- Asian companies keep budgets depressed for meetings and events
- Companies seek savings from nearby destinations and simplified programmes
- High airfares continue to be a major obstacle for corporate events
A combination of business uncertainty and rising cost of operations has led Asian companies to maintain a tight meetings and events budget this year and the next, forcing event agencies and DMCs to recalibrate programmes and offerings to win projects.
Michael Chong, managing director of GEMT, a DMC with offices Singapore, Thailand and Myanmar, told TTGmice that budgets this year are down 20 to 30 per cent compared to years before, with some half of what they used to spend.
“This is a challenging situation for us and our tourism partners, especially since the cost of travel has gone up post-lockdown. Airfares are persistently high over the past few years while fuel prices are also up, causing ground transport fees to rise,” explained Chong.
GEMT’s customers are largely Asian-based companies.
Justin Culkin, business development director of Beijing-based A Trails, shared the same observation. Many multinational companies as well as small- and medium-sized enterprises in China have budgets that are 20 to 30 per cent smaller than pre-Covid days.
Cutting corners
When asked how cost-conscious clients were balancing tight budgets with event needs, Culkin said preference for domestic incentive trips in China was on the rise.
“For overseas travel, North Asia and South-east Asia remain popular due to flight connectivity and good value-for-money offerings,” he said, adding that savings were also sought from a reduction in expenditure on gifts and downgrading accommodation class.
Irene Huang, CEO and owner of Flying Travel Service based in Kaohsiung, shared that some of her corporate incentive clients from Vietnam and the Philippines had trimmed down entertainment, hotel, and transportation expenses.
Kaohsiung-based Welcome Wonder’s inbound sales director, Saisuri Wong, added that some companies are choosing local five-star hotels over international equivalents for savings while their programme features a mix of standard meal options and higher-end experiences to better manage expenses.
Chong shared that as airfares would not budge while ground transport arrangements could go no lower due to fuel prices, he and his team have had to rely on strong relationships with hotel partners to come up with affordable event packages.
Shifting event groups away from four- and five-star hotels is not an option, according to Chong, as three-star hotels often do not have a large room inventory or sufficient function rooms to support the types of corporate groups GEMT typically serves.
“Our hotel partners understand the current situation and are doing their best to support,” said Chong.
Jason Pinto, director of business development with Pullman Bangkok Hotel G, told TTGmice that the property is being “very flexible” with enquiries from agent partners.
“We are in the business together. They (the agents) need us as much as we need them, so we will be as flexible with their requests as we can,” added Pinto.
However, the 469-key hotel is in high demand, running about 80 to 85 per cent occupancy throughout the year, with bookings from both leisure and corporate segments.
“We will have to see what we can do. If F&B cost is high and fixed, we could play with room rates or talk to our ground partners to see how else we could support the client,” he added.
Yet, not all hotels are able to lower rates substantially to meet reduced budgets.
The Slate, a five-star hotel in Phuket, is doing “excellently” across its peak months from November to April, with repeat leisure and corporate clients ready and willing to pay.
David Barrett, events consultant with the property, said demand for Phuket is strong enough to “sustain Phuket hotels without them having to drop rates”.
“If corporates are looking for a three-star rate in a five-star hotel here, then they are in the wrong destination. If the budget isn’t there, then corporates should consider other destinations in Thailand,” stated Barrett, who added that there are many beautiful and more affordable alternatives in the country.
When quizzed if corporate events insisting on Phuket could be shifted to off-peak months for better rates, Barrett warned that the rain during Phuket’s quiet period could be disruptive for events.
“Quite frankly, the issue is with the airlines. Airfares are just too high, and it should not be the responsibility of hotels and DMCs to dump their rates to make it possible for their clients,” said Barrett. – additional reporting by S Puvaneswary
