CEI industry booms

The Asia Pacific region is currently experiencing a boom in international visitor arrivals unparalleled in its history, with expectations for an end of year count in excess of 300 million. The CEI sector within the larger travel and tourism industry has consistently been a major contributor to this industry, certainly in numbers but more significantly in yields, as this sector of the industry is seen as having a higher 'value-added' than many others. This year is no exception with many destinations within the broader Asia Pacific region reporting increased activity in the CEI sector. But it is not necessarily business as usual. Many changes in the structure of the travel and tourism industry - both on the supply and demand sides - mean that more than ever before, we need to understand the implications of change (both current and impending) if we are to positively capitalise on the opportunities that arise. Hence comes this year's CEI Annual Industry Survey 2005. The respondents Of the 328 respondents studied, 61 percent were suppliers to the CEI industry while 39 percent were corporate buyers. The suppliers were largely represented by hotels/conference and exhibition centres and professional exhibition organisations (PEO), professional conference organisations (PCO) and destination management companies (DMC) with other service suppliers also contributing to some degree. The corporate buyer respondents were spread across a number of industries with general industrial/manufacturing, financial, advertising and IT/telecoms accounting for almost half of these. The respondents were all from within the Asia Pacific arena with some 88 percent being based within Asia. More specifically, half the respondents were based in Southeast Asia (six destinations mentioned), more than one-third in Northeast Asia (five destinations mentioned), and only a handful (3.7 percent) were in South Asia (one destination mentioned). The Pacific (Australia and New Zealand) accounted for a little over 10 percent of the respondents. Individually, however, 45 per cent of respondents were based in just two destinations, Hong Kong and Singapore. The weighting towards Asia dovetails with PATA's future. PATA predicts the majority of its new members will come from the private sector in Asia, notably hotels, travel agents, tour operators — those with a stake in the business event sector. The vast majority of respondents held relatively senior-level positions within their respective organisations and tended to work in management and/or marketing positions with significant involvement in the organisation of events. Chief amongst these were meetings, conferences and exhibitions with more than half of the respondent group indicating their involvement with these specific activities. Product launches and staff training activities were also significant, followed by incentives and live activities such as road-shows. The respondent group was almost evenly split when it come to belonging to relevant industry associations or not. Pacific Asia Travel Association (PATA) was particularly well represented by those who do belong to such an association, however the breadth of associations available is such that one-third of respondents collectively belong to more than 100 separate bodies. The markets Close to 90 per cent of respondents indicated that they had been actively involved in organising CEI events during 2004 and, as expected, these were widely distributed across destinations within Asia Pacific. Thailand was the most named destination for aggregate CEI activity, especially in relation to conferences and incentives while China took the lead in relation to exhibitions. By type of CEI activity the top five destinations utilised in 2004 were: Thailand, China Singapore, Hong Kong and Malaysia. However, the position changes somewhat in relation to proposed CEI activity in 2005. While the top five named destinations remained the same as for 2004, China rises to the top for overall CEI activity. Hong Kong rises to compete equally with Thailand as the next nominated destination. China (PRC's) rapid rise as both an inbound and outbound entity drives much of the statistical work PATA carries out. To a great extent, PATA members look to us for advice and know-how on how to tap China's potential. China's rise Furthermore, China ranks first or equal first in all of the categories of conferences, incentives and exhibitions, with absolute dominance in the latter category where it is nine percentage-points ahead of its closest rivals, Thailand and Hong Kong. But we can expect changes even here. When asked about emerging destinations for CEI activity over the next few years, Vietnam and Indonesia were easily the most recognised as offering potential. Vietnamese inbound operators are hungry for knowledge and exposure. In December, PATA and the PATA Vietnam Chapter organised a seminar which showed operators how to attract visitors from Asean markets and get the most from travel trade shows. In the immediate future, however, China rated as the destination with most growth potential over the next 12 months, followed by Hong Kong, Australia and Thailand with India and Singapore tying for fifth-place. At least in terms of numbers, the picture shifted when looking at the destinations in terms of revenue sources/market share. Here Singapore dominated followed by Hong Kong then Japan and China in equal third place with Australia moving into fifth spot. While the order of importance varies according to whether or not the destination was a first-choice selection or in the top three, the destinations themselves remain as stated. It was surprising to see Thailand which generally dominated in terms of destination selection, move well down the rankings in terms of revenue, at least in respect to hotels/convention and exhibition centres. From the corporate buyer angle, the best conference and exhibition centres in Asia, based on experience or impression were in Hong Kong where the Hong Kong Convention and Exhibition Centre (HKCEC) gains special mention, closely followed by Singapore (Suntec City for special mention) and Thailand where the QSNCC and the Impact Centre both received mentions. Australia ties with Thailand for third place. However, no individual centres were consistently named. Hotel insight As for hotel properties, Singapore and Thailand dominated the grouping for the corporate buyer segment while the Grand Hyatt and Shangri-La groups came out on top in terms of the best hotel chains in Asia. Thailand is the clear leader in resort properties, well ahead of Indonesia, the next nominated destination, with Shangri-La again dominating as a leading hotel group, although Sheraton and Westin were not far behind. And, in terms of getting there, Singapore Airlines was voted the best airline in Asia well ahead of Cathay Pacific and further in front of Thai Airways. Outlook It is interesting to note the shift in the number of events expected to be organised in 2005. Whereas in 2004 there was a relative dominance in the one to five events per year category, during 2005 this is expected to give way to more than six events per annum, with a strong skew towards more than 11 events in that year. On average and across all respondents, the number of events expected in 2005 will grow from around 7.6 to almost 8. This prediction is underpinned by budget allocations, as roughly 90 percent of respondents indicated that they would have the same or better budgets than in 2004. Two-thirds indicated an increase in budget with the majority of these expecting a gain of 5 percent to 10 percent. Obviously this increase in budget will be needed, as half the respondent group are expecting increased charges for exhibition spaces during the next 12 months. Corporate buyers are also expecting increases in charges over the next 12 months as almost two-thirds indicated expected rises in supplier charges of 5 percent or more. There are concerns amongst this respondent group, however, with (not surprisingly) safety and security issues topping the list. Political instability is ranked overall second as a concern followed by regional conflicts and energy prices. Of note, environmental concerns came in last in this sequence. It is not surprising then to see security issues consistently ranked first in order of importance by corporate buyers and PEOs/PCOs/DMCs when selecting a destination for incentive activity. However, pricing and accessibility were also regarded as key factors in selection. PATA is keenly aware that negative perception on issues such as security can undo a destination — or a region. Since SARS, PATA has learned to act quickly via media relations to protect consumer — and business event buyer — perception of the region. Bird flu may yet be a challenge for the industry. Having great resorts and aviation access counts for nothing if the perception in host markets is that your destination is unsafe or unhealthy. PATA is energetic in encouraging media to present a balanced image of the region based on facts. PATA's communication strategy is to protect the region as much as position and promote it. On the other hand, this same sub-group regarded pricing, the availability of in-house events teams and airport accessibility as key elements when it came to organising a conference.