MICE Business

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MICE Business City Economic Development

• Dr. Karin Weber
• School of Hotel Tourism Management
• Hong Kong Polytechnic University

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- Outline -

• Requirements for Development of Successful
  Convention Destination
• Economic Impact Assessments (EIAs)
• Problems with Existing EIAs
• EIA Framework
• Industry/Academic Collaboration

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Convention Attractiveness

• of delegates for conventions large
• of days in city/country for convention and
  pre-/post- convention tour
• Delegates are large spenders
• Industries affected by conventions are various
  and interrelated

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Requirements to Develop Successful Convention
Destination

• Understanding of Site Selection Factors
• Infrastructure Development
• Destination Marketing/Promotion

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- Site Selection -

• Complex process with numerous influencing
  variables
• Organizational
• Scope of the association (regional, national or
  international
• Influence of Associations CEO/Committee Members
  versus Meeting Planner
• Site-specific
• Facilities, image, tourist appeal

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Site Selection

• Crouch and Ritchie (1998)
• Comprehensive review of site-specific factors
• Majority of studies based on opinion, anecdotal
  evidence and industry experience
• Model with 8 Primary categories, divided into
  subcategories ? 36 destination attributes

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Site Selection

• Previous focus on quality of meeting and
  accommodation facilities clearly insufficient
  
• Accessibility, Strong Local Support and
  Attractive Destination Image equally critical
• ? Destination rather than Individual Supplier
  Approach needed in marketing to associations

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- Infrastructure Development -

• Asia
• Taiwan
• Singapore
• China

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- Destination Marketing/Promotion -

• Hong Kong
• Malaysia
• Korea

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- Benefits of MICE -

• Economic Benefits
• High Yield Market
• Employment
• Income
• Foreign Exchange
• Non-economic Benefits
• Social and cultural benefits
• Exchange of ideas
• Cultivation of business contacts
• Forums for continuing education

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- Benefits of MICE -

• Economic and Non-economic Benefits
• Growth potential (link with major special events)
  
• BUT
• little data to estimate exact size
  contribution
• yet important in resource allocation by private
  and public sector stakeholder

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Economic Impact Studies

• HKECIA Economic Impact Study 2004
• HK 19 billion expenditure
• HK 9.5 billion direct expenditure exhibition
  organizers, exhibitors, visitors
• Visitor spending HK 6.6 billion
• HK 5.1 billion international visitors
• Biggest beneficiaries FB, hotel and retail
  sectors
• HK 5.7 billion indirect expenditure

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Economic Impact Studies

• Biennial Globe Conference - Vancouver
• 10,000 delegates
• CAD 12 million direct economic benefits
• CAD 30 million in indirect benefits
• 150 jobs
• CAD 5 million tax revenue

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- Concerns about economic impact studies -

• Differences in methodology, scope of analysis,
  data, collection methods, and accuracy of
  expenditure surveys
• Expenditure data for conventions is often of an
  aggregate nature, covering several conventions,
  in a given location, in some defined period of
  time.
• ? attendance and expenditure data for
  particular conventions often cannot be determined

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- Concerns about economic impact studies -

• Some of the published estimates are clearly
  inaccurate or based on assumptions that are not
  justifiable
• ? much of the data is not directly comparable.
•  
• Focus on conventions in major metropolitan areas
  ? little information on convention-related
  expenditure in regional areas

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Economic Impact Assessment

• methodology based on assessment of economic
  impact of special events
• Burns Mules 1989 Crompton 1999 Getz 1994
• Many academic studies on economic impacts of
  conventions are conducted by Australian
  researchers
• EIA Framework for Conventions developed by Dwyer
  Forsyth 1997

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- Convention Impact Assessment Framework -

• Estimate the in-scope expenditure of convention
  participants and accompanying persons
• Estimate the in-scope expenditure of convention
  organizers, associations and sponsors
• Allocate total in-scope expenditure to particular
  industries and
• Apply multipliers to total in-scope expenditure
  to estimate the contribution to regional income
  and Gross Regional Product.

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- In-scope Expenditure -

• Injection of new money into a region
• In-scope visitors
• Delegate, organizer, sponsor
• Visitors for whom convention is main reason for
  visit to destination
• Only in-scope expenditure is relevant in
  estimating conventions economic impact

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- Gross Expenditure (GE) -

• Numerous studies used Gross Expenditure (GE) to
  estimate economic impact
• Braun 1992 Convention Liaison Council 1993
• GE all purchases of final goods and services
  linked to convention from various parties
• Use of GE is INCORRECT since it inflates
  importance of convention

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In-scope Expenditure -Convention Participants
Accompanying Persons

• Number
• The greater the number, the greater in-scope
  expenditure
• Examples
• Singapore average travel party size for
  association meeting delegates is 1.67 persons
  (STB 2000)
• Australia accompanying persons add 15-20 of
  convention-related expenditure
• Importance of Site Selection and Partner Program
  

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Types of Delegates
• Convention visitors spend more than average
  visitor
• SECB per diem expenditure of association
  meeting delegates about 3 times higher than
  average visitors
• Problems in previous studies
• Average total expenditure for visit/convention
  duration INSTEAD OF Average total expenditure for
  visit/duration of visit

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Types of Delegates
• Origin of Delegates has influence on spending
• Average daily expenditure for interstate
  delegates was lower than that of overseas
  visitors BUT too few studies as yet to permit
  generalization
• Types of Conventions
• SCVB (1998) medical, corporate, then
  association
• System Three (1998) for UK market corporate,
  association, academic

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Trip Duration
• The greater the duration of stay, the greater the
  injected expenditure
• Average duration of conventions differs
• Las Vegas 4 days
• Hong Kong 3 days (5.5 days in city)
• Singapore - (5.2 days in city)
• Melbourne (4.6 days in the city)

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Pre/Post Convention Tours are critical
• 25 of spending of interstate delegates and
  almost 50 of international delegates in Western
  Australia is either before or after the
  convention (PCB, 1994)
• 60 of convention-related spending occurs either
  before or after convention (TCB, 1996)

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Cost at Destination
• The higher the prices locally, the greater the
  injected expenditure
• BUT
• Issue of Destination Image
• Payments made At Origin
• Air tickets
• Countrys component of FIT Package

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Additional Considerations
• Switched Expenditures
• Time-switching effect visitors changing time of
  their visit to coincide with convention e.g., for
  Melbourne 30 of delegates would have visited
  the city even if not attending convention
• TREATMENT should be excluded

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- In-scope Expenditure - Convention Participants
Accompanying Persons

• Additional Considerations
• Transferred Expenditures
• From one location to another e.g., FB
• From one expenditure category to another - e.g.,
  convention registration v. expensive shoes

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- In-scope Expenditure - Convention Organizers,
Associations, Sponsors

• Often omitted in convention impact assessment
  
• Organizer Revenues
• Delegate registration fees
• Corporate sponsorship
• Government sponsorship
• Sponsorship from associations

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- In-scope Expenditure - Convention Organizers,
Associations, Sponsors

• Delegate registration fees
• Typically re-spent at destination for
• Hiring of convention venue, equipment, catering
  and social programs
• Should be treated as revenue to organizers to
  avoid double counting
• Past studies included registration fee in
  delegate expenditure estimates (System Three,
  1998)

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- In-scope Expenditure - Convention Organizers,
Associations, Sponsors

• Substantial organizer expenditure beyond
  registration fee recognized by only a few
  studies
• Sponsorship
• Treatment as transferred expenditure unless new
  injection into economy

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Allocation of Total In-Scope Expenditure

• Different industries have different types of
  linkages and different multipliers
• Allocation to industry sectors based on
  expenditure surveys of delegates and organizers

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Allocation of Total In-Scope Expenditure

• Industry Sectors
• Accommodation, Transport, Shopping, FB,
  Entertainment and organized tours
• PCOs, catering services, specialized technical
  support, advertising
• Business service sector has higher multipliers
  than other industry sectors

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Allocation of Total In-Scope Expenditure

• Businesses that benefited the most from
  convention related expenditures in Australia
  (75)
• Meeting venues, caterers, PCOs, accommodation,
  domestic airlines, FB, international airlines
  
• Johnson et al 1999

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Application of Multipliers

• determine the total effect on output, household
  income, value added and employment of direct and
  indirect convention spending
• Use of income or value-added multipliers is
  recommended
• Previous studies incorrectly used output
  multipliers

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Leakage

• Proportion of in-scope expenditure spent on goods
  and services outside the region ? reduction of
  multiplier effects
• Regions have higher propensity to import than
  nation more specialized and less
  self-sufficient
• Payment of Taxes to federal and state governments

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- Measuring the Importance of the Meetings
Industry -

• report commissioned by WTO, ICCA, MPI, RTE, and
  STCRC
• aim is a minimum of 75 of meetings industry -
  standardize measurement within 5 years 
• Overview of international meetings industry
• Economic importance of meetings industry
• Proposal for Improvement of national statistics