started minimising travel and optimising group sizes. For instance, we used to fly three to four people out for meetings; now we will try to send just one person. We have always used the fare comparison policy where we look at three different flights to (find) the cheapest (option). LCCs are definitely used more now. If you fly from Singapore to Kuala Lumpur, it is just 45 minutes, so LCCs are useful.
Leong Sat Sing
Vice president Group Corporate Affairs UCSI Group Holdings, Malaysia
Our guidelines for holding meetings and events remain the same. The first choice for holding meetings is in our own facilities – we have meeting rooms and a ballroom. The venue chosen depends on the number of participants involved.
Where appropriate, we use teleconferencing and Skype (see also ASIAN INCENTIVES: Pockets of opportunities).
We have not received any new instructions on spending for 2014. Meetings remain a necessity for group communication, discussion and decisions. There is no measurement of ROI from meetings.
Louisa Chan
General manager
Amway Hong Kong
Guidelines on meetings and incentives remain the same. Amway applies strict guidelines in its vendor selection (and is subjected) to an internal audit and corporate governance.
Instead of stricter spend control this year, we are investing more on incentives and meetings because we are celebrating our 40th anniversary.
Amway Hong Kong will bring some 500 pax on a Mediterranean cruise. There will also be a tour to our headquarters in Michigan, an incentive to New York for distributor leaders, a visit to our organic farm in Washington for business builders, and a few other trips around the Greater China region.
Locally, there will be a large-scale meeting and expo, and a gala dinner at a five-star hotel for up to 6,000 pax.
There is always ROI and target set for our meetings and incentives. For instance, distributors have to qualify for participation in these trips by achieving specific personal sales growth and group volume. During the incentive trip, we make use of every moment for business presentation, teambuilding and fun to motivate the distributor force or participants.
Incentives and meetings do not only foster business growth, it helps to build team spirit and rapport, and drive distributor momentum to contribute to growth.
Alan Miu
Managing director
TNT Express Worldwide (Thailand)
Our policies and guidelines to hold meetings and events have not changed.
(But) we are using videoconferencing more. Usually we schedule videoconferences among multiple countries for our own internal meetings. This is getting more economical and effective, as it helps to save costs and also reduce the travelling time for the senior executives.
It is not a matter of stricter spending, rather, ensuring we spend according to our budget, and planning. We still maintain more or less the same budget for our meetings/events as in the past years. When planning meetings, we need to make sure the duration is neither too short nor too long. Apart from the cost impact, duration also sets the right tone and objective for the meetings.
Yes, we need to look at the ROI for the meetings. Apart from the cost element, it is also about the effectiveness of the meetings. Attending a meeting is important but the most important part is whether the agreed follow-up actions are followed through after the meeting. This is the true ROI of meetings.
ASSOCIATIONS MEETINGS
Sleepless over reduced numbers
In Union of International Associations (UAI) 2013 Associations Survey, released last November, associations worried the most about reduced participants numbers and lack of sponsors/exhibitors or reduced sponsorship on their current and future meetings.
When asked about their specific concerns about the impact of the current global economic situation on their current and future meetings, 55 per cent and 53 per cent of respondents picked these two issues, respectively. Another 43 per cent picked budget reductions, travel costs or visa problems, while 32 per cent picked transportation costs.
Interestingly, of least concern was safety (health, terrorism or political violence).
Joel Fischer (above), head, Congress Department, UAI, picks three other findings he finds most surprising:
ASIAN INCENTIVES
Pockets of opportunities
Overall, incentive travel as a motivational tool is gaining wider acceptance in Asia – but it is not without key challenges. TTGmice reporters dish their market report
Singapore
Motivating news
With more companies in Singapore recognising the power of incentive travel to goad staff to be super-achievers, organisers are expecting another buoyant performance this year.
A travel-loving nation, incentive travel is a motivational tool that hits the right spot. Dynasty Travel reported a 20 per cent year-on-year growth in 2013 and is forecasting a 30 per cent increase for the first half of 2014. Safe2Travel reported a 10 per cent increase last year. CEO Steve Fung said: “Companies know the importance of keeping their staff motivated and I believe 2014 will do even better because the economy is better now.”
Agreeing, Dynasty’s CEO Clifford Neo said: “The benefits of an incentive trip is becoming evident to many companies today, and we are already getting more enquiries for their retreats in 2014.”
Steven Smith, senior director of CWT Meetings & Events Asia/Pacific, noted that even SMEs in Singapore are using incentive travel. He said: “Many of the corporate companies that reward their top sales performers are from the banking and financial institutions but last year we observed an increase in incentive requests from SMEs, which are also starting to recognise and reward their staff.”
Singapore companies typically opt for shorter trips of three to four days. As such, the popular incentive destinations are Thailand, South Korea, Hong Kong, Taiwan and Australia.
The short timeframe poses a challenge for Smith. He said: “Often, the challenge is offering an itinerary that can showcase a destination within a limited time while maximising the client experience.”
European destinations like Switzerland, Paris and Spain are always popular with the big corporates like insurance firms, which can bring as many as 2,000 staff members. Last year saw a steady demand for Europe, thanks to the weak euro which made Europe “easily 20 to 25 per cent cheaper than a few years back”, said Fung. “Generally the big companies will prefer to bring their staff to Europe because the destination is more exotic compared with Asia, which their staff can easily visit on their own. We foresee the same type of demand for Europe in 2014,” he added.
Melvyn Nonis, director, MICE Matters, expects greater demand for Switzerland in 2014, thanks to SWISS’ direct Singapore-Zurich flights and the greater presence of Switzerland Tourism, which has a South-east Asia office in the city. “Switzerland is increasingly popular and a viable destination for MICE,” said Nonis.
“Eastern Europe is also gaining popularity because it is a place less travelled. People are seeking exotic places, so we see growing interest in Eastern Europe cities such as Prague, Budapest, and Vienna. We expect a 30 per cent growth there in 2014.”
Although these destinations are more expensive, Nonis said companies in the insurance and the multi-level marketing industries are doing well. “With the upcoming World Cup in Brazil in 2014, we are also receiving greater demand for Brazil,” he said. – Paige Lee Pei Qi
Hong Kong
Planners cautious
Hong Kong planners are cautious about the business outlook for 2014, saying the world economy has not picked up, while China government’s stringent policy on official spending affects bookings.
Lotus Tours MICE, Pilgrimage, Cruise Planner’s senior manager, Arthur Choy, suggests that 2014 won’t be better than 2013. “The last quarter dropped drastically due to the stringent government policy,” he said. “The subsequent crisis with two pharmaceutical companies in Shanghai (which also have offices in Hong Kong) exerted a negative impact and resulted in stricter checking on tenders by their procurement teams.”
Few agencies expect the going to be easy this year, what with increased competition from other retail agents for the incentive traffic; greater transparency that enables clients to compare quotes; and shorter lead times of less than four months, which makes it hard to secure air seats and rooms for big groups.
“We also see airfares of the mainstream carriers getting more expensive for MICE groups than normal groups and FITs, whereas clients will not really accept low-cost carriers for MICE travel. In some extreme cases, the quoted MICE airfare may be over HK$2,000 (US$258) more than the airline’s special promotion airfare,” lamented Towa Tours/MICE World’s head of project and business development, Rosanna Leung.
She added: “Clients like to gain advice from agencies, but book direct.”
Moreover, Leung pointed out, many veterans in the industry are reaching the age of retirement, while the market is short of staff to carry on the succession. “This is an industry of relationships. It takes years for an individual to gain a profound knowledge of MICE operation and to be recognised for his/her work,” she said.
Lotus’ Choy said he will keep looking for opportunities and push destinations such as Vietnam, Bali and Taiwan, which have improved air connections and growing interest among clients.
“Our biggest incentive clients are from insurance and direct sales. They tend to use fewer luxury elements and require standard offers. Still, the budget of reward trips for stellar sales performers will be retained because of the drive for better sales records.
“For longhaul destinations, new air connections and easier visa processing may also provide opportunities. We already have two to three groups to New York from direct sales and insurance companies with a group size over 300 pax,” he said. – Prudence Lui
Indonesia
Wait and see
A weakened rupiah and the imminent general and presidential elections in April are casting a shadow on the Indonesian incentive market.
Specialists who handle the market said companies are taking a wait-and-see stance on their incentive programmes as a result.
The rupiah has weakened by 20 per cent over the last five months. The general election is taking place in April, smack in the middle of the incentive travel season.
“Many companies have reconsidered their incentive programmes, either postponing or seeking alternative destinations. Some are even taking a wait-and-see stand,” said WITA Tour director of sales and marketing, Rudiana.
Although the election itself is only a day, companies will be paying attention to the political agenda months before the date. “Following the general election, people’s concentration will then be on who the next President will be. Again, there will be a wait-and-see period,” he sighed.
Tara Tour incentive & MICE supervisor Elny Rosita said: “With the rupiah at 12,000 per USD (at end-November), only the financial and automotive industries are moving (ahead with incentive programmes) for 2014, but the groups are smaller.”
Even though some companies have raised their MICE budget, the increase does not offset the rupiah’s devaluation, she said.
As such, Tara tries to create memorable experiences within the budget by changing destinations, for example, from Europe or Australia to Asia, reducing the trip’s duration and revising itineraries.
“For example, the original full-board programme now has one free evening or an additional shopping programme. Indonesians love shopping, so they welcome it,” she said.
She agreed some companies are taking a wait-and-see on their incentive tours due to the elections.
Panorama Tours, which saw a 30 per cent growth in Indonesian incentives in 2013, expects a moderate if not flat performance this year.
Vidya Hermanto, managing director-Corporate Travel Management, Panorama Tours, said: “A number of companies has postponed programmes since the currency dropped (around September last year). If and when they eventually decide to go ahead, they need to change the programme to fit the budget.
“We don’t need to change destinations, only downgrade the class of hotels, or take off some itineraries, although there are cases where ‘to fit the budget’ means changing destinations entirely.”
Panorama Tours has been breaking records in handling the biggest incentive groups from a major insurance company for several years. Alas, Vidya said this year the group would be smaller than last year. “The outbound incentive market is still there, but it is not as buoyant as it has been in the last couple of years,” she said. – Mimi Hudoyo
Malaysia
Firms look east
Specialists expect the Malaysian outbound incentive travel market in 2014 to be even better than 2013, which turned out to be a good year despite the national general election in May and the ringgit’s depreciation.
Agency CEOs predict that, as with last year, neighbouring destinations will do better over longhaul destinations this year. Last year, some of them saw a 30 per cent drop in the longhaul market.
Countries within six hours’ flight time from Kuala Lumpur especially will gain a greater share, as this is a radius of plentiful seat capacity, said Richard Vuilleumier, managing director of Panorama Tours Malaysia.
“Bookings for 2014 started coming in in the last quarter of 2013, and the demand was for Thailand, South Korea and Indonesia,” he said.
Last year, the favourite destinations were China (Guangzhou and Shenzhen), Hong Kong and Indonesia (Bandung and Bali), Vuilleumier compared.
Raaj Navaratnaa, general manager of New Asia Holidays Tours & Travel in Johor, said: “As the ringgit has softened, I foresee demand for this year will mainly be to ASEAN destinations. I already have incentive bookings to Bali and Jakarta.”
But Desmond Lee, group managing director of Apple Vacations & Conventions, disagreed, saying there is still plenty of opportunities in the longhaul.
He pointed out the weakened ringgit in 2013 had resulted in more SMEs incentivising their dealers and sales staff to meet targets. Apple had seen a 100 per cent and 50 per cent increase in demand for trips to Japan and the US, respectively, in the second half of 2013.
He said Japan’s move to lift visas for Malaysians, coupled with a weakened yen, had spurred demand to Tokyo, Osaka and Mt Fuji; likewise, easier visa processing to the US turned on the tap for incentive trips to Los Angeles, San Francisco and Las Vegas. Lee predicts demand for Japan will continue to grow, but a challenge is insufficient seat capacity, especially to Tokyo and Osaka.
Another challenge facing companies is strong competition, which has led to price wars and lower profit margins. Lee lamented: “They are offering cheaper tour fares at the expense of quality service.” – S Puvaneswary
Thailand
Tighter budgets
Thailand’s political turmoil will not roil the market, said outbound incentive planners, who explained that incentive travel has become the norm in such sectors as insurance, direct sales and banking sectors.
But many are expecting corporate purse strings to remain tight. Said Incentive Design’s production manager Anukul Phuttanan: “Budget control has become more evident among our client companies for the past few years, through means such as cutting out unnecessary sites, special requirements or even free gifts. But they still expect highlights during each trip, such as cocktails following a tram ride in Prague or a river cruise in Budapest, so it is a challenge for us to craft an itinerary that wows and yet fits their budget.”
Bonus Travel is anticipating a “similar or better performance” and has set a five per cent growth target for the segment this year over last year, said the firm’s sales manager, Arthit Kiatbenchaphong.
Outbound incentive business from Thailand in 2013 was also “good” for Incentive Design, which expects demand to be similar this year. Said Anukul: “The majority of our business comes from existing clients, with different departments within the same company requesting for incentive travel.”
For Image Holiday, the incentive outbound business has been recording an average 30 per cent growth annually, according to operations executive, Mona Visitwattanakul.
Japan’s visa waiver for Thai travellers since mid-2013 propelled the country to become the top incentive destination for Thais last year, a common thread observed among the incentive planners TTGmice spoke to.
“With Thai Airways International (THAI)’s new Sendai service (which started in December 2013), I expect Japan to stay popular this year,” Mona commented.
Non-traditional, far-flung destinations are also making inroads with some Thai incentive groups. Said Arthit: “Several companies have shown interest in organising incentive trips to Brazil for the FIFA World Cup this year. This is definitely a niche, high-end segment as tickets can easily cost 500,000 baht (US$15,600) for just two matches, on top of tour expenses of around 300,000 baht.”
Thailand’s potential as a source of MICE arrivals has not gone unnoticed by Tourism New Zealand (TNZ). The NTO launched inaugural business events promotion efforts in Thailand this year and “expects a better performance in 2014” for the Thai incentive market, according to Mischa Mannix-Opie, TNZ’s regional manager for South & South-east Asia.
She said: “New Zealand is a still a relatively new MICE destination, so we may not be a top-of-mind destination among the Thai incentives operators yet. We’re working with partners…such as Auckland International Airport to offer a visa-free subsidy for incentive groups flying on THAI.”
While Europe continues to be lusted by Thai incentive groups, the new visa information system introduced by the Schengen States in November 2013 could add to the travel hassle, warned Arthit, as travellers are now required to visit the respective embassy in Bangkok to provide their biometric data – 10 fingerprints and a digital photo.
He added: “As some clients are based upcountry, companies have to fly them into Bangkok to complete this visa procedure. This will certainly add to expenses and may deter incentives from visiting Europe.” – Xinyi Liang-Pholsena
India
Defying obstacles
The prognosis is Indian outbound incentives will continue to grow even though the market has witnessed a tough time due to the ever-fluctuating Indian rupee and economic slowdown.
Despite difficulty for corporates to plan an event four to six months in advance as the end cost could not be predicted with the rupee’s yo-yo, the Indian outbound incentive market grew in 2013, according to organisers. Many expect the trend to continue.
Karan Anand, head – relationships, Cox & Kings, said in fact in challenging economic conditions, incentives are “a key catalyst that drives employees and business associates to perform and India market is no different”.
“In 2013, the market did exceedingly well and was a key growth driver for our company. We believe the Indian market has grown by over 25 per cent,” he said.
Helping it along is some serious wooing of Indian incentives by overseas NTOs. Said Chander Mansharamani, managing director, Alpcord Network Travel & Conferences Management: “NTOs have been quiet aggressive in 2013 and have been regularly visiting the country. This has played an important role in the growth of the incentive market.”
Anand agreed, adding: “This year we partnered with various tourism boards to promote their destination to corporates.”
But some travel consultants noted that corporate clients have been sensitive about budgets. This helped Asian destinations like the Philippines and Indonesia.
“Economic slowdown resulted in corporates choosing Asian destinations like the Philippines and Indonesia. Even within Europe a section of corporate clients opted for destinations that fit their budgets,” said Mansharamani.
However the outlook for 2014 is positive and new destinations are expected to emerge. “The incentive market will definitely grow and new destinations like Vietnam, Cambodia, Morocco, Jordan and Eastern Europe are likely to emerge as favoured incentive destinations,” said Vikas Khanduri, managing director, Viva Voyages. – Rohit Kaul
Philippines
Fighting spirit
The Philippine incentive market ended 2013 with sanguine results and prospects for this year are even better, on the back of a growing economy and increasing popularity of incentive travel as reward for a growing number of companies.
Boding well for incentive travel is the fact that the Philippine economy remains strong even after factoring in the aftermath of Haiyan, said Ine Faustino, general manager, CCT 168 Travel & Tours.
Added Gigi Juinio, assistant general manager of Corporate International Travel and Tours: “We are looking at a positive trend, as incentive travel is always part of the tradition for rewarding champions and bringing in more qualified staff.”
Sheena Shroff, business development director of Shroff International Travel Care, which has seen the market “quickly growing year on year and specifically in 2013”, said even trading companies now offer incentive trips to their employees, sales people and distributors, not just the traditional industries such as direct sell, insurance and pharmaceutical.
These companies are also open to new destinations and product offerings and are more receptive to longer itineraries of seven nights, from four, she noted.
There are however several challenges for planners, including limited destinations because the market is so driven by price. “Even if we recommend a destination, clients don’t want to consider it,” said Juinio.
Agreeing, Shroff said corporate clients’ buying power can be volatile and an incentive trip could be the first to be given up in case of business fluctuations.
Other forms of rewards, like cash, also compete with incentive travel.
Rigid government policies on granting visas to Philippine groups also pose a challenge, while political upheavals such as the turmoil in Thailand and natural disasters beyond one’s control such as Haiyan, which made a landfall in Visayas, keep planners on their toes.
Asked if recent Philippine efforts to spur domestic travel through Bangon Tours would lure incentives away from foreign shores, Shroff said based on enquiries received to-date, Bangon Tours are more suited for the leisure market, with five per cent of sales proceeds going to communities affected by Haiyan.
As incentive travel is goal-driven, Shroff said several companies may prefer Bangon Tours but others want the energy and excitement of other itineraries.
“Ultimately, it is not the travel but the goal of travel, which can be to bring more business to the company, or forge better relationships among staff, among other goals,” Shroff said. – Rosa Ocampo
EUROPEAN INCENTIVES
Waiting for the upside
The consensus is European incentives remain in the doldrums, but DMCs are not about to give up on a key market. By Raini Hamdi, Mimi Hudoyo, S. Puvaneswary, Rosa Ocampo and Prudence Lui
Europe’s economic problems prove one thing: Whoever said that when times are bad, companies would turn more to incentive travel to achieve higher revenues?
The inconvenient truth is European incentives, a key source for destinations across Asia, have been in the doldrums and few DMCs expect the market to return this year.
“Are they back? Unfortunately, the answer is the combination of N and O,” said Richard Brouwer, CEO of Diethelm Travel Group, after studying figures from Diethelm Events in Thailand and Malaysia.
Agreeing, Laurent Kuenzle, CEO of Asian Trails and Kuoni Destination Management Asia-Pacific, said: “I wish I could say yes, but that would not be correct. Some incentive movements are back, but not on the level that we would like them to be.”
Across the region, the overriding sentiments are the same. In Indonesia, Pacific World’s country manager Ida Bagus Lolec said 2013 did yield “some” groups from Europe but not to the maximum the market could have done, blaming “the economic situation in Europe, which has not recovered fully”.
In Malaysia, Luxury Tours’ manager, Ganneesh Ramaa, said: “Inbound incentives from Europe was bad in the first half of 2013 but picked up slightly in the second half, where we had more groups, especially from Germany, France, Austria and Switzerland.”
In the Philippines, Eleanor Ng, Marsman Drysdale Travel’s director of tourism services, said “we didn’t have much European incentives last year; we had more in 2012”, while Marjorie Aquino, Blue Horizons Travel and Tours’ sales and marketing manager, echoed: “In general, European incentives to the Philippines dwindled. Several European countries are still in financial crisis so when they travel, they go to nearer destinations and opt for budget tours.”
In Hong Kong, DMC – The Destination Management Company’s conference and incentive travel manager, Adrianne Lynch, said European incentives were in a down cycle last year. “The upside is the market will always come back, as it knows Hong Kong works well (as an incentive destination) and always has something new to offer,” she said.
According to Brouwer, the current negperception of incentive travel in Europe in general is “a biggie to overcome”. “The perception is one should not travel far, it shouldn’t take too much time, have a long weekend at the most, etc. Incentive travel in groups is less popular in Europe; it is more about getting a reward which can be shared/experienced with the direct family of the award winner,” he said.
But the silver lining is, while few expect the market to be back in force this year, DMCs are encouraged by signs it is stirring to life.
Asian Trails’ Kuenzle said: “We are not back to the good old times, however, we are quoting for many more movements this season than last season and that is a good sign. European incentives that materialise are generally with smaller participants than in the past and with smaller budgets. Clearly large European incentive movements concentrate on European destinations mainly for budget reason. What is a further good sign though is that incentive requests and materialisations from emerging markets in Europe such as Poland or Czech Republic are growing nicely.”
Hamish Keith, COO and co-owner of Exotissimo Thailand, said: “The market continues to be challenging. However, we do see more interest in Asia and more appetite for European and American clients to travel further and to more exotic destinations. That means more requests are coming our way but not necessarily more conversions as competition and price pressure is more intense than ever.
“Many of the requests we receive now do not have the budgets of a few years ago and pressure on budgets and price is often a determining factor as to which destination the client chooses and where and what they do during the event.
“We also see more competition and a strong trend for agencies to put bids out to tender with multiple suppliers. Although this is understandable, it does create more work for all concerned and this eventually translates back into cost that has to be absorbed by the end-user or the supplier.”
Kevin Leung, marketing director, Tomco Incentive & Travel Service Hong Kong, noted more enquiries for 2014 and 2015 for Hong Kong specifically rather than 10 destinations within Asia like in the past.
“I was in Germany and Portugal for sales calls recently. Europeans feel bored after restricting incentives within Europe with not more than a four-hour flight time. This explains why they have started shopping in Asia again,” Leung said.
“Unlike a few years ago, when the market was dead quiet, I started receiving enquiries at tradeshows like EIBTM last year. We had a proposal for a group from Switzerland in September, site inspection in October and arriving in early December. The lead time was short because the group was confirmed on an ad-hoc incentive budget and needed to spend it in the same year. In 2014, we hope the positive phenomenon prevails. So far, we have secured two to three European groups.”
Different pressures
While DMCs in Thailand are dealing with the extra pressure of volatile political protests, in Hong Kong many are feeling the additional burden of competing with more affordable destinations in the region at a time of budget limitations of European companies.
Lynch said: “Hong Kong is not the most reasonable destination, value-wise, in Asia, so there is constant pitching against other more reasonable, more perceived value-for-money destinations, such as Thailand, or the US, because of the weak USD now.
“We should not forget that Europe is still in a downturn, even though it is on an upward (trajectory), so for (image) purposes, trips may take place in Europe and with room rates between 100 and 150 euros a night, Europe becomes a reasonable option – and that’s without flights.”
Tomco’s Leung is also concerned that Hong Kong “keeps losing its old charm to modern building and luxury shopping malls” while his high-end groups and VIPs from Europe want the traditional and heritage look of the city. “Moreover, many new restaurants have moved into high-rise shopping malls, e.g., i-Square, where logistics is an issue when you have a big group.
“It would be great if the government could relax the policy to use public areas for incentive activities, e.g., tai chi at a local park. We held one in a local park in an early morning but was told we needed to apply for permission.”
Even in Indonesia, DMCs said they feel the pressure of competition from other destinations such as Thailand or Malaysia, which are “aggressive in promotions”, said Lolec, and Singapore, which has an established infrastructure.
“With Garuda Indonesia planning to start services between London and Jakarta this year, I do hope the airline will allot some seats for MICE players and incentive houses for a familiarisation trip to Indonesia,” said Lolec.
Asian Trails Indonesia’s managing director André Seiler is hopeful that more inventory for groups and better rates than in the past will help him to nab a few European groups.
Manfred Kurz, managing director, Diethelm Travel Malaysia, said: “To get the business, pricing is very important as European companies have cut down on their budgets. It helps that Malaysia Convention and Exhibition Bureau
provides assistance such as hosting the gala dinner, or hosting a cultural performance, as this helps to keep costs down.”
Philippine DMCs hope the lifting of the EU ban on Philippine Airlines, which allows the carrier to return to London and encourage other carriers to link the Philippines to Europe, will be a positive move for the market. But Marsman’s Ng said Haiyan has clouded this prospect.
Key challenges with European incentives
Laurent Kuenzle
CEO
Asian Trails and Kuoni Destination Management Asia-Pacific, Thailand
• Security at destination. Political unrest and instability, or the perception of it, keeps incentive movements away from destinations that are seen as unstable such as Thailand. Winners are destinations like Vietnam and Cambodia.
• Budgets. Budgets in general are limited and we need to do more with less. A challenge at most destinations in Asia.
• Profitability. With lower budgets comes more pressure on prices and to retain profitability is a challenge.
• Innovation. We constantly have to reinvent ourselves and propose new ideas to differentiate ourselves from the competition. A fun task that all our teams love, but it gets difficult in particular at saturated, traditional destinations in Asia.
Eleanor Ng
Director of tourism services
Marsman Drysdale Travel, Philippines
• Hotel rates. The Philippines is one of the most expensive destinations in Asia.
• Access. Although we had a good start with PAL returning to London, it’s not enough to encourage (European incentive trips) to move farther. Domestic flights are still too unstable.
Ganneesh Ramaa
Manager
Luxury Tours, Malaysia
• Lack of direct flights from Europe (to Malaysia). Most European travellers come to Malaysia via the Middle East, Singapore or Bangkok. It will help when Lufthansa commences its new five weekly direct flights from Frankfurt to Kuala Lumpur and onward to Jakarta from March 30. Currently, Lufthansa flies to Kuala Lumpur four times weekly with a connection from Bangkok, thus the seat allocation is shared with Bangkok.
• Malaysia also needs more destination marketing in Europe to be able to compete with the likes of Indonesia, Thailand and Hong Kong. MyCEB should provide financial support to incentive houses in Europe to print brochures and collaterals on Malaysia.
EXHIBITIONS
Exciting days ahead
Asia is the most dynamic exhibitions market worldwide, according to Mark Cochrane, UFI regional manager Asia-Pacific. And it is only becoming more exciting. Here’s his take on the three key trends to watch for in 2014 and beyond
During the past decade, the exhibition industry in Asia has consistently and without interruption grown year-on-year, and I expect that impressive growth record to continue this year. The following three trends, combined with the overall strong macro-economic outlook of Asian economies, suggest that, yet again, the year ahead looks to be a good one for the Asian exhibition market:
01
The maturing of the exhibition market in mainland China According to our research, the exhibition market in mainland China grew three per cent in 2012 (latest available data). But growth was not evenly distributed across the entire country.
Mainland China is, by a wide margin, the largest exhibition market in Asia. Of around 16.3 million net m² space sold across Asia in 2012, 55 per cent, or nearly nine million m², was sold in mainland China. And in recent years, China’s largest city markets – Shanghai, Shenzhen and Guangzhou – have tended to outperform the rest of the country. Perhaps more importantly, within individual exhibition themes or categories (e.g. furniture, electronics, fashion shows, etc.) the category-leading exhibitions grew much faster than the average.
This could be taken as a sign that the exhibition market in mainland China is headed into a period of consolidation. Higher growth rates should be anticipated at category-leading events, and in the key geographic exhibition markets.
Lower growth rates can be expected in tier-two and tier-three markets as well as at “me-too” or “also-ran” exhibitions across the country as exhibitors become more discerning with their marketing spend.
02
The impressive growth recorded in South-East Asian exhibition markets For the past three years, exhibition markets including Malaysia, Indonesia, the Philippines and Singapore have been at the top of growth charts. For example, in 2012, Malaysia grew by 8.2 per cent, Singapore by 7.6 per cent and Indonesia by 6.6 per cent. The regional average was considerably lower at 2.7 per cent.
Look for this trend to continue this year and beyond as new capacity comes online in markets such as Indonesia and Malaysia and more international organisers look to South-east Asia for acquisitions and launch opportunities.
03
Additional venue capacity This will unfold over the next several years, not just in 2014. New venue capacity will be added in some key markets.
Notable additions will include the Hongqiao venue in Shanghai which will add an incredible 400,000 m² of indoor space and 100,000 m2 of outdoor space when it opens in 2015.
Two exhibition centres will open in Jakarta in Indonesia in 2015. BSD Convention Center will have an exhibition space of 100,000 m2, while Alam Sutera International Exhibition and Convention Center will be 60,000 m².
Finally, the New MATRADE venue in Kuala Lumpur will add 100,000 m² to Malaysia’s capacity when it opens in 2016.
