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March 20, 2012
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FAST AND LEAN:Tight pockets and short lead times prevail




Last year’s great expectations in Asia’s MICE industry, fuelled by a strong business rebound after 2008’s financial crisis, have mellowed, thanks to the unresolved Eurozone debt crisis that has caused volatile shifts in the Asian stock markets and currencies, and multinational companies to exercise caution in their spending.

 

While event houses saw an increase in client’s spending and stronger MICE traffic in 2011, many are expecting a slowdown in 2012. David Goh, regional managing director of MCI Singapore, said: “The outlook for the global economy is uncertain and a slowdown is anticipated. MICE business will continue to grow but not at the recent phenomenal rate.”

 

Event houses in Asia told TTGmice that the slowdown was most apparent in European markets.

 

“We’ve observed that the number of Europeans heading to Singapore for MICE has dropped significantly in the last year or so. We envision this trend to flow into 2012, as Europe continues to struggle economically and its currency continues to weaken. Although we’ve received a sizeable number of enquiries from European MICE planners and firms, few have translated into actual events or bookings,” said Mauro Del Vento, general manager of Lotus Asia Tours Singapore.

 

Asian Trails Thailand incentives and inbound manager, Sumlee Anankamanee, said: “European MICE business is on the decline because of the economic downturn in Europe, particularly in Spain, Italy and Greece.

 

Multinational companies in those markets have cut budgets. Some did so because of poor corporate performance, while others did not want to be seen as big spenders in hard times.”

 

However, Asia’s MICE players are certain that the region itself will keep the industry buoyant.

 

Robert Guy, managing director, Singapore & Malaysia, Destination Asia, believes that the “slight slackening in requests and demand from the UK and continental Europe” will be soothed by robust business from other markets, particularly Australia.

 

DMC Bali Plus also expects most meetings business to come from Asia-Pacific, with Australia putting forth a stronger showing. “Overall business will be good for us. What we need to do is be proactive in our marketing and stay ahead of the competition by offering quality service and innovative suggestions,” said the agency’s general manager Marten Habbeling.

 

Asian Trails Thailand’s Sumlee said 2012 would see more incentive movements from Asian source markets such as Singapore, Jakarta, Hong Kong, India and China.

 

Many other Asian MICE players also see China as a gold mine.

 

Associated Tours Hong Kong vice president, Ken Chang, said: “China seems to be the only place that is immune to the recent financial crisis so far. Domestic consumption is still growing, and as a result we are handling more MICE business from China. We are waiting for the market to mature, which will allow business to be carried out in a more systematic and organised way.”

 

Chang expects the winds of change to sweep in soon, as his company is already seeing a growing number of professional Chinese MICE companies and clients.

 

“China will continue to be an important source market for Hong Kong,” said Julie Yeong, director of marketing, JW Marriott Hotel Hong Kong. “To cope with the demand, the hotel has a dedicated sales team which specialises solely in the China market.”

 

Stephen Cokkinias, general manager of The Ritz-Carlton, Kuala Lumpur, noted that the Chinese market had been growing every month.

 

Meanwhile, in destinations where prices have been inflated by new attractions and strong demand, inbound MICE operators are worried. In Singapore, where new tourism infrastructure rang in stronger arrivals and pricier hotel rates – arrivals in 3Q2011 grew 15 per cent year-on-year, while average room rate rose 16 per cent – event organisers expressed concerns that rising prices could dampen potential business growth.

 

Lotus Asia Tours Singapore’ Del Vento said “a significant number” of clients had chosen to hold their events elsewhere in Asia, “as rates charged by hotels and venues in Singapore put them off”.

 

Dennis Law, managing director of Star Holiday Mart, said Singapore could enjoy stability or growth in its Asian MICE markets in 2012, “provided Singapore hoteliers do not hike their rates as enthusiastically as they had in the last few years”.

 

Law added: “It is important for all stakeholders to re-evaluate how they conduct their business given that there is tremendous uncertainty on the horizon and clients’ budgets are tightening.”

 

The threat of high prices is keeping Michael Ziemer, general manager of The Excelsior Hong Kong, on his toes too.

 

“Since holding an event in Hong Kong may be more expensive, organisers may take their events to other destinations and this will affect our business. Clients will also bargain for a lower price. We will have to extend competitive packages during specific periods and partner our sister hotels in nearby cities such as Macau and Sanya to offer creative packages.”

 

Rully Rachman, director of sales and marketing, Hotel Mulia Senayan Jakarta, told TTGmice that his hotel had benefited from corporate groups that were put off by high prices elsewhere and took their events to the Indonesian capital city instead. “Destinations such as Singapore are getting more expensive and it has been hard to secure guestrooms and venues there,” he said.

 

Rachman added that Jakarta would continue to see growth in regional and international events in 2012 because the city had stepped out of the shadow of security breaches and Thailand’s “political and domestic issues had resulted in business to Indonesia”.

 

“We are seeing more IT-based MICE business. Many of the IT firms from India see an affinity with Malaysia due to the latter’s sizeable Malaysian-Indian population. Malaysia’s unique selling point is its ethnic diversity.

 

Indonesia’s positive economic outlook has also been credited for brighter expectations among the destination’s MICE players. Rini Stoltz, director of sales and marketing, Grand Hyatt Jakarta, said Indonesia would see a rise in corporate meetings and conferences that are related to economic investments.

 

Meanwhile, short lead time continues to plague Asian meetings and incentives players.

 

“We have to pull association meetings together in a couple of months instead of one or two years in the past. It’s tough to organise meetings in less than six months, as it normally takes nine months to a year to organise small meetings and even longer for bigger ones. Given the economic problems in Europe and North America, our clients are taking a cautious stance and are not planning too far ahead. Fortunately, we have our core events that will keep us going,” said Nancy Tan, managing director of Singapore’s Ace-Daytons Direct.

 

Explaining why events were being booked so close to execution date, Debrah Pascoe, director of sales and marketing, Shangri-La Hotel, Singapore, said companies were unwilling to “commit and then incur penalties if they cancel”.

 

For Malaysia-based Discovery Overland Holidays product development manager, Kingston Khoo, the dip in lead time is paired with greater demand for competitive pricing by increasingly savvy clients. “These trends have emerged as a result of increased wealth of information and ideas available to clients, coupled with the softer economic outlook for 2012,” Khoo explained.

 

Events in 2012 are also expected to shrink in attendance and scale, noted some players.

 

DMC Bali Plus’ Habbeling said short meetings that run for three days would dominate in 2012, and although there would be more corporate event movements this year, most would involve smaller groups or would be half-day teambuilding programmes with small budgets.

 

He added that such trends were already present in late 2011.

 

According to Shangri-La Hotel, Singapore’s Pascoe, corporate events at the hotel were being trimmed down to “meetings and perhaps one cocktail party for the welcome”.

 

Pascoe said: “There has been a noticeable reduction in the number of organised dinner events. Instead of organising F&B whereby the cost is borne by the company or event organiser, there is an increase in delegates dining at leisure, which reduces the registration or delegate fee.”

 

Based on observations in late 2011, The Excelsior Hong Kong’s Ziemer also expects cautious spending this year.

 

 

“We noticed that more incentive groups had booked only guestrooms with specific meals, without offering allowances for participants to spend on their own. The number of lavish activities organised for participants was reduced too. I believe that in 2012, more organisers will look for destinations that offer cheaper rates and where their main businesses are located so as to reduce travelling costs.”

 


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