MICE Tourism

Spring 2011
Enrollment key: MICE08
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Lecture 1

Introduction to Business Travel

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Objectives
 To acquire the principal definitions in business travel  To appreciate the differences between business travel and leisure travel  To be aware of the structure of the business travel market  To discuss the main impacts of business travel, and the major opportunities, challenges and threats affecting this industry

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Do you know that

 Over 6,500 events took place in 2007, a rise of approximately 800 over 2006?  Average spending annually by associations, big companies = 3 billion USD?
(Source: International Congress and Conference Association - ICCA)

 In 1 year, the British spent almost 46 million nights away from home travelling on business?  At the top end of biz market, individuals are making over 20 biz trips/ year?  Business travel was one of the earliest forms of tourism?

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International Business Arrivals to Vietnam

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Principal Definitions
 What is Business Travel? All trips whose purpose is linked with the travellers employment or business interests Business Travel Individual Business Travel
Regular and necessary part of employment Often individual travel Nondiscretionary/ fixed destinations Presentations; consultations; investigations; one-to-one meetings

Business Tourism/ MICE

Occasional feature of employment Often group travel Discretionary/ floating destinations MICE

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Principal Definitions - MICE

 Meetings


Conferences, training seminars, product launches, annual general meetings, conventions Held by companies and associations in order to facilitate communication with and between their employees, customers, shareholders and members Usually luxurious and often to attractive destinations Trips for employees receiving from their employer as a prize related to their job/ a means of motivation Corporate hospitality: For creating goodwill and building rapport with VIP customers and potential customers Exhibitions: trade fairs, trade shows, customer shows to which business send sales staff in order to display their products to potential customers to buy and/or to receive expert information

 Incentive trips
 

 Corporate hospitality/ Conferences, conventions



 Events/ Exhibitions


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Business Travel
 There are forms of business travel that are not business related;


Motivation is not to discuss jobs related issues , i.e. Associations meet regularly for members to share an interest, the same faith or the same hobby

 There are forms of business travel that involve very little travel


One-day meetings held in the seminar room of a local hotel; a party for a group of clients at an entertainment venue within the city

 Very often, elements of two or more categories are combined in the same event: e.g., exhibitions with conference 3 advantages
 

Exhibition earns revenue to offset the cost of the conference Exhibiting companies can present their products to an interested market Delegates have an additional reason for attending the event

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Business travel vs. leisure travel

Leisure travel
Trip payment Where When
The traveller both customer and consumer

Business travel
The employer

But
Self-employed/ those attending events paid for themselves Incentive travel similar to leisure Many extend into evenings and weekends

Mainly coastal, mountain, urban, rural In leisure time Classic holiday periods & weekends Quite infrequently but last longer Holidays - a few months/ Short breaks a few days in advance Friends and family

Largely in cities in stable, industrialized destinations In working time Mainly outside holiday periods & weekdays Quite frequently but for short periods Large events organized years in advance Usually unaccompanied (individual business travel); or with colleagues (business tourism)

Trip planning Travelling companions

Individual business travel at very short notice Family members may be included in incentive trips or conference attendance

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Business travel vs. leisure travel

Business tourist Consumer, not customer Not choose destination Frequent travels Shorter duration of trips Very short to very long planning period - Less budget conscious - More experienced and demanding   Leisure tourist - Both customer and consumer - Choose the destination - Infrequent travels - Longer trip - Medium time of planning - Cost conscious - Less experienced and demanding

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Business travel vs. leisure travel

Links exist btw biz & leisure tourism: - Leisure tourist can be the business tourist in their working lives When working day is over, biz tourists become leisure tourists Conference programs often have social and cultural programs; and provide visitors with opportunities to relax and network together After business time, biz tourists may choose to stay more days as leisure tourists Biz tourist may take along a partner with them who have time for leisure activities

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Structure of the business travel market

Buyers

Intermediaries

Business travel

The end consumers Business travel destinations

Suppliers

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Structure of the business travel market

 Top 10 meeting countries in 2009 (Source: ICCA)  1. United States (595 meetings) 2. Germany (458 meetings) 3. Spain (360 meetings) 4. Italy (350 meetings) 5. United Kingdom (345 meetings) 6. France (341 meetings) 7. Brazil (293 meetings) 8. Japan (257 meetings) 9. China (245 meetings)  10. Austria (236 meetings)  Top 10 meeting cities in 2009 (Source: ICCA)  1. Vienna (160 meetings) 2. Barcelona (135 meetings) 3. Paris (131 meeting) 4. Berlin (129 meetings) 5. Singapore (119 meetings) 6. Copenhagen (103 meetings) 7. Stockholm (102 meetings) 8. Amsterdam (98 meetings) 9. Lisbon (98 meetings)  10. Beijing (96 meetings)

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Demand for business travel

 Determined in part by the status of national and, increasingly global economy  More stable than holiday travel and less influenced by fashions  In some cases, spending on business travel can actually rise when the economy is slowing down  Derived demand (# leisure travel final demand)  Income- inelastic  Dependant on the level of government taxation of business expenses

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Impacts of business travel When we have a convention in town, it is as if an airplane flew overhead dropping dollar bills on everyone.
(Smith, 1990 in Davidson and Cope, 2003)

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Economic impacts of business travel

 Higher spending levels leisure travel
 

greater per capita vale than

Daily expenditure (biz : leisure travelers) = between 2:1 and 3:1 Average expenditure of international meetings = 343 USD/ day/ head UK: 591 million/day (177 million all average visitors)

 Induced effects generated by the large number of ancillary activities linked to conferences and exhibitions (=1.5 2 times the direct turnover)  Spending spreading more evenly throughout the year and complementary to leisure demand during troughs (low season, weekdays)

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Impacts of business travel - Image

 Putting the destinations firmly on the political map  Focusing the attention of key groups of decisionmakers upon the destinations potential for professional and business location and development  Establishing and reinforcing the image of the destination as a place to visit for leisure purposes

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Impacts of business travel Environmental

 Good geographical spread on minimal impact on fragile natural environment  Typically distinguishable business visitors in dress, behaviour and use of facilities  More sustainable nature: use of public transport like trains (domestic business travel)  On the other hand, for international business travel by air the most highly polluting mode of transport Hidden costs paid by the society

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Impacts of business travel Social

 Hidden economic cost: aviation fuel and airline tickets = no VAT the society as a whole subsidising air transport  Health cost associated with noise and air pollution  Costs of building and maintaining the transport infrastructure to serve airports  Direct and in direct subsidies to the industries to supply the air transport sector

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The costs of being a business destination

 Costs to attract business visitors  Substantial investment in specialist facilities (for conferences and trade fairs)  Costs to destinations of various externalities of hosting certain types of event

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Challenges facing the business travel market

 Political challenges


Lack of recognition and contribution from national and local government Lack of standardised and properly defined terminology Difficulties in reliable statistics and regular research Information and communications technology as an actual substitution for business travel E.g., downloading presentations; goods viewed from a distance; videoconference

 Market intelligence
 

 Technology


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Business travel industry: Opportunities

 Demand side
  

Increasing volume of world trade A relaxation of border controls A process of internationalisation of not only businesses but also associations Asia (e.g. Hong Kong, Korea, Seoul, Singapore, Taipei, Thailand) is challenging Europes pre-eminence Governments increased awareness of MICE industry Highly active local associations and businesses (VMIC, Saigontourists) Stable political system; attractive diversity in terms of destinations and cultures, The presence of many company head offices, institutions and associations + increasing number of business visitors to Vietnam Tourism infrastructure, especially the hotel and resort system, is growing rapidly Equipped themselves with facilities and services Experience in hosting international events

 Supply side - Vietnam



  

 

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