With the largest economy and population in the GCC, Saudi Arabia has long been a key destination for regional and international business leaders. The meetings, incentives, conferences and exhibitions (MICE) segment of the tourism industry has been a mainstay of many of the Kingdom’s hotels and hospitality services. Under the National Transformation Programme (NTP) and the country’s long-term development plan, Vision 2030, this segment is receiving additional support, with major new investments under way in MICE.
The Kingdom has long recognised the importance of this industry subsector, with 2016 data from the Saudi Commission for Tourism and National Heritage (SCTH) showing that when Hajj and Umrah pilgrims are excluded from figures, business tourist spending accounts for around 20% of total visitor spend in the Kingdom. Breaking this down further, around 75% of people visiting MICE events are inbound into the Kingdom, with the remainder domestic. Moreover, around 71% of MICE attendees stay in hotels, making them one of the principal sources of hotel occupancy. “Around 65% of our guests are a mix of business and groups, with around 10% governmental and the rest leisure,” Tarek Bekhiet, regional director of marketing at Riyadh’s Four Seasons Hotel, told OBG.
In 2013 the Council of Ministers set up the Saudi Exhibition and Convention Bureau (SECB), tasked with promoting and developing this key segment. The bureau began by setting several primary objectives, putting the development of a regulatory framework at the top of its agenda.
This prioritisation was crucial in elevating professionalism as sector figures told OBG that previously, venues such as wedding salons that had not been licensed for MICE events were sometimes used due to a scarcity of premises. The sector had also generally lacked professional expertise and experience.
Licensing of venues and sector players has proceeded apace, alongside filtering of existing outfits and more rigorous controls for the issuance of licences to new entrants. Now, business events in the Kingdom can only be organised once a licence has been obtained from the SECB. Furthermore, such events must either be organised in cooperation with a Saudi partner, or the MICE investor must have opened an office in the Kingdom. For the latter to occur, the relevant commercial licences to conduct business in the sector must be obtained from the Saudi Arabian General Investment Authority.
The SECB has greatly improved the accumulation of data on industry activity since licensing and registration have been more widely enforced. Recent figures give some idea of the rapid growth that is taking place; according to the SECB, some 4.4m visitors attended MICE events in 2016, of which around 3.3m were international visitors, making up 15% of total tourism in country and representing a 10% increase in attendees year-on-year. The number of licensed activities rose 12% in 2015, reaching a total of 8758.
These activities – comprising workshops, conferences, exhibitions, forums and more – were largely concentrated in Riyadh, which held 48% of the total, while Makkah held 31% and the Eastern Province 18%. The SECB – an affiliate of the SCTH – also implemented the Trade Fairs Plan for 2017 that aimed to increase the number of trade fair events from 57 in 2016 to at least 86 in 2017.
In tandem with these expansions has been an uptick in the number of companies involved in the segment. According to SECB figures, some 3100 event organisers were registered in the Kingdom at the end of 2016, with 700 of these receiving their licences in the 2014-16 period.
Prioritising the development of this subsector is also in line with the general diversification objectives of the NTP and Vision 2030. At the same time, a resumption of stronger economic growth, with the private sector leading the way, will likely only be good news for key MICE players.
Events organisers do, however, face constraints; one is the availability of large venues, although this is rapidly changing. According to SECB figures, the Kingdom possessed some 600 conference or meetings venues in 2016, with the Riyadh International Convention and Exhibition Centre being the largest. Owned by the Riyadh Chamber of Commerce and Industry, the 189,000-sq-metre site is centrally located in the capital city. It features a covered area of 14,644 sq metres as its main exhibition hall, a 1000-person conference centre, a VIP lounge, press and business centres, and a 4626-sq-metre outside exhibition area.
Riyadh also holds many other smaller licensed MICE venues, including the Khalid Centre for Conferences and Exhibitions, Al Khozama Banquetting and Conference Centre, and the Kingdom Centre.
Numerous high-quality hotels in Riyadh also offer MICE services, such as the Faisaliah, the Four Seasons, the Intercontinental, various Holiday Inns, the Ritz Carlton, Mövenpick and Novotel. Jeddah, meanwhile, offers the Leylaty Ballroom, as well as the Jeddah Centre for Forums and Events. The Eastern Province has Seef International Centre for Exhibitions and Conferences and the Dhahran International Exhibitions Centre, in addition to a similar range of luxury and high-end hotel venues.
On top of these, there are numerous additional venues in a variety of different locations in the works. The government is set to invest an estimated SR6bn ($1.6bn) up to 2020 in the MICE segment to create five major convention districts. These will be: King Salman International Conference Centre in Medina; a conference centre in the King Abdullah Financial District in Riyadh; a centre at King Khalid International Airport, also in the capital city; and two centres in Jeddah, at King Abdulaziz International Airport and at King Abdullah Economic City. This is in addition to privately backed schemes, with some 68 new hotels opening in the Kingdom during 2017 alone, many of which will have smaller-scale MICE facilities.
One ongoing constraint, however, is the issue of visas. The procedure for obtaining visas was simplified as of January 1, 2017, when a new mechanism that promised to issue foreigners business visas within 24 hours was implemented. Despite the faster turnaround, the rise in the price of business visas, introduced in late 2016, could prove problematic for the segment. The fee for a single-entry visa for business or religious purposes was raised from SR350 ($93) to SR2000 ($533), while a multiple-entry visa for six months was raised from SR500 ($133) to SR3000 ($800). Sector outfits are lobbying authorities to lower fees, arguing that these should instead be based on the amount of time spent in the country. MICE visitors may only stay for a few days and the high fee may act as a deterrent, curtailing the benefits business travel brings to the economy, especially since business travel spending was expected to grow by 4% in 2017 to SR14bn ($3.7bn), up from SR13.4bn ($3.6bn) in 2016, and rise at an average of 2.7% per annum over the 2017-27 period to reach SR18.2bn ($4.9bn) in 2027.
Skills & Training
Another current constraint is the capacity of MICE organisations themselves. Moving forward, the availability of properly trained and experienced human resources will be key to the growth of the subsector. The increasingly active role of the Saudi Event Management Academy (SEMA), which has been running a variety of courses for the past five years, is helping to address this. The academy offers short programmes in conference and exhibition management, as well as longer diplomas and certificates. SEMA also has a wide range of partnerships with sectoral companies, and aims to place more than 200 students into jobs in the MICE segment every year.
Many of these graduates enter the fast-developing MICE sub-segment of entertainment. Vision 2030 plans to create a more vibrant Saudi society, which has led to the establishment of the General Entertainment Authority, dedicated to promoting cultural and artistic events in the Kingdom.
MICE events geared towards entertainment are also poised for growth. “This is a new trend entering the market, which is an excellent opportunity for us and for the Kingdom’s future,” Khalid Almdar, marketing and sales director at Riyadh Exhibitions Company, told OBG.
In coming years this trend may indeed feed an expansion geared towards events. In any case, the MICE segment looks likely to be a key component of the Kingdom’s future travel and tourism development, with business travellers taking a growing role in the achievement of NTP and Vision 2030 targets.
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