Business Tourism Trends Update - Scottish Convention Bureau

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Business Tourism Trends Update - Scottish Convention Bureau

Business Tourism Trends Update - November

2012

Insight Department

VisitScotland

2012

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Welcome

Business Tourism Trends draws together some of the latest news and research on business tourism,

including trends, insights, buyer planning/booking behaviour and competitor decisions.

The reports and news items which have been used in this update are referenced under each item,

and are available from the publishers’ websites. A list of useful sources are provided at the end.

If you have any feedback or suggestions about this publication, or if you would like to be alerted to

the next issue, please email research@visitscotland.com.

Key Insights

Organisers are now looking for venues ‘closer to home’ in an effort to cut travel costs.

Within the European market, Barcelona, Lisbon and Amsterdam have all seen a reemergence

in popularity, due to competitive rates during the economic climate. London has

also performed well, despite a less attractive currency for foreign visitors and hosting the

2012 Olympic Games.

The UK was also cited as having the 2 nd highest level of spend by business travellers in

Western Europe, behind Germany.

Despite the economic downturn, meetings in 2012 are rising from 2011, and more meetings

are being planned. Shorter and smaller meetings are a growing trend. Organisers are now

looking to do more during their meetings with a smaller audience, in order to improve

delegate engagement. The incentives market has also suffered from cost cutting initiatives,

with a decrease in gifts being recorded in 2012.

Technology continues to grow in importance throughout the business tourism sector. There

are numerous forms of social media now available to make events more accessible and

interactive with delegates. Smartphones and tablets are becoming more integral for

delegates’ every day business. Mobile devices are expected to increase interaction at events,

with delegates using them to communicate with speakers before, during, and after the

event. Whilst many support and embrace the use of technology, in a push for more cost

effective methods of conferences (such as virtual meetings), there still remains an argument

for the importance of face-to-face interaction, which is deemed as the most important

element of meetings.

North American business travellers are still feeling the effects of the economic downturn,

with fewer employees being allowed to attend meetings. Cost cutting limitations have also

been applied to delegates in order to control spending whilst in attendance. Recent research

has found that US hotels had a record year, amassing $1.85 billion in surcharges, including

WI-FI and telephone calls.

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Business Travel & Tourism in Scotland

Figures for Jan-May of 2012 indicate that there has been an increase of 39% (256,000) in domestic

business tourism trips, from the same period in 2011. Nights have also seen an increase of 24% and

expenditure has seen a healthy increase of 59% to £262 million.

Business Travel to Scotland (Domestic) Jan-May 2012 % Change Jan-May 2011

Trips (000's) 918 +39%

Nights (000's) 1964 +24%

Expenditure (£m) 262 +59%

(Figures provided by Great Britain Tourism Survey)

These figures suggest that despite economic uncertainty trips, spend and number of nights has not

decreased, possibly due to the proximity of the venue for delegates. The business traveller is able to

utilise a greater amount of capital if travel costs are kept to a minimum, unlike that of long-haul

events. Organisations are more likely to spend more on the incentives market, and allow for longer

night trips to short-haul/domestic events, than on long haul flights for international MICE events.

Business Tourism’s slight increase however, may be an example of tighter constraints being placed

on delegates as they have limited time for other activities whilst on business trips.

Although business travel figures for 2012 look strong in comparison to the previous year, Business

tourism figures indicate that while more trips were taken in 2011, less overnight stays were utilised

than in 2012 (a decrease of 1.2%). This may indicate cost saving initiatives by organisations in order

to cope with the economic downturn, and utilise day visits over overnight stays. It had been

suggested that business travel and tourism had suffered due to a ‘double-dip’ recession however,

positive employment figures and levels of investment would suggest that the sector remains in a

healthy condition despite economic woes.

The main overseas markets to Scotland in 2011 for Business Tourism, in terms of volume of trips,

were the USA, Germany, Norway, The Netherlands and France. In terms of spend the list is

consistent, with Denmark now substituting Norway. The inclusion of Denmark and Norway are

predominantly included due to the oil industry based in Aberdeen.

Research from the Scottish Chamber of Commerce (SCC) indicates that there has been a gradual

decline in the conference/function facilities sector within Scotland. Trends for the demand for

conference/function facilities were recorded to be weaker than the demand for accommodation

within Scotland. It must be noted that, these findings are based on the SCC’s own research, and may

be a small sample size, which makes it difficult to measure the findings correctly.

Source: GBTS/IPS/SCC

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Developments within Scotland

Scotland’s reputation amongst the meetings and conference sector looks set to excel within the

coming years. An injection of £2 million over the next three years from the new conference bid fund

(aimed at attracting more business tourism to Scotland), with a particular focus on scientific and

knowledge based industries, will take place in order to compete to host larger international

meetings. The new conference bid fund is expected to boost business tourism in Scotland by over

20,000 delegates each year, and build the competitiveness of Scotland’s cities and destinations

within the International conference market.

Topping this £2 million injection is a further £2 billion investment in to the business tourism

infrastructure. This is aimed at regenerating and boosting facilities across Scotland. Benefitting

venues include;

Victoria & Albert (Dundee) - 1,500sqm international centre for design is set to open in 2015 as part

of a spectacular centrepiece for the newly regenerated waterfront area.

Edinburgh International Conference Centre - 2,000sqm function space extension is due to be

opened spring 2013.

The Edinburgh Assembly Rooms - Recently finished a £9.3million restoration to the iconic 18 th

century landmark and reopened on 20 th July. The venue has also been supported by a number of

additional business ventures such as Jamie Oliver’s ‘Jamie’s Italian’ and boutique high street brands.

The Hydro (Glasgow) - Part of the River Clyde regeneration programme, the 12,000 capacity Hydro

Arena will be billboarded as one of the world’s busiest entertainment venues and will also offer

support to the neighbouring SECC. The Hydro is set to open in September 2013 before the SECC

hosts a number of Commonwealth Games events.

Source: Meet Pie

Meeting Market Trends 2012

Research from ‘Benchmark Hospitality’, (a leading US-based hospitality company) examined some of

the key 2012 trends in the meetings market. The report highlighted the top ten 2012 meeting trends

for a number of properties owned by the firm, that are affecting the sector.

Meeting demand has been growing stronger than it has since 2008, with venues and hotels now able

to be more selective in their choice of bookings. This trend is reflective of the ‘strength of demand’

and ‘flexibility’ of venues, which is now decreasing.

Traditional meeting spaces are no longer the key aspect of a successful venue. Destinations which

are abroad, but closer to ‘home’ are becoming more popular, in order to keep costs to a minimum.

This finding has been reinforced by Europe, which is now growing in the MICE market, as UK

organisations look to venues within the short-haul market. A panel discussion at Hyatt’s UK fair

discussed the re-emergence of Barcelona, Amsterdam and Lisbon, due to competitive rates within

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the current economic climate. Discussions also pinpointed the growth of London as a MICE

destination from firms outside the UK, despite higher rates than competitive destinations.

There has also been a growth in more niche venues to host meetings in order to give a more

personal feel for attendees. This is linked with the growth in teambuilding exercises within the

meeting and conference sector. Many organisations are now looking to combine their event with

teambuilding exercises, in order to create a more memorable experience for attendees, and enticing

investment in to the organiser’s products and services.

Research by American Express Meetings & Events found that meetings in 2012 are increasing from

2011 and with more meetings being planned. Shorter and smaller meetings are a trend being

identified for 2012, with organisations looking to do more with less, and hold a higher number of

meetings. Sustainable meetings and conferences are also growing, with 47% of hotel suppliers

stating clients are requesting/requiring sustainable practises at events.

Association Meetings

Source: Benchmark Hospitality / American Express / ABTN

Research by the Global Business Travel Association (GBTA), has identified the UK as having the

second highest level of spending on business travel in Western Europe in 2011, behind Germany.

Although the UK suffers similar regional woes as mainland Europe, it has been able to diversify due

to having its own currency and monetary policies, bringing a level of flexibility during the recession,

making business travel a healthier environment.

Business travel spend in the UK is predicted to rise by 0.7% in 2012, and total spending on domestic

business travel is expected to rise to 2.7% in 2012. The Olympic Games will also have brought about

a level of displacement for business travellers, but it is expected that the UK will recover, with events

affected by the games, to be rescheduled later in the year. It is also expected that the UK will

prosper against Southern European destinations due to the strength of the Pound against the Euro.

Source: GBTA

Research by BMEIS identified some of the key trends developing within the Association meetings

sector, namely the belief that social media and virtual meetings will never replace face-to-face

meetings. 37% of respondents (from a sample of over 200 businesses), felt the connection of a faceto-face

meeting is key to developing relationships, and interacting with other attendees. This is

reinforced by the importance of networking at events, with 70% of respondents believing this is one

of the key aspects of Association meetings.

The expectations of delegates at Association events have increased. Event programmes are now

expected to be packed with incentives, and opportunities to entice delegates to invest within the

hosts products or services.

Source: BMEIS

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Growth in Technology

Technology is now seen as an integral part of the meeting and conference sector, with numerous

forms of social media available making events even more accessible, and interactive to the audience.

The growth of low cost apps for smartphones are helping to increase connectivity between

attendees, enabling insights to be communicated to a greater audience.

Social Media sites such as Facebook, Flickr, LinkedIn and Twitter are now essential to the meeting

and convention market, as they allow for information to be distributed to the correct audiences.

Mobile devices are also transforming the meeting and conference sector. A study by FutureWatch

found that 80% of meeting professionals use smartphones, and other mobile devices in their daily

jobs. There has also been a growth in the use of tablet devices within the sector, giving attendees an

easy method of note taking, and communicating insights almost immediately via mailing systems.

Tablets are expected to increase in use during events, and may eventually lead to blogging, Question

& Answer sessions, making events more interactive.

Research conducted by the British Meetings & Events Industry Survey (BMEIS), further discussed the

importance of technology within the meetings and conference sector. From a sample of 632 meeting

and conference organisations (based in the UK in 2011), over 50% of corporate respondents use

Social Media to communicate with delegates before, during and after the meeting. Virtual meetings,

in addition to face-to-face meetings, have increased to 20% in both corporate and association

sectors. BMEIS found that technology has been growing since the previous study.

It has been noted that not-for-profit organisations have also embraced social media to a greater

extent than the corporate sector. This may be due to the informal nature of certain association

market communities, whereas the corporate market is considered to be more formal, and security

aspects of social media may deter them from fully embracing its services.

Social media was prevalent at VisitScotland’s annual trade event Expo in 2012, with 681 tweets

being communicated via smartphones and other portable devices. It is estimated that 74% of the

916 attendees used social media communication whilst attending the event.

The Wider Environment

Source: Corbin Ball / VisitScotland Research / BMEIS

Research conducted by Egenica in 2012 reviewed the macro environment of the hotel, and aviation

sectors pricing rates and how this affects the Business Tourism industry. Research found that

average daily hotel rates were up approximately 6% in North America, 5.7% in Asia Pacific and 3.3%

in Europe. These increases mainly revolve around the increase in demand, coupled with a slowed

increase in supply.

Average airfare prices have also seen an increase year-on-year of 6% in North America and Europe,

and a 3% average rise in the Asia Pacific region. The reasons for these increases in Europe include

rising fuel costs, tightly managed capacity, and financial vulnerability, which have been coupled with

competition from low cost airlines, and high speed rail.

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These findings indicate the pressure placed on the meeting and conference sector. It also supports

the rising trends of finding venues closer to home, and the increase in virtual and remote meetings,

as overall travel packages for attendees are increasing to unaffordable levels.

Source: Egenica

Research from the World Travel & Tourism Council (WTTC) investigated the impact of what Business

Tourism would look like in 2 years, if business travel is cut by 25%. Results indicated that if this were

to occur, global GDP would be 5% lower than it would be over a 5 year period, without the sudden

cut. Global employment would also decrease by 1% each year based on this scenario, totalling a

potential 30 million job losses. Although the effects would not force a world recession, the global

economy would grow at a slower rate, if business travel were to progress at normal levels. However,

after a five year period, growth would begin to return to a baseline pattern figure of 4%, but the

levels of GDP and employment would remain lower than baseline predictions.

Source: WTTC

North American business travellers are still feeling the effects of the economic downturn. Over a

third of the business travellers surveyed by ‘USA Today Travel’ during August 2012, found that fewer

employees are allowed to travel to meetings than a year ago. Research also found that around a

quarter of respondents are practising more cost-saving daily spending limits than a year ago, and

23% are staying less frequently in luxury or full service hotels. However, research by New York

University’s (NYU) School of Continuing and Professional Studies indicated that despite the economic

downturn, and constraints on travel for meetings and conferences, U.S. hotels collected a record

$1.85 billion in total fees, and surcharges last year. This record is on track to be toppled in 2012.

Surcharges could be categorized within extra spend during a trip. This would include internet fees,

telephone call surcharges and baggage holding fees amongst others.

It could be suggested that virtual meetings are becoming a more affordable alternative to face-toface

meetings, with 64% of respondents indicating that technology has helped their companies save

money on business travel. Although this may refer to the booking process of hotels and flights, it

may also be referenced to webinars and virtual conferencing.

Incentive Industry Trends

Source: USA Today / Successful Meetings

The Incentive Research Foundation (IRF) have reported that providers, buyers and suppliers are

being squeezed by the increasing velocity of change in the work place, causing planning and

response cycles of businesses to contract.

Incentives have also suffered with many organisations deciding to cut the number of on-site gifts for

delegates. This has also been coupled with organisations only choosing to send their attendees to

venues which limit travel costs. This may be to venues which can be driven to, involve a shorter

length of trip, and meetings that have fewer follow up meetings afterwards to attend, in order to

limit spend.

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Further studies by the IRF found that smartphones, and tablet devices are playing a pivotal role in

the incentive travel market. It is predicted that by 2013, 35% of meeting and conference planners

will use mobile apps to track programs. The growth of social media usage such as Facebook, LinkedIn

and Twitter are expected to continue, connecting attendees with regular offers, which will be in

response to the state of the economy at that particular time period.

Research conducted by Corporate Meetings & Incentives, and Incentive Research Foundation during

November 2011, found that economy remains the driving force for destination decisions. The

research found that markets fluctuated dramatically during 2011, whilst sales were stable for 40% of

respondents, and this was viewed as a significant increase from 2010’s performance of 26% in flat

salesby respondents. A decline in sales was only reported by 19% during 2011, a 6% improvement

from 2010. Although evidence of a ‘stagnant’ economy was reflected by 41% (seeing an increase in

2011), this was a 7% decrease on 2010.

Results from the study also indicated that fewer cancellations were occurring in group incentive

travel, and merchandise programmes. As both sectors improved by 5% and 3% respectively. This

could reflect a desire for the market to battle through tough economic hardship, and to keep a

‘business as usual’ attitude. This can be reinforced by the majority of respondents indicating that

their travel budgets were much the same as previous years. Although 91% of respondents stated

that their travel budgets had been reduced due to the economy, weak sales were also to blame

(41%). The economy is also seen as a key reason why ‘per-person’ spending for incentive group

travel has fallen for the 3 rd straight year, to an average of $2,603.

Source: Corporate Meetings & IRF/Meetings and Conventions

Further research by Corporate Meetings & Incentives and the Incentive Research Foundation has

expressed concerns that the line between incentive travel, and meetings are beginning to blur. The

economic downturn coupled with tax implications has encouraged planners to incorporate business

content within incentive travel programmes, to maximise the potential of their trip. This finding was

reinforced with over a quarter of planners dedicating around 40% of their event to business

meetings.

Source: Corporate Meetings & Incentives

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MICE Trends Update

The Scottish Exhibition & Conference Centre (SECC), has been awarded a Gold Star Award

for Greenest Conference Venue, at the Green Tourism Business Scheme (GTBS). The venue

also recently launched its ‘Better Business’ campaign, looking at how positive contributions

can be made to staff, customers and its local, regional and national communities. [Green-

Business]

In conjunction to celebrate the 20 th anniversary of the resort, Disneyland Paris has recently

developed a number of team building programs, private-event opportunities, and special

offers for the MICE sector. [Disney Meetings]

Boutique Hotels are increasingly investing in marketing initiatives and incentives, to

compete against larger hotel brands, in order to lure meetings and event opportunities.

[Meetings-Conventions]

A recent survey by the International Congress and Convention Association (ICCA), and the

IMEX Group found that Association meetings are still feeling the pressures of the economic

downturn. Respondents that attended the most recent IMEX Frankfurt trade show, found

that 49% had collected less sponsor, and exhibitor income at their Association meetings in

2012 than last year. 60% of respondents also indicated that the economy had a negative

impact on their associations, and/or events in 2012 (an increase of 17% from 2011).

[Successful Meetings]

Virtual meetings are now increasingly viewed as a significant alternative, for organisations to

hold large conferences and events. It is perceived that virtual meetings offer solutions to

face-to-face meetings, by providing a significant cost effective venue for attendees to

communicate, and engage within. This is also viewed as a green method as it cuts down on

international travel, as well as eases travel safety concerns. [Meetings Focus]

Centaur Exhibitions has announced that it will host the Meetings Show UK, the new event

for the UK inbound, and outbound meetings industry. It will focus in particular on the

Association conference market. The event is expected to attract around 5,000 visitors, and

1,500 buyers from across the UK, and Europe. [Meet Pie]

The London Olympics generated a price increase of 87% for London hotels during the games.

Research by STR Global found that the ADR (average daily rate) for hotels, between the

opening ceremony on July 27 th and August 5 th, to be £216.42. Occupancy also increased by

3.2% during the same 10 day period to 87.7%. Not all hotels were privileged with such

prosperity, as hotels around the Heathrow and Gatwick areas suffered decline in occupancy,

as visitors opted to stay within London to limit daily travel costs. [ABTN]

Although pricing of business travel will still scrutinised next year by organisations, as

constraints continue, business trips will still be made. Findings from a panel discussion at

Hyatt’s annual UK fair, indicated that lead in times for business travel bookings, and MICE

events are continuing to become shorter. [ABTN]

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Non-MICE business travel news

Virgin Atlantic will start three daily short-haul flights from Heathrow to Manchester in spring

2013. This is seen as a competitive move to combat British Airways control over the shorthaul

market within the UK. Virgin has also won slots at Heathrow, which BA had to relinquish

in order to buy BMI as part of the European Commission’s competition clearance laws.

Routes include six return trips a day to Edinburgh and three to Aberdeen, with a further six

flights to Manchester, launching on March 31 st 2013. [ABTN Herald Scotland]

Budget hotel chain Travelodge has set new constraints in order to restructure its finances by

dropping 10% of their hotels. The chain looks set to transfer 49 of their hotels to other

operators over the next six months in order to tackle debts of £1.1 billion. [ABTN]

Moscow remains the world’s most expensive city for hotels, with an average room rate of

£258.11 per room, which is a 3% rise in local currency year on year. This is significantly

higher in contrast to London, which is £164 between January and June 2012. [ABTN]

BAA has agreed to sell Stansted after an extensive 3 year battle against the UK’s competition

authorities. Despite claims by BAA that Heathrow and Stansted serve different markets, the

sale will now go ahead. This move is set to increase competition within London and allow for

new markets to enter the UK. [Business Traveller]

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Useful resources

Almost all of the information featured in this newsletter is available freely from the website

sources provided. Below are links to some of the key reports and websites.

Scottish Chamber of Commerce - 2012 Quarter 2 business survey

http://www.scottishchambers.org.uk/userfiles/file/QBS%20/PressRelease%20QBS%20Q1%2

02012%20Final.pdf

Meet Pie - Meetings & Incentives Travel Archive

http://www.meetpie.com/Modules/PublicationModule/MIT/FeaturesArchive.aspx

American Express - American Express Meetings & Events Announces its Forecast Showing an

Expected Increase in Number of Meetings Planned in 2012

http://about.americanexpress.com/news/pr/2011/meetings2012.aspx

The British Meetings & Events Industry Survey 2012 (BMEIS)

www.meetpie.com/BMEIS

GBTA Business Travel Index (BTI) Outlook - Western Europe

http://www.odysseymediagroup.com/en/Editorial-Associations.asp?ReportID=530553

Egenica - 2012 Global Supply Benchmarking Research and Analysis

http://www.egencia.com/daily/home/docs/2012_us_global_benchmarking_guide_final.pdf

ITB World Travel Trends Report 2011/2012

http://www.itbkongress.de/media/itbk/itbk_media/itbk_pdf/WTTR_Report_komplett_web.pdf

World Travel & Tourism Council - Business Travel: A Catalyst for Economic Performance

http://www.wttc.org/site_media/uploads/downloads/WTTC_Business_Travel_2011.pdf

IMEX America Index of Optimism

http://www.wttc.org/site_media/uploads/downloads/WTTC_Business_Travel_2011.pdf

The Top Incentive Trend for 2011

http://theirf.org/research/content/6031533/driving-our-future-the-top-11-incentive-trendsfor-2011/

The Incentive Industry Trends for 2011

http://theirf.org/direct/user/file/pdf/Pulse-Survey-Fall-2010.pdf

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