MICE Industry - Economic Importance for the UK - Case Study Example

MICE MICE industry MICE is an acronym which refers to meetings, incentives, conferences and Events. This is an industry in which the customers are companies or non-profit organizations who want to arrange meetings or events. These companies use intermediaries who assume the role of event planners. These intermediaries are selected on the basis of the quality of service offered and the experience they have. The MICE industry was recently hit by the economic recession of 2008 after which it started to decline. After that the participants had to lobby the government for rebates and also had to persuade the companies to continue having business meetings and conferences and also to give incentives to their employees. This is important because when people come for business meetings they also spend on other things such as food, shopping entertainment and this revenue is earned by the destination that is the city or state. When revenues are received and business is growing, then investment is made by the government and the private sector as well to improve the facilities so that the can attract more business. This means that this industry ultimately leads to economic development of the destination. This report focus on the MICE industry of UK, its economic importance and trends, problems faced by it and how it can deal with these problems and attract more tourism. Economic importance for UK Economic importance of this industry for UK is that it provides a stable business for hotels as it had done when the recession of 2008 affected the core business of hotels badly. The MICE industry of UK is also an important part of the tourism industry. As there are many people who come for meetings, conference etc. from other countries and therefore the money spend by them on recreation and other entertainment is actually generating revenue for the tourism industry. It is expected that the MICE industry in UK will grow very fast in the period of 2010-20.the value added contribution of the MICE industry to the overall economy is expected to grow at an average rate of 3.5% which is even higher than the other important sectors such as manufacturing, transport etc. In the year 2010 a study conducted by Oxford Economic and Deloitte showed that the MICE industry was the fifth largest industry of UK worth £115 billion and employing around 2.6 million people and this is expected to grow to 2.9 million till 2020. In the year 2010, UK ranked number 6th overall in the world and is very competitive globally. This industry provides jobs and is one of the industries in which work cannot be outsourced to other countries thereby creating job opportunities for the local people. Moreover it also helps in building the community as it brings business not only to the cities but also to the rural and coastal areas. Other than that, it builds an image of Britain in the eyes of the world as Britain has become famous for the business conferences and meetings. (UK Tourism Growing Faster Than Other Industries, 2010) Historical performance in UK: MICE industry in UK has seen the largest growth in the last two decades. MICE industry of UK has been very competitive as it keeps updating its technology, revamping its venues and also building new ones. In the year 2000, UK was the second largest player in the conference market (after Australia) with a market share of 8.85%.in the exhibitions industry in UK, most of the exhibitions were for the service sector and on second number was the culture and recreation sector. The incentive sector at that time was still at its infancy stage and had a lot of potential to grow. (The UK & London Conference Market, 2010) The demand for MICE industry has been on a declining trend after 2006 but the largest downfall was seen in 2009 when demand fell by 22% due to the economic recession of 2008.A further decrease of 5% was also seen in 2010. UK has been one of the most popular destinations for overseas meeting. In 2009, UK ranked fourth in Europe after Italy and Spain but was ahead of France. In 2010, another trend observed was the decrease in the number of participants in the meetings. (Meetings, Incentives,Conferences,Exhibitions(MICE) in the UK) Current Trends in the UK MICE Market The extended recession in most parts of the world including Europe has affected a lot of industries that have a positive correlation with the economy of the country. The MICE industry is facing similar situation where lack of economic growth and activity has slowed the growth of the overall industry in UK. The industry which was already in its maturity stage has faced further impediments in its growth due to lack of budgets. Although the number of events planned in the last couple of years have increased but most have been low budget events reflecting the state of the industry and overall economy. (Promising EU export markets for MICE, 2011) Most events planned are of short haul nature whereby participants meet at overseas destinations nearer to UK. Domestic events are not well perceived and therefore the turnout for local events is also low as compared to overseas events. Most preferred short haul destinations for various British agencies include Spain, France, Germany and Italy. Short haul events are favored by the agencies as they help them arrange more events in the given budget. Participants on the other hand are more for long haul events where they get greater value for their money. United States has maintained its position of being the most favored long haul destination for events arranged by the British agencies followed by other renowned destinations such as United Arab Emirates, China, South Africa, etc. (Meetings, Incentives, Conferences, Exhibitions (MICE) in the UK, 2012) With relative decline in budget another changing trend witnessed is the fall in number of participants per event and the duration of the event trip. The long haul participants fell by 33 % and short haul participants fell by around 42 % showing further decline in participant’s interest in short haul events that are perceived as low value packages. Although the duration for short haul events did not change much, the duration of long haul events reduced by around 25% (from 4 to 3 night trip) in order to accommodate in lower budgets. (Meetings, Incentives, Conferences, Exhibitions (MICE) in the UK, 2012) In a market where the buyers such as corporations assign the role of arranging the event to an intermediary, the buyer-seller relation is maintained on the basis of the quality of service provided. If the past experience is not good, the client will not return to the agency to delegate arrangement of another business meeting or conference. Thus it is difficult for new players in the market to immediately make their presence felt. However with increasing use of internet as means of promotion, this trend is changing and newer agencies are coming forward by having attractive and informative websites with clear and transparent pricing and billing systems and presentation with creative, unique and innovative styles. (Future trends and issues affecting the UK meetings and conventions industry, 2002) Expected future trends Companies are planning more events but have less budget which is actually a challenge faced by the hotel owners as their customers are looking for value i.e. more for less. In future it is expected that the number of members in the meetings will increase as the industry is recovering from the recession of 2008.Moreover, the hotel industry itself is reviving so it’ll become difficult for companies to book hotel 30 days before the event. Moreover, getting large spaces on discount will also not be a norm in the near future as hotels are regaining their core business. (Benson) Although technology was important for the MICE industry from the very start but it is going to become more important in the future as people need to download applications on their IPad and Smartphones quickly which need fast speed internet. (Benson) Increasingly, more and more companies are looking for small teambuilding activities which last for about half a day so the hotels/venues which have facilities for fun activities such as golf, kitchen for cooking activities are going to see a rise in their demand. (Verikios, 2006) Due to increase in terrorism and increasing travel costs, companies prefer virtual meetings instead of travelling to go for meetings. Therefore, teleconferencing is increasingly used in the MICE industry. Although technology is not going to replace face to face meetings but is going to aid the meetings a lot. Technology is important not only during the meeting but also overall as many event planners now use internet for arranging these meeting, conferences etc. Therefore, the participants in the MICE industry should have good website in order to be successful in this industry. (Verikios, 2006) The world today has generally become more conscious of the environment. Similarly in the MICE industry there are many associations which are promoting those hotels, conference centers and airlines which care about the environment and adapt greener policy. Problems Faced by the Industry The major problem affecting the UK MICE industry is the lack of research, academic and otherwise. The collection of data is inadequate and the techniques of data collection are also not standardized. The reason for this is the fragmented nature of the MICE market in UK. There are a lot of organizations involved in collecting data, but the sample size is not representative of the whole industry as it includes only the players that are close to the organization researching. Another problem besides the sample size is that, the terms and definitions used within the MICE industry are not standard and various organizations have their own interpretations of various terms. These factors render the data incomparable and confusing. The MICE industry and its growth are negatively impacted due to the lack of reliable statistics and academic research. (The UK & London Conference Market, 2000) Secondly there are a few issues related to the human resource. The UK MICE industry lacks skilled human resource and is marred by high turnover due to lack of training and motivation. The pay scale is also relatively low. The employees lack the ability to interact properly with international clients and participants due to lack of expertise in foreign languages. The deficiency in the human resource reflects in the quality of service provided to the clients who according to one research perceive the quality of events in the Asia Pacific and Australia to be comparatively better. Thus UK MICE industry is losing out to the newly emerging international competitors. (Future trends and issues affecting the UK meetings and conventions industry, 2002) Another reason why UK is losing out to competition is the lack of funds and government grants for the development of the industry. Even one of the most popular MICE destinations, London, is witnessing slow down due to lack of improvement in the current facilities and shortage of space. Events arranged on larger scale are being arranged outside UK due to lack of capacity in the facilities that require alterations and modifications. Marketing of events is also not up to the mark due to budget constraints that hinder overseas promotion and development of thorough websites that are informative, creative, user friendly and interactive. (The UK & London Conference Market, 2000) Lastly, there is a major problem with the focus of agencies and other intermediaries arranging these events. The focus is not much on inbound events, rather overseas short haul events are preferred by agencies. This does not help the UK market as much as it could if more and more international clients and participants are attracted to these events. The UK economy and culture will enhance only if foreign participants come and visit UK, live in UK and spend in UK for the duration of the event. (Whitfield & Ladkin, 2000) How MICE industry in UK can improve? Although the industry is in its maturity stage, there is still lot of scope for growth if steps are taken in the right direction. The UK MICE industry needs to act to stop losing its market share to emerging players. The very first step should be to have a single body for the purpose of collecting industry relevant data. Even before collecting the data, the body will have to make efforts to standardize the definitions of the different terminologies used to avoid confusion. The collection of data by a single body will ensure proper representation of the players in the industry and allow for reliable comparison over time and over regions. (The UK & London Conference Market, 2000) Secondly human resource development in this sector is of immense importance as they are integral part of any service providing organization. Thus special focus is required on proper training of the employees. Pay scale needs revising as well in order to keep the workforce motivated and to retain the quality workforce. Preference should be given to potential employees with expertise in overseas language (besides English). (Future trends and issues affecting the UK meetings and conventions industry, 2002) There is a further need for improvement in facilities. The capacity of conference rooms, meeting halls, seminar rooms and auditoriums need to be increased to be able to hold events on larger scale. For this the current facilities need to be modified as well as building of new facilities is essential to accommodate the events that have been forecasted to increase in 2013-14 after some recovery from the economic recession. This can only be achieved through increased government attention towards the MICE industry. The government can be roped in by showing them the incentives of a growing MICE industry in UK which include promotion of the local culture especially if the event is an inbound one rather than an overseas event, boost to the economy through greater spending by foreign visitors and better marketing of the country to the outside world both through increased overseas promotion of events and word of mouth. (The UK & London Conference Market, 2000) (Whitfield & Ladkin, 2000) Conclusion: As we have seen the MICE industry in the UK has great economic importance as it is the fifth largest industry of the country generating one in every twelve jobs. It is expected to grow further in the coming decade, generating more tourism and employment. Along with wonderful growth opportunities, the industry is also faced with some challenges. First of all proper data is not available as research is not done properly. Associations that have done research only have data for their own members. Other problems faced by the industry are lack of skilled human resource, less government support etc. Therefore it needs to focus on solving these problems in order to remain competitive. They need to focus on the changing trends and act accordingly. Training of human resource and up gradation of facilities according to changing needs of customer is of immense importance. References (2010). The UK & London Conference Market. UK Tourism Growing Faster Than Other Industries. (2010, March). Retrieved June 2012, from Odyssey media group: http://www.odysseymediagroup.com/en/Editorial-MICE.asp?ReportID=389526 Benson, P. (n.d.). MICE Industry to Boom in 2012. Retrieved 6 29, 2012, from hotel-industry.co.uk: http://www.hotel-industry.co.uk/2012/04/mice-industry-to-boom-in-2012/ Meetings, Incentives,Conferences,Exhibitions(MICE) in the UK. (n.d.). Ministry of Foreign Affairs-CBI. Verikios, M. (2006, October 26). MICE Industry Trends & Markets. Retrieved june 29, 2012, from Travel daily nes international: http://www.traveldailynews.com/makeof.asp?central_id=1272&permanent_id=17 Read More