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17 Aug, 2009

MICE Industry Undergoing Shakeout, But Still Optimistic

Like other arms of the travel & tourism industry, meeting planners and incentive organisers are undergoing a shakeout due to the ongoing business slump but see themselves re-emerging as a “leaner, smarter, more cost-effective, and additionally creative” sector in 2010.

Results of a survey of more than 1,000 buyers in the meetings and incentive travel sector interviewed after the IMEX trade show in Frankfurt last June indicated that they “remain divided as to current levels of demand” due to the “less settled economic climate.”

However, according to the survey results released last week, “broadly a third are doing well (depending on their country’s economy, nature of business, market mix, etc.), a third are little changed from previous years, and a further third acknowledge the negative impact of the global downturn. But the overall impression is that the worst is probably past.”

Respondents ranging from agency and association managers to corporate meetings buyers and destination marketers report a transformation into a leaner, smarter and more cost-effective industry coupled with buyers who have clearer objectives, albeit with shorter lead times and a stronger appetite for negotiation.

The survey’s overall perception was that business values and volumes are holding up reasonably well and that industry suppliers and buyers are responding with an assertive mix of creativity, proactivity and cost-consciousness.

According to IMEX, “More than 1,000 hosted buyers provided feedback within 10 days of leaving the Frankfurt show. The results showed that the average value of orders placed per buyer at the show was $353,982, with the average value of orders each buyer expected to place within nine months of the show, and as a result of attending IMEX, was $515,089.

“Factored up, this suggests that IMEX 2009 generated $375.5 million of business during the show, with an approximate $1.7 billion of business generated in the months afterward: a total business value of just under $2.1 billion.

Trends predicted by a minority of those surveyed include tighter margins leading to reduced quality, fewer events held over shorter distances and less use of four and five star hotels and facilities. Those identifying such a ‘bear’ market also envisage strong discounting, very late contracting, the survival of only the most professional suppliers, and a switch to more virtual meetings.

This outlook contrasts with the majority who believe that demand is, and will continue to be, resilient. They anticipate little change in the volume of meetings and events being held but a fresh emphasis on a pared-down approach with clients satisfied by swifter “off the shelf” rather than more complex and resource-heavy tailor-made solutions.

Said the results announcement, “Findings from those working in the performance improvement and motivation sector in particular also point to long-term resilience. Although some suggest that “the threat of losing a job is now incentive enough (to achieve targets),” others take a different view. They point to the awareness and understanding of “the finance people” and suggest that incentive programmes are still being commissioned by enlightened CFOs who understand the negative long-term impact of demoralised staff on customer loyalty and hence profits.”

Some “typical comments” from both meetings industry suppliers and buyers in the survey included:

“I see this market shake-up – in favour of sharper, more skilful and responsive suppliers – as something of a renaissance for our industry.” Others testify, “Whilst it is true that the size, levels of luxury, format, budget, duration and travelling distances are all being curtailed, the actual number of events is largely unchanged.”

According to the survey, delegates targeted for association get-togethers are expected to be selective about what they attend, and much more conscious of time away from the office. Generally an argument has emerged that at a time of downturn the perception of spending corporate resources on meetings and incentive programmes needs to be managed carefully.

However, it claimed that there were “literally hundreds of thoughtful and bullish points of view.”

Such opinions forecast strong demand for 2010, and predict leaner more basic meetings, better integration of conference calls and webcam programmes within employee motivation and communication, and the use of more competitively priced suppliers. Many association executives label their events, ‘crisis-resistant’.

Meetings generally are expected to become more ‘vital’, albeit with fewer of these deemed inessential. Such resilient demand will prove that better arguments to go ahead have been provided for decision-makers, that streamlined new meetings products have been introduced, and that issues such as value, ROI, and sustainability are being tackled satisfactorily, the survey results showed.

Some hosted-buyer respondents were quoted as saying:

<> ‘because client companies are downsizing I have received additional requests to assist with event planning and site selection’

<> ‘more last-minute bookings are arriving’

<> ‘our clients continue to meet … budgets are strictly analysed, but still are available. The answer is to be both effective and creative’

<> ‘the current economic climate provides a great opportunity for the market globally because of the good deals to be had.’

<> ‘the future is most bright for functional – not extravagant or glossy – events, and especially for domestic destinations and venues’.

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