Download - Lec1 Introduction to Biz Travel Tr08
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MICETourism
Spring 2011Enrollment key: MICE08
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Lecture 1
Introduction toBusiness Travel
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Objectives
To acquire theprincipal definitions in businesstravel
To appreciate the differences between businesstravel and leisure travel
To be aware of thestructure of the businesstravel market
To discuss the main impacts of business travel,and the major opportunities, challenges andthreats affecting this industry
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Doyou know that
Over 6,500 events took place in 2007, a rise ofapproximately 800 over 2006?
Average spending annually by associations, bigcompanies = 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 aremaking over 20 biz trips/ year?
Business travel was one of the earliest forms oftourism?
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International Business Arrivals toVietnam
0
200000
400000
600000
800000
1000000
1200000
2002
2003
2004
2005
2006
2007
2008
2009
2010
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PrincipalDefinitions What is Business Travel?
All trips whose purpose is linked with the travellersemployment or business interests
Business Travel
Business
Tourism/ MICE
Individual
Business Travel
Regular and necessary part ofemployment
Often individual travel
Nondiscretionary/ fixed destinations
Presentations; consultations;investigations; one-to-one meetings
Occasional feature of employment
Often group travel
Discretionary/ floating destinations MICE
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Meetings Conferences, training seminars, product launches, annual
general meetings, conventions
Held by companies and associations in order to facilitatecommunication with and between their employees, customers,shareholders and members
Incentive trips 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/ Conferences, conventions Corporate hospitality: For creating goodwill and building rapport
with VIP customers and potential customers
Events/Exhibitions Exhibitions: trade fairs, trade shows, customer shows to which
business send sales staff in order to display their products topotential customers to buy and/or to receive expert information
PrincipalDefinitions - MICE
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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 thesame hobby
There are forms of business travel that involve verylittletravel
One-day meetings held in the seminar room of a local hotel; a partyfor a group of clients at an entertainment venue within the city
Veryoften, elements of twoor more categories arecombined 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 interestedmarket
Delegates have an additional reason for attending the event
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Business travel vs. leisure travelLeisure travel
Trippayment
The traveller bothcustomer and consumer
Business travel But
The employer Self-employed/those attending
events paid forthemselves
Trippayment
Where
When
Tripplanning
Travellingcompanions
Mainly coastal,mountain, urban, rural
Largely in cities in stable,industrialized destinations
Incentive travelsimilar to leisure
In leisure time
Classic holiday periods& weekends
Quite infrequently butlast longer
In working time
Mainly outside holidayperiods & weekdays
Quite frequently but forshort periods
Many extend intoevenings and
weekends
Holidays - a fewmonths/ Short breaks a few days in advance
Large events organizedyears in advance
Individual businesstravel at very
short notice
Friends and family Usually unaccompanied(individual business
travel); or with colleagues(business tourism)
Family membersmay be included inincentive trips or
conferenceattendance
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Business tourist- Consumer, not customer
- Not choose destination
- Frequent travels
- Shorter duration of trips
- Very short to very longplanning period
- Less budget conscious
- More experienced anddemanding
Leisure tourist- Both customer and
consumer
- Choose the destination
- Infrequent travels
- Longer trip
- Medium time of planning
- Cost conscious
- Less experienced anddemanding
Business travel vs. leisure travel
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Links exist btw biz &leisure tourism:
- Leisure tourist can be the businesstourist in their working lives
When working day is over, biz touristsbecome leisure tourists
Conference programs often have socialand cultural programs; and providevisitors with opportunities to relax andnetwork together
After business time, biz tourists maychoose to stay more days as leisure
tourists Biz tourist may take along a partner
with them who have time for leisureactivities
Business travel vs.leisure travel
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Businesstravel
SuppliersThe end
consumers
Buyers Intermediaries
Structure of the business travelmarket
Business travel
destinations
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Structure of the business travelmarket
Top 10meeting countries in2009(Source: ICCA)
1. United States (595meetings)2. Germany(458 meetings)3. Spain (360 meetings)4. Italy(350 meetings)
5. United Kingdom (345meetings)6. France (341 meetings)7. Brazil(293 meetings)8. Japan (257 meetings)9. China (245meetings)
10. Austria (236 meetings)
Top 10meeting cities in2009(Source: ICCA)
1. Vienna (160 meetings)2. Barcelona (135meetings)3. Paris (131 meeting)4. Berlin (129 meetings)
5. Singapore (119 meetings)6. Copenhagen (103meetings)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 lessinfluenced by fashions
In some cases, spending on business travel canactually rise when the economy is slowing down
Derived demand(# leisure travel final demand)
Income- inelastic
Dependant on the level of government taxation ofbusiness expenses
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Impacts of business travel
When we have a convention intown, 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 greater per capita vale thanleisure travel
Daily expenditure (biz : leisure travelers) = between2:1and 3:1
Average expenditure of internationalmeetings = 343USD/ day/ head
UK: 591 million/day (177million allaverage
visitors)
Induced effects generated by the large number ofancillary activities linked to conferences and exhibitions(=1.5 2 times the direct turnover)
Spending spreading more evenly throughout the yearand complementary to leisure demand during troughs(low season, weekdays)
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Putting the destinations firmlyon thepolitical map
Focusing the attentionof keygroups of decision-makers upon the destinations potential forprofessional and business location and
development
Establishingand reinforcing the image of thedestinationas a place to visit for leisure purposes
Impacts of business travel -Image
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Good geographical spread onminimal impact onfragile natural environment
Typically distinguishable business visitors in dress,behaviour and use of facilities
More sustainable nature: use ofpublic transport liketrains (domestic business travel)
On the other hand, for international business travel byair the most highlypollutingmode of transport
Hidden costs paid by the society
Impacts of business travel Environmental
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Hidden economic cost: aviation fuel and airlinetickets = no VAT the society as a whole subsidising airtransport
Health cost associated with noise and air pollution
Costs of buildingand maintaining the transportinfrastructure to serve airports
Direct and in direct subsidies to the industries to
supply the air transport sector
Impacts of business travel Social
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The costs of beinga businessdestination
Costs toattract business visitors
Substantial investment in specialist facilities (forconferences and trade fairs)
Costs to destinations of various externalities ofhosting certain types of event
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Challenges facing the business travelmarket
Political challenges Lack of recognition and contribution from national and local
government
Market intelligence
Lack of standardised and properly defined terminology
Difficulties in reliable statistics and regular research Technology
Information and communications technology as an actualsubstitution for business travel
E.g., downloading presentations; goods viewed from adistance; videoconference
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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 alsoassociations
Supply side - Vietnam Asia (e.g. Hong Kong, Korea, Seoul, Singapore, Taipei, Thailand) is
challenging Europes pre-eminence
Governments increased awareness ofMICE industry Highly active local associations and businesses (VMIC, Saigontourists)
Stable political system; attractive diversity in terms of destinationsand cultures,
The presence of many company head offices, institutions andassociations + 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