Business travel remains an often-overlooked market compared to the more marketable leisure travel segment, despite it packing greater dollar per day spending rates compared to other tourism subsectors. Business travel spending accounted for 23.4% of the travel and tourism industry’s contribution to GDP in 2015, which was valued cumulatively at $1.1trn for the year, according to data from the World Travel & Tourism Council (WTTC). Although it represents less than one-quarter of the tourism market, growth in business travel spending is set to outpace that of leisure travel, with the former expected to grow by 3.9% in 2016 to $1.1trn, compared to a 3% growth rate projected for leisure travel.
With its well-regarded leisure travel segment receiving the bulk of tourists, spending within Thailand’s business tourism subsector remains well below the global level, sitting at 16.1% of travel and tourism contribution to GDP in 2015. On the bright side, the segment is projected by the WTTC to grow by 5.4% in 2016 to a total of BT381.4bn ($11.5bn) for the year, with leisure spending expected to grow by 4.5%.
Within the business travel sector, the meetings, incentives, conventions and exhibitions (MICE) category in Thailand is a tantalising prospect, both for its high growth rate and its coveted high dollar per visit spending patterns. The segment is becoming increasingly important, as traditional business trips have declined in recent years due to a sluggish global economy and improvements in communication technology. Within the business travel market as a whole, the MICE segment grew by 37% between 2007 and 2014, accounting for a 54% market share of all business travel according to a 2015 report prepared by IPK International for the ITB Berlin Travel Trade Show. Over the same time period the traditional business trips segment declined by 14%.
Carving Out A Niche
Thailand’s bevy of upscale accommodation, conventions centres and other business facilities, along with its agreeable climate and bountiful leisure opportunities make the country particularly well suited for the MICE sector. These offerings, along with concerted government efforts to boost the industry and Thailand’s optimal location in the midst of a rapidly expanding regional economy, have all lead to continued expansion of MICE tourism in the past decade. Situated at the crossroads of Asia, Thailand is a natural hub ideal for MICE tourism, and serves as a convenient springboard to other ASEAN countries, which together form a market consisting of over half a billion people. The Thai MICE industry has five officially designated MICE cities spread across the country: Pattaya, Chiang Mai, Phuket, Khon Kaen and of course Bangkok.
Revenue generated by the MICE subsector approached the BT100bn ($3bn) mark for the first time in 2015, as 1.1m tourists spent BT95.9bn ($2.9m), up from the 919,164 visitors that spent BT80.8bn ($2.4m) in 2014. The meeting and convention categories accounted for the largest numbers of events with 2764 and 2716, respectively, followed by 2039 incentive travel events, 89 exhibitions and 14 “mega events”. The relative figures were closer in terms of revenue generation, in which the meetings category held a slim margin over conventions, with each bringing in BT28.4bn ($854.8m) and BT27.3bn ($821.7m), respectively. These were followed by incentive travel with BT16.1bn ($484.6m) in revenue, along with BT15.2bn ($457.5m) for exhibitions and BT8.8bn ($264.9m) from mega exhibitions.
However, in terms of per capita expenditure, these rankings shift to an extent, as the exhibition and meeting classifications posted nearly identical per capita spending at BT108,386 ($3262) and BT108,165 ($3256), respectively. Travellers visiting Thailand for the purpose of attending conventions spent BT92,874 ($2796) per trip on average, and incentive travel visitors spent the least at BT63,495 ($1911).
Following similar growth patterns as other tourism subsectors, the MICE segment has been enjoying steady, if moderate, growth between temporary downturns in 2008 and 2014. A total of 6410 MICE events took place in Thailand in 2008, attracting 821,892 visitors and bringing in BT61.6bn ($1.85bn), according to statistics provided by the Thailand Convention and Exhibition Bureau (TCEB). Arrivals dropped off the following year after increasingly tumultuous government protests in late 2008, which led to a temporary closing of Bangkok’s Suvarnabhumi airport and contributed to a decline in MICE traffic over the next two years. The 2008 figures were not surpassed until 2011 when 6929 MICE events took place in Thailand, attracting BT70.63bn ($2.1bn) in revenue. A period of stability in the ensuing years fostered further growth up to a record 7866 events in 2013 and BT88.5bn ($2.7bn) in revenue. Unrest erupted again in 2014, culminating in a military coup d’état, which saw MICE business tail off to 7377 events in 2014, recovering to 7622 events in 2015.
Unlike other segments of the tourism sector, concerted efforts to promote and develop the MICE subsector have been a more recent trend. For example, the TCEB, which is responsible for promoting and developing business events in the country, has only been operating since 2002. In recent years the TCEB has ramped up efforts to attract more MICE tourists with a handful of new promotional campaigns launched in 2015 that offer financial incentives to encourage businesses to choose Thailand as a location for conventions and meetings.
The “Convene in Paradise” campaign provides up to BT1m ($30,100) in support of conventions that last at least two full days and attract a minimum of 1000 international delegates or 500 international delegates for conventions related to one of five focus industries. These industries are health and wellness; energy; food and agribusiness; infrastructure and logistics; and automotive and electronics. A BT300,000 ($9030) stipend in support funding is also offered for offshore conventions drawing at least 200 international delegates, provided that 80% of the delegates originate from the same country .
In addition, the TCEB formed a partnership with the Ratchaprasong Square Trade Association (RSTA) to create the “Thailand CONNECT RSTA Welcome Package”, which is designed to offer MICE travellers financial incentives, including discounts of more than 35% for restaurants and spas from seven high-end hotels, along with discounts of at least 20% from retail outlets in the area. The package became effective in October 1, 2015 and will continue through to December 31, 2016 .
Last but not least, the “Thailand Connect Beyond the Capital Package” is focused on the incentive travel segment by offering impetus for travel outside of Bangkok and is designed to support international corporate clients who organise incentive meetings outside the city and travel with local or alliance airlines. The package provides a subsidy of up to BT1000 ($30.10) for each participant in a travel package (up to a maximum of BT300,000, $9030), with a minimum of 100 participants in each group and a minimum stay of three days and two nights.
Through marketing promotions under the “Thailand Connect Our Heart, Your World” campaign along with these promotional packages, the TCEB expects the number of MICE travellers to Thailand in the 2016 fiscal year to grow by 5% to 1.06m visitors, generating BT92bn ($2.8bn) in revenue.
These incentives are part of the TCEB’s longer-term strategic goals for the sector, designed to establish Thailand as one of the premier MICE destinations in the world through a mix of marketing and promotion, as laid out in the bureau’s master plan running from 2016 to 2020. This strategic vision follows a sustainable eco-friendly path.
The first phase of the plan – to be carried out in 2016 – focuses on creating participation in and collaboration with various associate networks. In parallel, the TCEB will develop a sustainable management system for its internal operations, along with marketing tools and communications channels to reach target groups. In addition, it will create a manual of sustainable practices for MICE businesses. Beginning in 2017, the second phase of the plan is intended to boost awareness and enhance Thailand’s competitiveness by promoting local and international alliances and strategic partnerships, as well as developing a larger number of training programmes. Phase three, due to start in 2018, will begin to capitalise on the progress made in the first two phases by highlighting new innovations made in the Thai MICE industry, with a specific focus on environmentally friendly management practices. Lastly, phase four (2019-20) will focus on supervision policies and supportive measures relating to Thailand’s certification by the Global Sustainable Tourism Council as a sustainable destination and ISO 20121 (a sustainable management system standard).