Singapore as a MICE destination 2 comments

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The way that the mass media has been advertising the IMF/World Bank convention coming up in September, you'd think that it's the coming-out party for Singapore the way that the 2008 Beijing Olympics is seen as one for China.

Every country which sees itself as a respectable business destination and aspires to build on its services-based income is eyeing a slice of the MICE pie. MICE stands for Meetings, Incentive Travel, Conventions and Exhibitions, and in my view it is suddenly being seen as prime beef for two reasons: (1) business/incentive tourists tend to spend more in the convention cities on their company accounts (ie. other people's money) compared to leisure tourists; but more importantly, (2) because it creates long-term strategic value to become (in the words of STB) "an exchange capital where talent, technology and ideas converge to create synergistic value for both business events and visitors" --- given the current focus on innovation and information to drive growth, it will pay off to be a "hub" (yes, that word again) where people converge and ideas and information are generated. Just as couples have a special attachment to places where their romance bloomed, so executives/academics will develop certain mindshare for places where their ideas were first sprouted/exchanged.

The tailwind is behind Asia to grow this trend. The top 10 convention countries are all in Europe/North America and yet Asia is seen by all major MNCs to be their growth drivers for the next 1-2 decades. As relocation of manufacturing is followed by relocation of higher value-added services components (IT, R&D, design & engineering) and regional headquarters are established in the region, and the major Asian cities grow in sophistication and market size, their share of the business conventions/exhibitions market can only grow. Everyone will converge in the most dynamic region for exchange of ideas because they "need to understand the market". It is a no-brainer.

What may be more arguable is Singapore's ability to grab a growing piece of this pie, given that all major Asian cities are planning expansion of MICE space. For the Asia Pacific region, there is currently 1.9m sqm of available MICE space with another 772,000sqm coming onstream in the next five years, an increase of 40%. The major space additions are in cities like Shanghai, Tokyo, Seoul, Macau, Singapore, and surprisingly, Ho Chi Minh. That is not including investment in Middle-East cities/countries like Dubai, Abu Dhabi, Qatar etc which are also expanding aggressively.

There are a few factors which support Singapore's bid. The most important factor is that it has critical mass; it has been Asia's top convention city for several years and was ranked second (in terms of number of meetings) for the World Top Convention City last year (behind Vienna). The second, linked to the first, is that it is one of the key regional hubs for Asia, a bridge between West and East. Given that the top 10 convention countries are all from the West (Singapore is considered a city), it makes sense that if some should migrate to Asia in the future, they would be seeking "transition" cities where culture shock would not be too great. Thirdly, there is strong governmental support through STB, comprising of clustering, marketing and incentivisation efforts. The Business Travel & MICE sector accounted for approximately 30% of total tourism receipts in 2004, and the aim is to raise it to at least 35% by 2015 --- an average annual growth rate of 15% (in dollar terms) over the next ten years. I always look for governmental support because it takes away a portion of the required investment costs away from the private sector.

Check out the MICE (exhibition/convention) services providers. Given that they already operate on tight margins in a highly competitive and fragmented industry, it is a volume game. And volume growth, as has been highlighted above, is what the Asian/Singaporean MICE industry is all about.

References:
(1) UOB Kay Hian analyst report 25 Jul 06: Cityneon
(2) STB Unveils Key Initiatives to Spur Growth in the MICE Industry 3 Aug 06
(3) ICCA publishes country and city rankings 2005