lec1 introduction to biz travel tr08

8/2/2019 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

lec1 introduction to biz travel tr08

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