Corporate travel on the rebound as markets soar

As the target group of the world's largest travel trade shows, corporate event planners of blue-chip multinationals are — for a significant proportion of this industry — the goose that lays the golden egg. It's little wonder, then, that exhibitors at shows such as AIME, EIBTM, IMEX and IT&CMA invest the amount of time, money and faith in exhibition organisers, whom they hope will deliver the cream of the crop in terms of buyers with intent and budget to match. Overview In this year's CEI Annual Industry Survey, corporate buyers (128 in total) formed 39 per cent of the respondent profile, with findings drilling down to fundamentals including what purpose events hold for corporates, what are the markets in which buyers have held events or are planning to do so in 2005 and how big are the budgets they are willing to invest. For the first time since its inception, the survey also examines the experiences of corporate event planners at key CEI facilities around the region. In a bid to gauge opinion as well as experience, we also wanted to know what in-house event managers felt were the best convention and exhibition centres in the region; what and where were the best hotel chains in Asia Pacific; where were the best resorts in the region and what was the best airline catering to the group business travel segment (Respondents' Choice p48). Events breakdown When it comes to the types of events organised, corporate event planners in the region shed some interesting light on what they have been investing in. Overwhelmingly, meetings are the CEI activity of choice, and 97 per cent of all corporate buyer respondents elected this as their CEI mainstay. This was followed in close succession by conferences, which 90 per cent of respondents in the corporate category also opted for. It is worth noting, however, that in the Asia Pacific region in particular, within both the conference and meeting segments, incentives can quietly feature in many corporate programmes. This has been mooted by both incentive houses and corporates in the past year as one of the repercussions of tax laws concerning employee incentive rewards. So what might appear to be just a meeting or conference may also include an incentive element — the full extent of which is unknown. And so-called 'pure incentives' were outgunned by both 'staff training/team-building' and 'exhibitions' at 76 and 69 per cent respectively, with incentives coming in lowest at only 41 per cent. Product launches fared well as a CEI tool of choice — elected by 58 per cent of corporate respondents — with 'live events/roadshows' coming in just above 'incentives' at 44 per cent. Overall, this year's survey has not revealed any drastic disparity between the number of events corporates ran in 2004, although encouragingly in comparison, the number of events they are planning to hold in 2005 is marginally higher. In 2004, the majority of corporate respondents — 48.44 per cent — held between one to five events, while 27.34 per cent held significantly more, at 11-plus events. Consequently, 21.88 per cent of corporate respondents said they had organised between six to eight events while the 2.34 per cent minority had opted out of holding any events whatsoever. In comparison, for 2005 events numbering between one to five again are the dominant majority that 42.19 per cent of corporate respondents will be hosting. Showing an increase on 2005, 31.25 per cent will be holding 11 events or more, while 21.88 per cent look set to hold six to eight events in the course of the year. Somewhat alarmingly, the number of corporates that responded by saying they would not be holding any events in 2005 rose to 4.69 per cent. Choice destinations With security such a prevalent aspect of regional corporate travel and fluctuating travel advisories afforded terrorism hotspots such as Bali, Jakarta and Southern Thailand in 2004, exactly where corporates are sending their teams for CEI events is highly topical. Despite major setbacks such as SARs and the Iraq war, travel did continue for conferences, meetings and incentives and the overwhelming destination leaders are shown in the Top 10 CEI Snapshot (p20). The criteria that corporates factor into the value chain is also interesting. "We are always looking for somewhere a little bit different, somewhere exciting, but somewhere that fits in with the personality of our business. It's not just about sitting back and enjoying the sun, its about getting to know your peers and driving your business forward," notes Vodafone Australia's head of sponsorship and events Steve Lawson. While it is difficult to give specifics on CEI budgets for 2005, he expects them to remain roughly at 2004 levels, given how important it is to ensure staff are well-versed in the company's business strategy and motivated by it. "We want to reward and recognise and encourage our people to get involved with these programs and are constantly challenging ourselves to do it bigger and better than the year before." Final choice of location comes down to logistics like ease of transport, safety of venue, and the availability of a wide range of facilities on the ground. "There was very much that feeling of keeping things close to home, especially after September 11 and then Bali. Security issues are still in the back of people's minds because if you are taking people away you are responsible for them," he says. Markets such as Thailand are also well scored and the industry looks set to continue to grow at a dynamic pace continuing to provide value for buyers and planners and excellent hospitality infrastructure and services — topping the poll with the best resorts in Asia Pacific. Indeed such has the growth been of Thailand in recent years, it has led a surge on interest in Southeast Asia among global buyers and planners. However, while security issues are a constant reality, the trade in Thailand feels that there is a change in global mood. "Events over the past few years affecting security seem to have faded somewhat and it is possible to foresee that the market has become hardened to this type of threat," says Pornthip Samerton, managing director, Destination Asia (Thailand), who told CEI that any negative impact on Thailand's industry would only be "short term". "We should look at it as being positive, it means that Southeast Asia is still a great destination for CEI," she says, adding. "Vietnam is definitely an alternative for clients who have already been to Thailand. Bali is also a good value destination with great offers on hotels and ground services." Overall, Samerton believes people see Thailand as "a stable and safe place in which to travel." Budgets break new ground In a sense, the million-dollar question is 'how much are corporates willing to put their money where their mouth is when it comes to CEI activities'? Encouragingly, budgets are there, and on a broader industry level, while taking groups to costlier luxury destinations such as Dubai may not be financially feasible for all, a large proportion of Asia Pacific corporates appear to be playing in the CEI big league. The majority, at 25.78 per cent, fall into the category of more conservative CEI budgets for 2004 — listing an annual CEI budget of between US$10,000 and US$50,000. However, falling just short of this majority is the upscale alternative — 25 per cent that had between $100,000 and $500,000 to spread across the CEI events spectrum. While 18.75 per cent had a healthy $50,000 to $100,000 to spend on corporate events, just 14.84 per cent were budgeting with $10,000 worth of annual CEI spending. The rest, at 8.59 per cent, 4.69 per cent and 2.34 per cent, swing the pendulum in the opposite direction, brandishing respective mega budgets of $500,000 to $1million; $1m to $5m; and $5m or more. Given Asia Pacific's financial and IT/telecommunications hub status, it is highly likely that these budgets originated from these high earning sectors. For the rest, markets such as Thailand — and a weak Thai baht— provide a financial incentive for companies looking for a five-star experience at affordable prices. The litmus test for 2005 In Australia, events management companies are looking forward to a robust market for the CEI sector in 2005 thanks to a healthy global economy. David Grant of David Grant Special Events, one of Australia's largest events planners which has worked for clients including BMW, Calvin Klein, Nokia, L'Oréal, Louis Vuitton, MasterCard and Sun Microsystems, is upbeat about the coming year. "From all accounts, 2004 has been the best year the industry has had for at least ten years and I think this year will be better. The budgets are increasing, but also people are more realistic about what budget gets what event, making it a more sophisticated educated market," he notes. This outlook is supported by the survey results which, despite the 40.63 per cent majority of corporate respondents flagging no change to their CEI budgets in 2005, overall the picture is one of increments and stability. The 18.75 per cent following in second place said they expect to see a healthy 5 per cent increase to their 2005 CEI budgets. Falling just short of this, 14.84 per cent are ushering in 10 per cent increases, while 4.69 per cent are respectively looking forward to 20 and 25 per cent budget hikes. And at the top end, 3.13 per cent said they expected the increases to their CEI budget to be greater still. Conversely, only 2.34 per cent are this year grappling with a 5 per cent budget cut, with 1.56 per cent respectively looking at cuts of 10, 15 and 20 per cent. Grant believes firms are more results-orientated and notes an emerging trend towards smaller, better quality, more targeted events as opposed to the bigger "shotgun-style" events. According to Kevin Buckley of Sydney-based events organisers Eventsource — which has recently organised events for clients including Maserati, LG Electronics, Lexus and Vodafone — security will remain a defining factor for corporate travel in 2005. He predicts the three most important factors for 2005 as "infrastructure, air accessibility and pricing". As for external factors, security threats, regional conflicts, political instability and environmental concerns top the list, and for Australia at least, that will continue to translate into more domestic events.