2016 03 a clearer insight into the mice market

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A clearer insight into the MICE market in France,

Germany and the UK

White Paper

March 2016

Produced by

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INTRODUCTION Why does nobody know the size of the MICE market? The MICE market (Meetings, Incentives, Congresses and Events) not only arouses considerable interest, but also raises many question marks. Little is known about this market, and yet it represents a core activity in the business travel and hotel sectors. Big data is on its way to becoming "outdated", and yet the MICE business continues to confound any attempts to gauge its size, which all industry professionals recognise without exception. Some experts may release studies or hazard ballpark figures, but it only takes a few questions to reach the only realistic consensus, namely that nobody knows the size of the MICE market, despite weighing several billions of euros for Western Europe (estimates vary from 40 to 120 billion euros a year)!

MICE: a host of players with mixed budgets The market for corporate events alone is both extensive and multi-faceted. The MICE acronym encompasses a broad array of situations for both decision-makers and service providers. First of all, the initial complexity arises from the large number of entities present with potential decision-making authority, including associations, companies, consortiums and federations. Secondly, the market is rife with event organisers, including event planners, business travel agencies, destination management companies (DMCs), professional congress organisers (PCOs) and venues serving as congress centres. Some stakeholders, such as tourist information centres and regional / departmental tourist boards, also wield considerable influence. The companies operating in the travel industry, such as airlines, rail companies, cruise lines, car rental firms, insurers, hotels and accommodation providers, are often the same as those involved in the business travel sector; an overlap in expenditure is therefore inevitable, even though purchasing practices are different. Finally, the market also features catering firms, content producers, audiovisual experts, scenic designers and new technology firms.

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What you will find in this white paper This is the background to the study that Concomitance Consulting carried out among more than 300 meeting planners in the top three European markets: France, Germany and the United Kingdom. This study laid the foundations for the white paper that we are offering to share with you. You will find a summary of the study's main findings, the salient points of the French, German and UK markets, and a benchmark of MICE practices among hotel groups. This document represents an executive summary of the information collected. A broader summary is actually available. We will do our utmost to address any remarks and comments, as well as respond to any enquiries.

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MICE markets in France, Germany and the UK

In 2015, the MICE market in France, Germany and the United Kingdom could be estimated at approximately €70 billion and accounts for slightly more than two thirds of the business travel market.

MICE undeniably represents a significant share of company spending on travel. Despite its size, the market lacks structure and faces major challenges in the form of growth and digitisation. We came to this observation after interviewing professionals in the MICE market and analysing the wide range of practices between countries and according to the types of event and decision-maker.

54

28 28,4

Germany

Business

travel

2015

MICE

market*

2015

40

23 23,3

UK

Business

travel

2015

MICE

market*

2015

33

20 19,9

France

Business

travel

2015

MICE

market*

2015

MICE

market*

2016

MICE

market*

2016

+1.3%

MICE

market*

2016

* The market valuation (in € billion) includes venue hire, accommodation and F&B

+1.3%

-0.4%

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Some salient facts relating to events in Northwest Europe o Close to two thirds of events are meetings involving fewer than 30 people

In France, Germany and the United Kingdom, close to two thirds of events are meetings involving fewer than 30 people. Not only does this apply to companies but also associations, unions and other federations. It goes without saying that specialised MICE agents are not often contracted to organise such events. This first risk shows the extent to which the MICE market is fragmented, often underestimated and in need of specific tools to market services and solutions.

o 46% of organisations have a MICE budget of less than €150k Over 60% of associations, unions and other federations have a MICE budget of less than €150k, while nearly 40% of companies are required to manage their events with less than €150k. A parallel can be drawn between this observation and the slight reduction in the duration of events. The vast majority of events lasted less than two days in 2015. Only conferences and congresses still average two days. Although MICE budgets are increasing on average, companies are tending to streamline their event budgets and shorten their duration. Therefore, meeting planners are faced with a growing number of short-duration events.

o 44% of events are for in-house purposes

Whereas 37% of events are organised to achieve a commercial or communication objective (product launches, conferences, congresses, communication and media relations), 44% of events are laid on for the company's internal management (training, meetings, management seminars, board meetings and incentives). The remaining 19% are special events or participation in events organised by other entities.

44%

37%

19%

Event objectives

Internal meetings

Commercial or

communication

Special events

or organised

by others

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70% of events are organised locally (i.e. in the country of the entity holding the event) Of the 30% of events staged abroad, most take place in Europe. Events are most often organised abroad by associations, unions and federations. Companies prefer holding their events at a local venue. When staging their event abroad, companies most frequently enlist the services of an agent.

How are events managed? o Senior management is involved in the decision-making process in over half

of all events Senior executives actively participate in the selection and negotiation process when organising events. Even when the company features buyers, meeting planners or a dedicated events department, senior management remains highly involved in over 50% of all event-related decisions.

o 90% of events are managed internally by companies. Providers (agencies)

only take part in 10% of events, although they believe that they are involved in 30% to 40% of cases. Companies and associations estimate that 90% of their events are managed directly with their internal teams. They do not believe that they are outsourcing the management of their event by using online booking or sourcing systems or a venue finder's services. Consequently, only 10% of events are entrusted to agents. However, agents believe that they are involved in 30% to 40% of events. This difference in perception is likely related to the scope of the market, insofar as agents are probably unaware of some of the small events organised.

o 91% of companies believe that MICE expenditure is under control, but only 50% have a system for tracking expenditure Although many companies believe that expenditure is under control and that they are unable to optimise their MICE budget, 50% of companies do not have a system for managing and tracking expenditure. Tools for measuring ROI or processes for reclaiming VAT are far from standard practice. These points illustrate that business travel has reached a higher level of maturity than MICE in most companies.

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Some of the specific features observed in France, Germany and the UK o France:

In 2015, France achieved third position in Europe behind Germany and the United Kingdom in terms of the volume of MICE activity. In 2016, market players are expecting to see a slight fall due to the terrorist attacks in Paris late 2015. 57% of events in France include fewer than 30 participants, and 59% of companies have a budget of less than €150k. Nevertheless, the cost per participant with or without accommodation is clearly higher in France (approximately +20%) than in Germany or the United Kingdom. This finding can partly be explained by the greater use of agents for organising events. In terms of the types of event, training sessions and internal team meetings were the most frequent in France in 2015. French companies organised 73% of their events in France. Over two thirds of events held abroad took place within Europe.

57% of events are

attended by fewer than

30 participants

MICE budget

< €150k

> €150k59%

41%

59% of organisations have an annual

MICE budget of less than €150k

73% of

events

are organised on a

national scale

27% of

events

are held abroad

Intermediation

French companies are

more often inclined to

use agents (+/- 60%)

61% of companies have a

MICE management system

MICE costs

The average cost per

participant is higher in

France than in the United

Kingdom and Germany

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o Germany:

With the volume of business estimated at €28 billion, Germany is home to Europe's leading market. Professionals are expecting to see growth of 1.3% in 2016.

The proportion of events with fewer than 30 participants is also the highest in Germany (74%). In 32% of cases, such events are training sessions or internal team meetings.

A defining feature of Germany is the implementation of strict (57%) or directive MICE policies (32%) for organising events. Companies without a MICE policy are few and far between. With the aim of improving the process, German meeting planners prefer using online sourcing tools, and 94% have installed a system for managing and tracking their events.

74% of events organised by German organisations are held in Germany. Only 8% of events take place outside Europe.

74% of events are

attended by fewer

than 30 participants

MICE policy

Directive

policy

Strict

policy

Lenient policy

No policy

32%

57%

89% of organisations have a strict or

directive MICE policy

Types of event

32%

68%

Training & internal

team meetingsOther events74% of events are organised on

a national scale

26% of events are

held abroad Germans prefer online

sourcing for finding new

venues

94% of companies do

not have a MICE

management system

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o United Kingdom:

The UK is home to the second largest MICE market in Europe with €23 billion and projected growth of 1.3% in 2016. The events held by English organisations are generally on a larger scale. 63% of events are attended by over 100 participants. It logically follows that MICE budgets are also higher on average. These results can be attributed to the types of event, with conferences and congresses representing 40% of events in the United Kingdom. Another specific feature of the MICE market in the United Kingdom is the tendency among decision-makers to organise events abroad. In 45% of cases, the chosen venue is located abroad in Europe (23%), North America (9%) or the rest of the world (13%). In terms of expenditure, venue hire represents a significantly larger cost item in the United Kingdom than in other countries. Loyalty programmes are less used in the United Kingdom. This can be attributed to the fact that many companies prevent their employees from signing up for this type of programme.

63% of events are attended

by fewer than 100

participantsMICE budget

< €150k > €150k

34%

66%

66% of organisations have an annual

MICE budget in excess of €150k

Types of event

40%60%

Conferences/

Congresses

Other

events

55% of

events

are organised on a national scale

45% of

events

are held abroad

MICE expenditure

Venue hire accounts

for a major proportion

of costs

(46%)

65% of interviewees do not

have a loyalty card (they are

not allowed to sign up for a

loyalty programme)

92% of companies do not

have an expense management

system

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Closer look at MICE services by hotel groups MICE experts emphasise the lack of market knowledge, in spite of the complexity relating to its fragmentation and the wide range of stakeholders involved. Few in-depth market analyses are available, and research has failed to zero in on the customer experience. The result is that hotels experience real trouble in building services and solutions suited to each type of meeting planner and the different providers. Hotels are actively involved in the market, but do not disclose their MICE activities. There is no identified or recognised leader in the market. Analysing the main hotel groups operating in the market reveals that only international groups are starting to roll out services and tools that could ultimately structure the market.

Although they are aware of how important MICE activities are to their business, hotel groups have not defined a true MICE strategy. They develop solutions focused on one or more competitive advantages that enable them to gain market shares in the short term. They have recently started developing digital tools. Most have a dedicated MICE loyalty programme that is directly or indirectly related to the hotel loyalty programme. Hotels still pursue a traditional strategy for acquiring new market shares by communicating directly with customers and commercial platforms. Some hotels are consequently strengthening their position and raising their profile. National hotel groups have to contend with a much more restricted budget for developing their MICE activities. In general, they have built one or two services, but do not offer online tools or a loyalty programme. Only some hotels appear to be significantly developing their activities in the MICE market as part of an exclusive MICE strategy. They offer to welcome groups with an end-to-end range of services, including team-building and recreational activities.

International hotel groups

• Important, but no explicit

strategy

National hotel groups

Strategy

Services

Online tools

Loyalty programme

Specific features

• Not important

• Focused on certain

competitive advantages

• Few MICE services and no

dedicated communication

• Basic tools (RFI, budgeting

tools & to-do list)

• No online tools

• Related to the hospitality

loyalty programme

• No loyalty programme

• Some groups are trying to

pre-empt the MICE market

• Some groups specialise

exclusively in MICE

services

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New providers that are more akin to start-ups are taking an interest in this market. Aware that many organisations cannot easily find a venue for their events, these new providers give customers access to a booking platform and appropriate management tools. In the medium term, these companies could achieve leadership status in the market and give greater structure to what is still an inconsistent range of practices.

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CONCLUSION

The main complexity for sizing and getting established: the wide range of decision-makers One thing is for sure: covering the MICE market involves reaching out to a large number of stakeholders. There are several tens of thousands of clients in each of the three countries in this white paper alone. The vast majority of these clients are not incorporated into a structured MICE organisation (such as MPI: Meeting Professionals International), and their demand for events varies considerably from one period to the next. Furthermore, each stakeholder has an extremely different set of objectives, room for manoeuvre, needs and desires, which depend on the function or role of the person managing the planned event. That person could be a travel manager, an executive or team assistant, an event / incentive / seminar project manager within a functional department, or a senior executive. This allows companies operating in the market to nurture high ambitions, because this level of disparity and fragmentation currently enables many companies to prosper with varying degrees of success. But this also prevents organisations from establishing a holistic and suitable position spanning the entire market. Gaining a foothold in the market means choosing target groups, and choosing means giving up ambitions of covering the market. But the fact that the market has not been sized implies that all providers are becoming established but without truly leveraging the opportunities available.

An opportunity for improvement to be shared: creating a consolidated insight into expenditure No country has a clearer insight into the size of the market than the others. The solution is to carry out a recurring syndicated study among several thousands of decision-makers and providers to exchange views on how they can improve performance rather than on how much they can do!

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Methodology

B3tsi/Concomitance Consulting conducted this study late 2015 based on: - A telephone survey among 300 professionals responsible for organising events for a

company, association or agency. These organisations are located in France, Germany and the United Kingdom, and are distributed according to a representative sample group of major corporations, mid-cap companies, SMEs and small/medium-sized industries.

- An analysis of existing research into the MICE market in France, Germany and the UK. - A benchmark of the MICE services offered by hotel groups. - Interviews with MICE market experts.

Credits: the icons used in this white paper are taken from The Noun Project collaborative icon sharing platform and were created by Ema Dimitrova, Olivier, Creative Stall, Frederick Allen and Gerard Wildmoser.

Definitions:

Venue finders: specialists who focus their expertise on selecting and recommending the venues best suited to hosting the event. Venue finders are widespread in the English market.

PCO (Professional Congress Organiser): a company that specialises in organising congresses.

DMC (Destination Management Company): an organisation (freelancer or company) that is permanently based in a country and which designs programmes for stays in its home country.

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About Concomitance Concomitance, a brand of B3tsi, is specialised in marketing and sales consulting. Concomitance is an independent consulting firm specialised in management and strategy. We focus on two levers of value creation built on customer experience: marketing and sales. Since its establishment in 2002, Concomitance has stood out in terms of its capacity to transpose commercial and marketing issues into action plans which are immediately effective and comprehensible to all players. This capacity is a direct result of Concomitance's DNA: the prior business experience of our consultants allows us to formulate recommendations and share them with our clients in line with the maturity of their organization.

B3tsi - Concomitance Consulting 3 rue de la Grange Ory – 94230 Cachan – France Follow us on Concomitance.com or SlideShare

Contact for this white paper: [email protected]

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2016 03 a clearer insight into the mice market