Embed Size (px)
Citation preview
The Global Meetings & Events Exhibition29 November – 1 December 2011 Fira Gran Via, Barcelona, Spain
Organised byEIBTM is part of the Reed Travel Exhibitions Meetings and Events Portfolio
www.eibtm.com
EIBTM 2011 Industry Trends and Market Share Report
An evaluation by Rob DavidsonEIBTM Industry Analyst
EIBTM 2011 INDUSTRY TRENDS AND MARKET SHARE REPORT
BY ROB DAVIDSON
PREFACE
Inevitably, this year’s edition of the EIBTM Industry Trends and Market Share Report is dominated by the state of the global economy, which has increased in volatility since our last report. The prevailing mood, in the meetings and events industry as in the economy in general, is still one of recovery and confidence. But it is an increasingly uneven and uncertain recovery, the pace of which varies greatly from world region to world region.
This has been a year of two distinctive halves, which began optimistically, in the widespread belief that the worst was over, encouraged by a profusion of positive projections for the global economy as a whole. But by the second half of 2011, revised and updated data pointed to a loss of momentum across a wide range of national economies. Only two years into the post-‐crisis recovery, the data indicated that the global economy had once again weakened as world GDP growth slowed, raising doubts about whether the recent expansion of economic activity in the advanced economies was really sustainable.
As the year draws to a close, fears of stalled growth or even a double-‐dip recession have returned, as much of the most recent data suggests that the advanced economies in particular may be heading into another downturn in economic activity.
Macroeconomics notwithstanding, this has been a year of steady growth overall for the meetings and events industry, with much of the data indicating that both demand and price levels are rising. Demand in many sectors is now close to 2008 pre-‐recession levels, and business confidence remains high among meetings and events professionals. It may be that, given our experiences of the past few years, we have learned to operate effectively within volatile markets by drawing on our reserves of innovative solutions and by cooperating with our stakeholders in new and imaginative ways, in order to meet head-‐on the challenges we have encountered. There can be no doubt that this spirit of cooperation and collaboration has already created stronger intra-‐industry relationships that will last for years to come.
Rob Davidson
EIBTM Industry Analyst
Senior Lecturer in Events Management, University of Greenwich.
THE GLOBAL ECONOMIC CONTEXT IN 2011
2011 began optimistically, with surveys showing high levels of business confidence. For example, 75 percent of the 665 senior finance executives in 11 countries who responded to the 2011 American Express/CFO Research Global Business and Spending Monitor, published in May, said that they expected their local economies to expand in the following 12 months.
Contrast this positive attitude with the International Monetary Fund’s update of its World Economic Outlook, released on 20 September. It stated:
‘The structural problems facing the crisis-‐hit advanced economies have proven even more intractable than expected, and the process of devising and implementing reforms even more complicated. The outlook for these economies is thus for a continuing, but weak and bumpy, expansion. Prospects for emerging market economies have become more uncertain again, although growth is expected to remain fairly robust, especially in economies that can counter the effect on output of weaker foreign demand with less policy tightening’.
KEY MARKETS
The US
The economic recovery in developed economies has proved to be frustratingly weak and slow, and this is seen very clearly in the US, with its stubbornly high unemployment rate.
However, there were a number of positive key performance indicators for the US economy, particularly in the early months of 2011. For example, the American Express/CFO Research Global Business and Spending Monitor indicated that after collapsing during the 2008–2009 recession, US company profits in the second quarter of 2011 had posted their strongest and fastest recovery in more than 50 years. As a share of GDP, profits, which had rocketed up to 12.9 percent of GDP, were at a level not seen since the early 1950s. US businesses had been able to post record profits, in part, due to the strength of their overseas operations.
Europe
The same source (American Express/CFO Research Global Business and Spending Monitor) was among several indicating that European business confidence was already lower than that of other world regions, even in the first half of 2011: only 61 percent of their European respondents anticipated economic expansion over the next 12 months, compared with three-‐quarters of all respondents all around the world.
Now, as we approach the end of this year, it is clear that the European economy faces multiple risks. Most significantly, the Eurozone sovereign debt crisis has yet to be convincingly contained, and there is a considerable risk that financial market contagion could drive the European economy back into recession.
Deloitte Research’s Global Economic Outlook for the 4th quarter of this year noted that Eurozone growth was slowing and that business sentiment had deteriorated over the summer amid signs of weakening global demand and disappointed hopes of solving the sovereign debt crisis. In the opinion of the authors:
‘This is a crucial time for Europe. If Eurozone leaders now act decisively to stabilize financial markets and turn their plans for closer cooperation into action, it could halt the downward spiral of deteriorating confidence and weakening activity. Real economic indicators are not yet indicating a recession, but markets remain unsettled by deteriorating sentiment and speculation about the future of the monetary union’.
The latest official forecast from the European Commission still anticipates 1.6 percent GDP growth for the Euro area in 2011. Current economic indicators support this view, with the economy still benefitting from strong momentum in the first half of 2011. Also on a positive note, industry orders for the Eurozone are still up 8 percent from a year ago and well above 2009 levels — despite declines in August and September.
Nevertheless, the risk of a return to recessionary times in Europe cannot be ruled out, and it is clear that any such slowdown would undermine the performance of other world regions and would almost certainly bring down corporate profitability in the US.
The emerging economies
Muscular economic growth has dominated this year in most developing economies, which over recent years have become the engine of the global recovery. Most are currently enjoying both strong domestic demand and a healthy outflow of exports, even if their growth rates have moderated in 2011 – a trend widely foreseen, as many emerging market economies have been tightening monetary policy in response to rising inflation, in the effort to engineer a ‘soft landing’ for themselves. For example, China’s tightening monetary policies began a year ago when policymakers raised interest rates and bank reserve ratios in the effort to fight inflation and slow growth. As a result, China’s growth rate is expected to slow from 9.1 percent in the third quarter to 8.4 percent in the fourth quarter (Financial Times).
Meanwhile, Brazil is set to overtake the UK to become the world’s sixth biggest economy this year, according to projections from the Economist Intelligence Unit. The EIU’s chief economist on Brazil attributed that country’s surge up the table to a growing consumer class and a booming trade relationship with China, a country in great need of commodities from Brazil, such as soya and iron ore. In the longer term, the EIU forecasts suggest that Brazil’s economy will be bigger than any in Europe by 2020 when it overtakes Germany to become the world’s fifth biggest economy, after China, the US, India and Japan (Daily Telegraph).
Key market segments
The overall performance of the corporate meetings and events industry in particular, is determined to a considerable extent by the prevailing market conditions experienced in a number of key client sectors.
-‐ Pharmaceuticals
For the pharmaceuticals industry in Europe, the Espicom Outlook for Pharmaceuticals report predicts that the leading markets are projected to average a Compound Annual Growth Rate of 2.1 percent in US dollar terms up to 2016, which will represent a combined pharmaceutical market value of over US$240 billion. Demand for pharmaceutical products is set to increase over the coming years in order to fulfil the health needs of the ageing population. However, as governments increasingly introduce or expand generic substitution as a cost-‐containment measure, the trend towards generics is set to continue, with several major patent expiries coming up. In addition, recent austerity measures, introduced to deal with the impact of the economic recession, have included drug price cuts or discounts in markets such as France, Germany, Greece, Italy and Spain. These price cuts could limit market growth in Europe. More positively, according to the Espicom report, the hospital market is expected to be the main driver of growth in Western European markets, with increasing investment in expensive, innovative products to treat chronic diseases, such as cancer. The investment from hospitals into new drugs should offset the falling prices of mature drugs that are soon to go off patent. There are also opportunities to further explore biotechnology advances and reformulations, which will drive the market forward in the long term.
But is the emerging economies of China, India and Brazil that are predicted to be the fastest growing regions among developing countries for the pharmaceutical industry. Ageing populations, growth of chronic diseases, expanding healthcare insurance coverage, urbanisation and increasing investment in rural healthcare services are major drivers for growth, according to the Global Pharmaceutical Industry Outlook Survey for 2011–2012.
-‐ Automotive
As a consequence of the massive structural change in the automotive industry that followed the global economic meltdown of 2008, the landscape is widely expected to be ruled by global automakers and suppliers based in the six major auto markets – China, India, Japan, Korea, Western Europe and the US. But we are witnessing a radical shift in the location of production facilities, with automakers continuing to shift their production facilities from high-‐cost regions such as North America and the European Union to lower-‐cost regions such as China, India and South America. As a result, China and South America together are projected to represent more than 50 percent of growth in global light vehicle production in the auto industry by 2015, according to the Zacks Equity Research Auto Industry Stock
Outlook. The two underlying factors behind this location shift in the auto industry are production costs and the demand factor. The cost of labour in emerging auto markets continues to be a fraction of that in the developed world; and many of those low-‐cost regions have high potential for growth.
Nevertheless, established manufacturers have also experienced a measure of growth in 2011. In the US, Chrysler, Ford and GM saw a recovery in sales. In the first seven months of 2011, Ford’s sales went up 11.7 percent to 1.25 million vehicles, while sales of GM and Chrysler grew 15.7 percent to 1.48 million vehicles and 21.2 percent to 751,958 vehicles respectively, during the same period.
But the cyclical leverage of the automotive industry nevertheless exposes it to the uncertain outlook for the US and global economy. While the Asian countries, especially China and India, are expected to account for 40 percent of growth in the automotive industry over the next five to seven years. According to Global Insight – a US-‐based provider of economic and financial information – 14.7 percent of growth is expected to come from India and 8.3 percent from China by 2013 (compared with 2008 levels) based on their rapidly growing economy. Domestic automakers are likely to rule the key growth market of China as the government plans to consolidate the top 14 domestic automotive players into 10. These automakers would capture a share of more than 90 percent in the local market. Meanwhile, Indian automakers are also venturing into international markets by introducing innovative products that could meet consumer demand abroad.
-‐ Financial services
Emerging from the global turmoil of the financial crisis and the worst global economic downturn of recent times, financial services companies are facing a multitude of external forces that continue to change the industry and impact individual companies. These forces range from new regulatory requirements aimed at stabilising the financial system to the development of ongoing rules to counteract corruption, terrorism, or bribery.
The key forces currently shaping the global financial services industry are analysed in the Deloitte Touche Tohmatsu Limited Global Financial Services Industry (GFSI) Group’s survey, Harnessing the Forces of Change, which highlights the changes affecting the world’s banks, securities firms, insurance companies, and investment management firms. As a result of the credit crisis, many financial institutions were forced to merge, dissolve, or reconsider their business models to maintain their operations. But while some well-‐known companies shut down, other new ones have emerged, creating some unique competition in the marketplace. Services that were once offered exclusively through major banks or insurers are now being offered by a new array of non-‐traditional and overseas entrants and this has created a new, more competitive landscape, according to the GFSI Group’s research.
In addition to new entrants, an increase in consolidation can be observed, with key players becoming global, and smaller national and regional companies becoming more strategic in
their acquisitions by buying failed and weaker entities. Faced with the increased competition, traditional financial services companies are reacting in many ways, such as seeking expansion overseas. The GFSI Group’s survey respondents indicated that the top four countries targeted for expansion were China, India, Brazil, and Russia, respectively, reflecting the belief that the BRIC countries are still among the fastest growing emerging markets for financial services.
MEETINGS AND EVENTS TRENDS IN 2011
ECONOMY-‐RELATED TRENDS
Globally, the prevailing mood of the meetings and events industry in 2011 has been characterised by cautious optimism, as clients’ use of their strong corporate profits has in part translated into greater investment in business events overall.
One international survey demonstrating the upbeat mood of our industry in early 2011 was the Meeting Professionals International FutureWatch report, which included insights from more than 450 meetings industry professionals in 20 different countries. It showed that:
* 58 percent of respondents say the number of meetings will increase this year, while 37 percent say it will stay the same, and only 5 percent say it will decrease
* 18 percent expect a significant increase in budget this year, 39 percent foresee a slight increase and 24 percent sense that budgets will remain the same
* 25 percent say that demonstrating ROI from meetings, events and incentives in detail—and in a way that management fully understands—is either their most or their second most important priority.
Corporate meetings
Advito is one of several sources reporting that 2011 was set to be a year of healthy recovery for corporate travel in general, including meetings, with renewed enthusiasm for travel, especially to and from the BRIC (Brazil, Russia, India and China) and the other developing markets currently driving global growth. Support for this view came from the Global Business Travel Association’s Business Travel Index (BTI), which stood at 112 for the first quarter of 2011, and reached 114 in the second quarter – compared with 108 in the second quarter of 2010. In fact, while the economy slowed in the first quarter of 2011, the BTI was expected to reach its pre-‐recession peak of 120 a quarter sooner than expected – in the second quarter of 2012. Part of this increase was expected to be driven by a higher projection for travel price increases, which would push spending higher over the forecast period.
However, opinion is divided on how close attendee numbers are to their peak levels as seen in 2008. While the Advito study claims that booking numbers almost returning to 2008 levels, an ACTE/Accor White Paper notes that although the overall number of meetings has returned, the average number of delegates per event has not reached the levels achieved before the global financial crisis. According to the White Paper, this has less to do with the health of the market than it does with the structure of companies after the crisis:
‘Most companies are simply not the same size with the same number of employees, with the result that the average size of meeting is lower than it was in 2008’.
The same source also contends that the prevailing attitude towards productivity, with an expectation of more output per employee, has also had its toll on the length of meetings:
‘Those conventions that used to be three room nights are often now two, and the number of day meetings is growing at the expense of residential ones’.
Most sources, however, agree that, in terms of numbers of meetings at least, there has been greater demand for such events in 2011 than in 2010 (itself a year of recovery). According to Advito’s analysis, this is because improved business results have given some companies the confidence to increase their overall meeting spend – with the result that supply is beginning to tighten (particularly in mature markets with high demand such as London and New York) owing to sustained increases in occupancy levels. As a result, meeting planners are beginning to encounter availability challenges with increasing frequency, particularly heading into 2012.
As demand continues to impact availability, particularly in primary markets, meeting organisers are increasingly considering secondary or even tertiary destinations. Another distinct trend has been rising demand for meetings in emerging markets, such as China and India. As these countries’ economies expand, Western companies are holding more meetings in them to support their growing local businesses.
However, Advito also notes that while some companies have loosened their purse-‐strings slightly after the conspicuous austerity of meetings during the recession, spend per meeting has been relatively flat. Consequently, meeting planners are being challenged to deliver the same quality of events as in previous years in spite of increasing supplier costs such as hotel rates, food and beverage, and airfares.
The American Express/CFO Research Global Business and Spending Monitor results support the Advito contention that corporate travel budgets have generally been on the move up in 2011. In last year’s Monitor, only 26 percent of respondents said they had plans to increase travel spending in the year ahead. This year, 41 percent of all respondents say they expect their companies to boost spending on business travel.
However, it is interesting to note how that additional expenditure is being used. The Monitor’s authors conclude that for the majority of the companies surveyed, revenue-‐supporting trips are clearly a priority. This year, 34 percent of all respondents said that they expected to increase spending on travel for meetings with new or potential clients. Meanwhile, the categories targeted for the biggest decreases in spending this year include travel for staff meetings and other internal business (33 percent), and travel for industry conferences, management retreats, and professional development (32 percent).
American Express/CFO Research Global Business and Spending Monitor
Association sector
The buoyancy of the corporate meetings market finds its echo in the trends noted in the association conferences market in 2011. With the ongoing creation of considerable numbers of new professional associations, from the Society of Robotic Gynecological Surgery to the European Network for Hyperkinetic Disorders, for example, the market for such events is expanding. Between April 2011 and November of this year, the Union of International Associations added over 500 organisations to its database, about 200 of which run regular conferences.
One source clearly indicating the positive direction being followed in the market for association conferences is the INCON Annual Survey of the Global Association Conference Market. INCON is a partnership of the world’s leading conference organisers and event management companies, with members operating in 36 countries worldwide.
The chart below summarises the business sentiment of those responding to INCON’s third annual survey, demonstrating improving operating conditions in this vital segment of the meetings industry.
The survey results note that this improvement in business levels is matched by an increase in the cost base of association conferences, particularly for housing and venue hire, two key elements in the overall cost of running such events. However, delegate numbers are up and all INCON partners reported that they expected to hire new talent in 2011 in anticipation of a good year. Event attendance was expected to rise this year with 50 percent of survey respondents forecasting an increase in attendee figures for 2011 events compared to 2010; 25 percent expecting delegate numbers to remain on par with 2010; and only 25 percent anticipating a decline in attendance. Most respondents reported that they estimated that this decline would materialise in the form of a less than 10 percent reduction.
Other significant results from the INCON survey included:
• Revenue from exhibitions remains stable and very close to last year’s figure.
• Revenue from housing is expected to see a marginal increase in 2011.
• A marginal increase in sponsorship is also expected -‐ by 20 percent in some instances.
Incentive Travel
Indications have emerged this year suggesting that the incentive travel market is finally stabilizing, with suppliers and managers gaining greater scope for the designing and implementing of incentive programs, as the influence of inhibiting factors in the general marketing environment have declined in importance. For example, this year’s Incentive Research Foundation Spring Pulse Survey shows that, compared to the previous four survey periods beginning July 2009, factors such as the client company’s financial forecast, competitor reactions, and sensitivity to program extravagance have weakened in the degree of influence they have on the quantity and quality of incentive programs.
Sensitivity to company forecasts has dropped below pre-‐recession levels as has sensitivity to competitor reactions. This is most likely due to better confidence in forecasts and less volatility in the marketplace. Of note, however, is the fact that sensitivity to extravagance has stayed the same since the last survey, with 64 percent of respondents to the Incentive Research Foundation’s survey agreeing that it influences their program decisions. Overall, the economy’s impact on program planners’ ability to implement incentive travel programs is stabilizing with about 66 percent saying that the economy has either no impact or a positive impact. Still, a full quarter of respondents view the economy as having a slight or very negative impact on their programs.
The evidence cited by the Grass Roots Group’s Meetings Industry Report leads to a similar conclusion:
‘To say that the [incentive travel] market has returned to the good old days of pre-‐recession would be misleading, however. In particular, the more lavish client events are yet to come back. Companies remain very rate-‐sensitive and want venues that are fit for purpose rather than those that impress’.
Regarding choice of destination for incentive programs, the Incentive Research Foundation Spring Pulse Survey shows that there was little change since the previous survey. Over 50 percent of program planners said they would not be changing their destination choice. About a quarter said they will be moving from an international to a domestic location and a little over 10 percent will be moving back to an international destination.
Involvement by procurement is beginning to normalize as well with over 50 percent of respondents in the Spring 2011 survey seeing no change or only a slight decrease in procurement’s involvement -‐ significantly different from the Autumn 2010 survey, in which 64 percent of respondents saw an increase in procurement’s involvement.
REGIONAL VARIATIONS
The US
Early 2011 surveys of US meeting planners displayed a degree of optimism that this year would be a better year for meetings than the previous 12 months. For example, of the 952 respondents to Convene’s annual Meetings Market Survey, only 11 percent expected their meeting budget to decrease in 2011 (compared to 21 percent who projected budget cuts in 2010), while 65 percent (compared to 50 percent in the previous year’s survey) expected no change. Twenty-‐four percent expected to work with a bigger budget in 2011.
Another indication, in the same survey, that US meeting planners were feeling more positive in their outlook came in the form of a greater expectation that their meetings would be held beyond US borders in 2011. 48 percent (up from last year’s 44 percent) of respondents reported that they would be holding meetings outside the US in the future. The international destinations that respondents were most likely to consider were:
Canada 78%
Western Europe 40%
United Kingdom 37%
Asia 36%
Mexico 34%
Caribbean 27%
Eastern Europe 26%
South America 25%
Australia/Pacific Rim 25%
Bermuda 13%
But according to Meetings Professionals International’s August Business Barometer, economic unrest in the US became the main concern for meeting professionals over the summer months. According to the survey results, 69 percent of people said the US Congress, US economy and the global economy were seen to be the most influential trend on meetings. The uncertainty regarding the debt limit and its impact on the financial sector overtook rising travel costs as the most important factor impacting future business and events.
Europe
On the whole, the travel recovery, for all purposes, continued in Europe for most of this year. However, by the end of 2011 it became clear that the rate of expansion was slowing. According to the European Travel Commission’s Trends & Prospects Quarterly Report for Q3, visits, nights, and hotel occupancy data told a consistent story of strong performance that was tapering off as the year progresses. Visits, for all purposes including business, grew approximately 6 percent through the first half of the year. By the end of 2011, the ETC expected that international visits to Europe would have surpassed records set in 2008.
European airlines also enjoyed a successful year. Data from the Association of European Airlines show that European airlines posted robust RPK growth even in the weeks outside those compared to the air space closures of April 2010. Since April, RPK growth was relatively stronger than the weeks prior to April. With only one exception, weekly growth rates were above 6 percent and averaged a rate of nearly 8 percent over this period.
The European Travel Commission’s Report also cites data from STR Global indicating that for the year through August 2011, pan-‐European hotel occupancy was 3.7 percent higher than the year before, including some slowdown from the first part of the year. Slowing has been most noticeable in Western Europe, but occupancy remains higher than in 2010 for all countries in the region. Average Daily Rate also remains higher than in 2010 for the year to August 2011, for all countries except the Czech Republic and Hungary.
Focusing on our own industry, the continuing importance of Europe as a destination for international association conferences may be seen from the following two tables of the most recent data published by the Union of International Associations. They show that 6 of the top 10 national destinations for international meetings were European countries; and 7 out of the top 10 cities were located in the continent of Europe.
TOP INTERNATIONAL MEETING COUNTRIES IN 2010
UIA
The UIA list is relatively unchanged since the previous year, although there has been a measure of re-‐arranging of the countries within the top 10. For example Spain has climbed from 10th place in 2009 to 6th place in 2010; while Germany has fallen from the 4th to the 7th place within the 12 months separating the UIA surveys for 2009 and 2010.
TOP INTERNATIONAL MEETING CITIES IN 2010
UIA
Mirroring the situation of the top 10 countries, there was very little change from the previous year’s list, but it is worthy of note that of the two European capitals that dropped out of the top 10, one was replaced by Tokyo. Barcelona moved up from 10th place to 6th place in the UIA statistics released this year, underscoring the city’s prominent position (second only to Vienna) in ICCA’s list of the top 10 cities for international association conferences, which is calculated using slightly different criteria to those followed by the UIA.
China
China’s ongoing economic expansion as well as its vast population continue to make it increasingly attractive not only as a thriving domestic and inbound destination for meetings and events, but also as an outbound market for conferences and incentive trips held in other Asian countries and in other continents.
Quantitative evidence in support of this contention is provided by the China and Asia Meetings Industry Research Report, which was launched at the China Incentive, Business Travel & Meetings Exhibition (CIBTM) in Beijing this summer. The report supplies clear evidence of growth not only for the meetings market within China, but also for the volume of meetings and events inbound to China internationally. And particularly noticeable this
year is the growth in meetings and events going outbound from China. The mood regarding China is extremely buoyant, with 74 percent of buyer respondents (over two-‐thirds of whom were based in China) and 52 percent of suppliers forecasting an increase in the volume of events they will organise over the next twelve months. Nevertheless, China, operating in a globalised economy, is not immune from the factors affecting demand elsewhere in the world, and, as has been the case for the last three years’ surveys conducted for CIBTM, this year’s research found yet again that the factors most likely to influence events held in China in the next twelve months were the economic climate and pressure to reduce costs.
On the supply-‐side, however, China’s meetings-‐related infrastructure continues to grow, and that country is leading the world in terms of new hotel openings -‐ although expansion is also rife in India and South America.
In a special series on Emerging Meetings Markets, Meetings and Conventions magazine provided clear evidence that hotel expansion in China is growing fast:
• Hyatt Hotels Corp. announced it would double the number of properties it plans to add in China from 11 to 22, with 4 to open in 2011 and 9 more in 2012
• Starwood Hotels & Resorts plans to add 86 new properties in the coming years to the 62 already in place in China. This year alone, one third of all new Starwood hotels are opening on Chinese soil.
• Both Marriott International and InterContinental Hotels Group plan to double their hotel presence in China by 2016, to 120 and 280, respectively. Most new properties will offer meeting space.
The expansion in the provision of hotel accommodation has been matched by the growth of new convention centres, such as the 120,000 square-‐metres Fuzhou Strait International Conference & Exhibition Center opened in May on China’s east coast. This vast complex offers a conference centre, two exhibition halls and an entertainment district.
Over the next two years, more meeting planners will experience China as a meetings destination at first hand, as two of the industry's major conventions -‐ Site's International Conference and the ICCA Congress -‐ are set to be held in Beijing in 2012 and in Shanghai in 2013, respectively
The Middle East
The Middle East Meetings Industry Research Report, launched at The Gulf Incentive, Business Travel & Meetings Exhibition in March 2011 noted that the number of business events in that region was higher than at any time since the annual survey began five years ago. In the survey undertaken for this Report, the buyer respondents reported organising an average of 6.2 events in Middle Eastern destinations over the year. This compared favourably with an average of 4.6 events organised in the same region by buyers responding to the 2010 survey. Moreover, 89 percent of the buyers surveyed stated that they would be planning more events or the same number in the year ahead. Average delegate numbers were unchanged, although the average duration of events fell from 3.9 days to 3.37 days.
Meanwhile, the Middle East region continues to add to its meetings and events industry infrastructure, which includes the ongoing expansion in hotel construction. The September 2011 STR Global Construction Pipeline Report notes that for this region, taken together with Africa, the hotel development pipeline comprised 481 hotels totaling 130,479 rooms.
Elizabeth Randall, managing director of STR Global, was quoted as saying:
‘The room growth in the region still continues, as 4,390 rooms have been added to the total active pipeline since August. With 36,205 rooms in the region's pipeline for 2012 and 29,260 rooms planned for 2013, it is clear the Middle East/Africa region is still an attractive region for development’.
Year-‐to-‐date 2011, 50 hotels have opened in the region with 9,663 rooms. In the remainder of the year, the region is expecting 69 more hotels to open with 15,420 rooms. During 2012, 131 hotels are planned to open with 36,205 rooms.
Australia
Following a sharp decline in the business events sector in Australia in 2009, this sector has recaptured some of these losses, with the latest figures from Tourism Research Australia showing that total visitor expenditure for business events rose 7 percent (or by AUD 539 million in nominal terms) to AUD 8.4 billion last year. However, this recovery is still only partial, as total expenditure remains around AUD 1.2 billion lower compared to 2008 estimates of spending on business events. Nevertheless, the sector is now showing more broader signs of recovery, with growth in expenditure in most business events visitor segments: international (up strongly by 16 percent), domestic overnight (up 5 percent), while there was a 1 percent fall in domestic day business events visitor expenditure.
Tourism Research Australia statistics also show business events visitor sector performance by type of business event: conference/convention seminar; trade fair/exhibition; incentive, and business meeting. In terms of expenditure, business meetings are responsible for around 70 percent of expenditure for each of the visitor segments. The combined conferences, conventions and seminar segment provides around 29 percent of business events visitor expenditure, while trade fairs/exhibition and incentive travel hold a smaller share.
Data published in May 2011 shows that visitor expenditure from those attending a business meeting in Australia increased moderately in 2010, compared to 2009, (up 5 percent or by AUD300 million to AUD5.9 billion), supported by stronger growth in visitors. However, of note is the large decrease in incentive travel expenditure last year; down 19 percent. Expenditure made by these visitors is now down by around a quarter, compared to just two years before.
TECHNOLOGY-‐RELATED TRENDS
2011 will be remembered as the year in which the meetings and events industry finally made peace with technology, with both sectors learning to coexist in a spirit of mutual respect. Or, as the 2011 MPI FutureWatch report stated:
‘Technology, it seems, has finally gone mainstream in an industry that has long pushed back against what was viewed once as a direct threat to in-‐person events’.
Technological advances have continued to evolve in a manner that provides destination marketing organisations, venues and conference planners with innovative solutions to enable them work faster and better at all stages of the conference lifecycle. Our industry has shown itself to be eager to leverage these continuing advances in technology.
The INCON survey also confirms the increasing impact of technology on our industry, with the emphasis on the importance of technology almost quadrupling among those surveyed, compared with last year. In that survey, technology stepped up to become the most important trend of 2011, replacing ‘perception of value’ which moved into third place, and just behind green meetings, the issue that was cited as the second most important trend. In detail:
• Social Media strategies are growing in importance, especially as they can act as a digital marketing tool as well as a means of communicating with delegates. Facebook and LinkedIn were deemed to be the most frequently used with 71 percent of respondents using each platform. Twitter was recorded as the next most important choice of social media with this channel engaged by 62 percent of respondents. Blogs, Podcasts and YouTube are each employed by approximately one third of respondents with other channels including Flickr, Slideshare and Skype activated by around 12 percent of INCON partners polled.
• Regarding Mobile Applications technology for conferences, 42 percent of those surveyed confirmed that they intend to use mobile apps in the near future, with 33 percent saying they already do so.
The Grass Roots Meetings Industry Report concurs with this, noting that the meetings app is an expanding area of technology. As three examples among many:
* Apple launched their Go To Meeting app last year, allowing people to join a meeting on their iPad through a link. They can then view slide presentations, spreadsheets, reports or whatever the presenters choose to share on-‐screen.
* Super Planner, another Apple app, provides a variety of planning tools, including calculators for venue capacity, staffing, catering, and staging.
* OotoWeb has also created an iPhone app that enables the planner to access reports such as attendee list, activity pickup and accommodation pickup while away from their computer.
THE OUTLOOK FOR 2012
The International Monetary Fund’s World Economic Outlook (WEO) projections indicate that global growth will moderate to about 4 percent through 2012, down from over 5 percent in 2010. Real GDP in the advanced economies is projected to expand at a relatively weak pace of about 1½ percent in 2011 and 2 percent in 2012. However, this assumes that European policymakers contain the crisis in the euro area periphery; that US policymakers strike a judicious balance between support for the economy and medium-‐term fiscal consolidation; and that volatility in global financial markets does not escalate.
The European Travel Commission’s Trends & Prospects Quarterly Report for Q3 stated that their global economic growth forecast had been lowered to 2.8 percent in 2011 and 3.1 percent in 2012 (at market exchange rates), due to prevailing signs of economic weaknesses.
More pessimistically, the same source concludes that after the recovery from the economic crisis caused by global financial turmoil, the world economy is threatened with another possible recession, with risks coming from three different fronts:
* An escalation of the Eurozone debt crisis including financial contagion
* The possibility that the US falls back into recession, and
* A hard landing in the emerging economies and China in particular.
Each of these three scenarios could be sufficient to tip the world back into recession.
However, within the meetings and events industry, there is a greater degree of optimism for the year ahead than general business confidence might indicate. Advito, for example, predicts that corporate meetings demand will continue to grow worldwide, approaching peak 2008 levels by year-‐end 2012. In terms of price, the same source notes that rising demand and generally stable supply can only mean one thing: hotel rates for meetings will rise faster in 2012 than in 2011 and then will accelerate even more sharply in 2013, owing to the strength of forward bookings, giving suppliers more confidence. Hotel rates are expected to return to 2008 levels in 2013/2014. The price differential between second-‐ and third-‐tier cities compared with primary destinations is also expected to widen.
Another valuable contribution to estimating the outlook for corporate meetings comes from the ACTE (Association of Corporate Travel Executives)/Accor White Paper, launched at the ACTE Global Education Conference in Paris, in October 2011.
The corporate buyers surveyed for the White Paper were asked: ‘How would you describe your company's 2012 budget for meetings & events?’
46 percent of respondents said ‘About the same’
33 percent said ‘Higher than 2011’
21 percent said ‘Lower than 2011’.
For the association meetings market, 71 percent of the PCOs and DMCs who responded to the INCON survey predicted that employment will also rise again in 2012. The same survey suggested that, on the supplier side of the business:
• Rates for venue hire will see a rise.
• Rates and prices for catering will also see a rise but less dramatic than venue hire and housing.
• Housing rates will show a considerable increase.
Finally, regarding incentive travel, the Incentive Research Foundation’s predictions were somewhat similar to last year, with 41 percent of respondents in Spring 2011 expecting their incentive travel budget to slightly increase and 38 percent expecting it to remain unchanged. This means that the vast majority (almost 80 percent) of incentive planners are looking toward a positive 2012, according to the IRF’s research.
SOURCES
(All 2011)
ACTE (Association of Corporate Travel Executives)/Accor White Paper: Meetings and their management today and tomorrow
Advito 2012 Industry Forecast
American Express/CFO Research Global Business and Spending Monitor: A Tale of Two Recoveries: CFOs on Managing for Growth
China and Asia Meetings Industry Research Report
Convene / American Express Meetings Market Survey
Daily Telegraph: Brazil poised to overtake UK, 01 November
Deloitte Research: Global Economic Outlook. 4th Quarter
Deloitte Touche Tohmatsu Limited Global Financial Services Industry Group: Harnessing the Forces of Change
Espicom Business Intelligence: The Outlook for Pharmaceuticals in Western Europe
European Travel Commission: European Tourism 2011 – Trends & Prospects Quarterly Report – Q3
Financial Times: Industry feels grip of tightening policies, 03 November
Global Business Travel Association: Business Travel Index
Global Pharmaceutical Industry Outlook Survey 2011–2012
Grass Roots Group: Fifth Meetings Industry Report
Incentive Research Foundation Spring Pulse Survey
INCON: Third Annual Survey of the Global Association Conference Market
International Congress and Convention Association: International Association Meetings Market statistics
International Monetary Fund: Updated World Economic Outlook, September
Meeting Professionals International Business Barometer, August
Meeting Professionals International FutureWatch
Meetings and Conventions: Emerging Meetings Market: China, February
Middle East Meetings Industry Research Report
STR Global Construction Pipeline Report, September
Tourism Research Australia: Business Events Visitors: 2010
Union of International Associations: World Congress Country and City Rankings
Zacks Equity Research Auto Industry Stock Outlook
