In order to manage, first measure. An accurate valuation of your business is critical to successful management.

In order to manage, first measure. An accurate valuation of your business is critical to successful management.

Real estate is often the most valuable asset on the balance sheet. When was the last time you had it reliably valued?

Real estate is often the most valuable asset on the balance sheet. When was the last time you had it reliably valued?

Often overlooked but always critical. Typically machinery & equipment is only considered for managing depreciation.

Often overlooked but always critical. Typically machinery & equipment is only considered for managing depreciation.

Measuring the Benefits of the MICE Industry: Hong Kong Case

The Global MICE Industry is Growing

The Meetings, Incentives, Conventions and Exhibitions (MICE) industry is an important segment of the tourism industry, and is a growing sector with great potential. The MICE industry comprises of the upper-stream (such as MICE activity organizers), midstream (such as accommodation, facilities and services suppliers) and downstream (such as adverting agencies, logistics services providers and travel agencies) industries. Therefore, the MICE industry involves a wide range of sectors such as tourism, hotels, transportation, catering, real estate and retail. A successful MICE industry is believed to have significant positive impact on a country’s economy. Apart from bringing significant economic benefits, such as national income and job opportunities, it also benefits a destination by providing opportunities for knowledge sharing, country brand development and network building. 

It has been observed that the global demand for the MICE industry has recorded fast growth since 2009 (World Travel Monitor, IPK International). This growth has been faster than for traditional business travel. Momentum was maintained during Jan-Aug of 2013 as the MICE sector grew by 6% while traditional business travel shrank by 10%. The MICE sector currently shares 54% of the total business travel market.For example, according to the statistics of the International Congress and Convention Association (ICCA), the number of association meetings has been increasing during the past 5 decades. Growth was more significant after 1997, during the periods of 1998-2002 and 2003-2007, growth rates over the previous period were 51.4% and 59.9% respectively.

Asia Pacific region is the Second Largest Market in Association Meetings

As a result of more convenient transportation and a higher degree of globalization, the Asia Pacific Region has become a more important destination for MICE activities. This observation could be illustrated by the changes in the association meetings segment. In the past 50 years, Europe was the leading region in holding association meetings. Even though its market share has been shrinking since the 1963-67 period, it still held more than half (54%) of the market share in the period of 2008-12. In contrast to Europe, Asia and the Middle East saw gradual increases in market share over the past 50 years, increasing from 8.2% in 1963-67 to 18.2% in 2008-12. Asia and the Middle East now share the second largest portion of the market. In 2012, there were 11,156 association meetings held globally. Of these meetings, 6,036 were held in Europe and 2,180 and 177 were held in the Asia Pacific region and the Middle East respectively. 

As with association meetings, the Asia Pacific region is also a major destination for the exhibition segment. According to the Global Association of the Exhibition Industry (UFI), there were 1,197 exhibition venues (with 5,000 sqm indoor exhibition space or more) with 32.7 million square meters indoor space by December of 2011. Of these 1,197 venues, 496 were located in Europe with a total space of 15.6 million sqm, accounted for nearly half (48%) of the world’s total space. 184 venues were located in the Asia Pacific region, and the total space was 6.6 million sqm. Of these 184 venues, 12 venues had a total space of 100,000 sqm or more, and 144 venues had a total space of less than 50,000 sqm. China is the country with the largest total exhibition space at 4.75 million sqm, accounting for 15% of the world’s total space.   

Economic Impact of MICE Industry: the Hong Kong Case

MICE Tourism imposes multiplier effects on the economy through various types of spending, namely direct spending, indirect spending and induced spending. Professor Larry Dwyer, President of the International Association for Tourism Economics, pointed out that direct spending effects can be measured in the industries which are regarded as “direct beneficiaries” of relevant activities such as the hotel industry. Direct spending is purchases of goods and services directly attributable to MCIE activities, such as MICE visitors’ spending on hotels. Indirect spending occurs with other industries that provide goods and services to the direct beneficiaries, such as industries supplying products and services to hotels. Induced spending refers to household spending of income earned either directly or indirectly related to MICE activities. Moreover, MICE tourism could absorb more income than other types of tourism because business travellers usually spend more for better hotel and dining services.

During the period from 2008 to 2012, the number of overnight MICE visitor arrivals in Hong Kong has increased by 37.6% to from 1.17 million to 1.61 million.On average, MICE visitors spend more money than other overnight visitors. In 2011, the spending per capita of general overnight visitors and MICE visitors were HKD7,470 (USD959.7) and HKD9,187 (USD1,180.3) respectively, a difference of 23%.From a macro point of view, we can get a picture of the direct economic effects of MICE activities by examining the survey results of Hong Kong Exhibition and Convention Industry Association. 

In the calendar year of 2004, the exhibition industry was responsible for USD2.4 billion of expenditure in Hong Kong. The figure increased to USD5.3 billion in 2012, an increase of 15.2% over the 2010 figure and a 10.41% compound annual growth rate (CAGR) from 2004. The 2012 figure accounted for 2.0% of the overall GDP of Hong Kong. Since 2006, the exhibition industry has been generating fiscal benefits for the government of more than USD100 million each year. The fiscal benefits contributed by the exhibition industry was USD181 million in 2012. Apart from bringing financial benefits to Hong Kong, the exhibition industry is also creating more full-time employment (FTE) opportunities in the labour market. The number of FTEs created by the exhibition industry increased from 47,000 in 2004 to 69,150 in 2010, with a 6.65% compound annual growth rate (CAGR). However, the expansion of the industry seems to have stagnated since 2010 as the growth in FTE opportunity during the biennial period of 2010-2012 was only +0.7%.