China battles with Thailand for incentive glory

While mainland China's growth as an exhibitions hub is undisputed, its dual role as Asia's Pacific's second favourite incentive hub is a little more surprising. But this is exactly what this year's CEI Annual Industry Report 2005 figures support. Bigger budgets Overwhelmingly, last year saw China rank second only to incentives champion Thailand by 13 per cent of event organising respondents, marginally less than the 14 per cent for Thailand. "China is the global manufacturing hub, it's cheap and it's a growing economy, so it is obvious that more and more (corporates) are holding their events here. But the CEI market is external. It's outside companies coming in driving it forward," says Nokia category group manager, Asia Pacific and China region, Genevieve Sulway. "At the moment it's a case among many CEI managers of 'we've done the Middle East, US, Europe, and Southeast Asia, so let's try Russia, India and China. China is popular purely because of its rapid growth," says Sulway. In close succession for 2004 incentives are Hong Kong, at 11 per cent, and Singapore and Malaysia tying neck and neck at 10 per cent. Despite offering arguably one of the most stimulating and polished incentive products in the region, Australia garnered a modest nine per cent of votes, only marginally higher than Indonesia's eight per cent. Kevin Buckley of Sydney-based firm Eventsource, supports the case that given the current economic stability Australian corporations are willing to dedicate bigger budgets to high-end trips beyond Australia's environs. "Clients were saying (that) rather than going on a piss-up in Bangkok we'll go to Hayman Island because it is more financially responsible. Now the global economy is booming, we have found that people want to go further afield again and they can afford to splash out a bit more," he notes. "For those reward trips, companies are saying we've tried the Australian thing and in two-thirds of cases there is more aspiration appeal in saying you are going to New Caledonia, Hawaii or Shanghai, rather than somewhere like Coolum [in Queensland]. It's a fantastic spot but I can fly there for A$79 (US$60) on Jestar." Nevertheless, Buckley does not expect an extravagant increase in the number and style of events companies are holding this year. Hot destinations for 2005 While the World Expo 2005 in Aichi Japan is putting the destination on the map for the broader tourist base, our survey showed a one per cent dip for in-bound incentives to Japan this year. Emerging destination favourites such as Vietnam and India, on the other hand, are due for a one per cent increase in incentive groups this year. While incentive favourite Hong Kong can look forward to a two per cent increase in incentives set for the territory, neighbours Singapore and Malaysia will see a two per cent dip each. China and Thailand will continue to outpace the region for incentives, neck and neck at a healthy 15 per cent. Luzi Matzig, group managing director of Bangkok-based Asian Trails predicts a 5 to 10 per cent increase in spending in Thailand this year, and argues that the country will increase its market share over the next 12 months. "Even if there was zero growth in (CEI) budgets Thailand's CEI industry could still grow by more than 20 per cent in 2005," he noted. David Grant of David Grant Special Events concurs with the survey findings, nominating Shanghai as an emerging destination and seeing interest in Bangkok returning. While there are some queries about Bali, he believes people are still concerned about security threats and has noticed a turn in his client base against Asian destinations like Hong Kong, Singapore and Kuala Lumpur as clients seek more exotic locations. In terms of the hot destinations within Australia, Broome is returning and New Caledonia is popular. Decision shapers While we all have a tried-and-tested 'destination wish-list', CEI wanted to find out what were the definitive influencers determining how a corporate buyer or DMC votes on an incentive destination — bar emotive gut feelings and personal preference. When selecting an incentive destination, survey respondents in the form of buyers, professional exhibition organisers, conference organisers and destination management companies (172 respondents)elected ona sliding scale the factors they deemed more important, or less important. Not surprisingly, 'security' was overwhelmingly ranked the most crucial factor, followed by 'pricing', 'finding a fresh, new destination' and 'infrastructure'. On the sliding scale or variable importance, 'accessibility' followed on, with — interestingly — 'leisure/cultural options', 'language' and 'familiarity with destination' weighing in at around fifth and sixth in order of importance. Out of this list, Eventsource's Buckley nominates air accessibility, infrastructure and low-cost carriers as having the most influence on his decision-making for clients. For instance, the decision by Qantas to use low-cost offshoot Australian Airlines has particularly affected incentives trips for high achievers, because they have a preference to fly business class. The same thing is happening at the domestic level with Jetstar hurting some destinations. "I've had a client saying they didn't want to go to Hayman Island, which is a five star resort, because they didn't want to fly there on a budget airline. These people are used to flying first class around the world," he adds. According to Vodafone Australia head of sponsorship and events, Steve Lawson, staff incentives are based around tickets to events which Vodafone sponsors, for example, the Vodafone Italian Grand Prix or beach volleyball and tennis matches locally. Then there are the themed roadshows; conferences; and a global leadership programme whereby staff can work in different Vodafone offices around the world. While price is a key deciding factor when considering certain destinations, according to Destination Asia MD Pornthip Samerton, one of industry favourite Thailand's chief selling points is its consistency of value. "There is no need (for corporates) to increase their budget for this sector since their currencies are much stronger," she said. "Even if they keep the same budgets it already reflects a 5 to 10 per cent increase — there's great value for money when they come to Thailand, compared to Europe or USA." As the industry remains on high alert for potential terrorist attacks, as the survey shows, it remains the biggest external threat to business in 2005 (Future Watch p46), alongside political instability, regional conflicts, energy prices and environmental issues. Both Matzig and Pornthip believe fuel prices have peaked and are unlikely to cause problems in 2005, though China's increasing demands for energy make for an interesting, if uncertain, future. Nokia China's Sulway admits that irrespective of its bright future: "On the ground, China is still a fledgling CEI destination and has along way to go." She highlights the need for more trained staff and an improvement in "transport infrastructure" efficiencies on the mainland for inbound incentive groups.