January 5, 2015

GCC shows high potential to become global meetings hub, says study

GCC countries have major competitive advantages as meetings tourism destinations / Proportion of business tourists is higher in the GCC than the global average — close to one-third of all tourist arrivals / UAE has the most robust meetings tourism model among the GCC countries

GCC countries are in an excellent position to become a global meetings hub because of their growing trade activity, central geographical location, and increasing status as prospecting spots for business travelers, according to a study by management consultancy Strategy&, formerly Booz & Company.

The Strategy& study identifies the meetings sector as one of the most lucrative niches within the tourism industry since business people who travel to a country to attend a trade show or conference tend to spend far more than other travelers. A country that positions itself as a good place for large-scale meetings, conventions, and exhibitions (MICE) can attract a high volume of foreign business visitors.

The study reveals that currently, only about 5 percent of travelers in any given year fall into the meetings, incentives, conventions, and exhibitions (MICE) category, also known as meetings tourism market.  Travelers in the MICE category are seen spending more than other tourists, staying at the luxury hotels where meetings often take place and dining at expensive restaurants, making them more desirable customers. MICE tourists account for about $11 of every $100 that tourists spend — a disproportionately high figure compared to the 5 percent of tourist arrivals they represent.

The study highlights the steady progress that GCC has made as a destination for business travel. Total business-tourist arrivals reached around 10million in 2012, representing a 5 percent annual growth from 2009. The proportion of business tourists as a whole is higher,— probably closer to one-third of all tourist arrivals. This validates the fact that business travelers in the GCC represent an unusually high percentage of total tourist arrivals compared to the rest of the world.

Richard Shediac, Senior Partner with Strategy &, said: “Despite the potential of the meetings market, most emerging economies have not developed a good understanding of this part of the tourism industry, nor do they have a well-considered strategy for getting a larger share of the pie. These gaps have contributed to a situation in which emerging markets like GCC lag far behind the West in terms of MICE market share. Only about 2 percent of all the exhibitions in the world take place in the Middle East, and only about 4 percent take place in South America. By contrast, Europe and North America, combined, are home to more than 80 percent of the world’s exhibitions, according to the most recent data.”

“However, this imbalance presents an opportunity for emerging markets including the GCC to attract a large share of MICE business, if they improve their tactics in the meetings market,” added Shediac.

Understanding the MICE Tourism ecosystem

According to the study, for GCC countries to tap into opportunities in the meetings market, it is important for government and policy makers to have a clear understanding of the MICE tourism ecosystem, which comprises of four parts:

The first is the basic set of MICE products and a clear economic strength that is likely to attract MICE tourists to a country. MICE tourism tends to be often correlated with the level of trade in a country and built around a country’s trade and economic activities. Regions looking to increase their MICE-related tourism need meeting-worthy facilities such as convention or exhibition centers, hotel meeting spaces, or unconventional venues like museums, historic buildings, or universities.

The second consists of MICE services, both core and ancillary. Core services consist mainly of intermediaries such as professional congress organizers (PCOs) - firms that arrange meetings for international associations and destination management companies (DMCs) that bid for meetings, plan events and handle on-site logistics.

The third part is composed of the MICE sector-enablers, which refer to a variety of different factors involving planning, marketing, sales and research. Planning represents a particularly important factor as countries usually tie their MICE plans to their long-term national tourism strategy.

The ecosystem’s fourth element is system enablers which refer to a nation’s handling of security, health and safety, environmental sustainability, and infrastructure. These enablers are important to a country’s overall ability to compete for international business.

GCC’s MICE strengths

Antoine Nasr, Principal at Strategy&, said:  “Among the GCC countries, the UAE is seen to have the most robust MICE business. The country has transformed itself into the region’s most important travel hub and this is evident with the Dubai international airport recently surpassing Heathrow as the world’s busiest airport. The UAE also provides an increasing range and quality of leisure offerings which has enhanced the country’s popularity as a place for meetings.”

GCC countries have five major competitive advantages as MICE destinations which include: (i) central geographic location; (ii) considerable trade activity and expanding economic and corporate bases; (iii) stable political systems; (iv) a host of emerging ancillary services (such as restored ancient sites and rapidly improving museums); (v) new and technologically advanced meeting facilities that can host sizable gatherings.

Roadblocks to GCC’s emergence as a meeting hub

The study outlines a few challenges that are hindering the GCC’s ability to emerge as a meetings destination. These include:  (i) a higher concentration of MICE tourists from other GCC countries which limit the possibility of longer stays; (ii) a limited market for congresses (the exchanges of ideas organised by international associations) due to inadequate local participation in such associations; (iii) lack of unconventional venues; (iv) lack of internationally active intermediaries like the PCOs and DMCs; (v) poor public transportation systems which impacts accessibility to the venues; (vi) most GCC countries do not provide ancillary leisure products with the exception of UAE and Oman.

“In addition to these problems, there are more systemic issues linked to sector-system enablers, such as the difficulty of obtaining visas in the GCC. Of the 140 countries analyzed by the World Economic Forum study on Travel & Tourism Competitiveness, all GCC countries except the UAE were in the bottom-quartile in terms of the restrictiveness of its visa policies,” added Nasr.

Capturing MICE market share

“Despite the start that some GCC countries have made with their MICE initiatives, they can do more to deepen their involvement in this lucrative tourism subsector. Many of the challenges are amenable to policy changes and may disappear in the face of better practices. It is therefore, important to use a structured approach that will allow the GCC to develop the great potential of its meetings tourism business and win a greater share of the meetings market,” added Shediac.

The study suggests the use of a three-step approach which include: (i) assessing the MICE tourism ecosystem; (ii) forging a strategy to win more MICE business; and (iii) developing a governance model for MICE tourism efforts.

“If GCC countries are able to follow this approach and do things faster and skillfully, the region’s meetings business will see a sharp increase in the next few years,” concluded Shediac.

Click here to read the full report.