Author: Vivek Neb & Mayank Nagpal, Grail Insights
COVID-19 has brought the global tourism industry to a standstill. The crisis has impacted the entire tourism value chain, with early signs of recovery expected only by the final quarter of 2020, which would take a concrete shape mostly in 2021. As UNWTO started to chart the recovery horizons for travel, it, understandably, put long-haul, international, and business and events-based travel on the slowest recovery trajectory. Though, from the past crises, we know that business travel is among the last segments to recover, it might take a different trajectory to emerge out of this crisis. As the segment gears up to restart, the recovery of Meetings, Incentives, Conventions, and Exhibitions (MICE) travel will take varying growth trajectories wherein an evolved set of market requirements will play a key role.
In this post, Grail Insights’ travel & tourism center-of-excellence, with inputs from various tourism boards, convention bureaus, and industry stakeholders, explores the recovery of the MICE sub-segments and potential imperatives that can help resuscitate the sector.
Staggered recovery across the sub-segments, with varying outlooks.
The impact of the crisis on the four MICE sub-segments seems, in many ways, similar—that they came to a grinding halt—yet it is different in terms of how the recovery horizons would shape up.
- Corporates stopped most travel related to Meetings. According to a member survey by the Global Business Travel Association, in April 2020, most companies had restricted international (95%) and domestic (93%) travel. In a July 2020 update to the survey, 90% of companies still did not have any firm plans on reopening travel. Companies believe that a decline in infection rates, easing restrictions and advisories, and availability of treatments and vaccines will be key for travel to resume.
- The industry has seen a deferral of most Incentives travel to late 2020 or 2021; the cancellation penalties will strain the already-reduced budgets due to the economic crisis; hence, dampen the recovery.
- Association Conventions have, in most cases, carried on as planned, with one major change—they have shifted to digital channels. Thus, no travel.
- The Exhibitions market, understandably, has suffered huge revenue losses. The global trade shows and exhibition industry will likely witness a loss of USD 88.2 Bn in the total economic output by the end of Q2 2020. According to a July 2020 Barometer update of UFI, most exhibition organizers believe that international-scale exhibitions will not return until 2021.
The prevailing sentiment across industry stakeholders and opinion leaders is that the anticipated recovery will vary, based on the necessity of travel. Nearly two-thirds of meeting planners/suppliers believe that in-person MICE activity will once again pick up at full steam before the end of February 2021. Thus far, virtual has been the keystone for hosting events in 2020. However, it is unlikely to replace in-person meetings within the next year, as suppliers and planners tend to prefer live events or hybrid solutions over completely virtual ones. The recovery outlook and horizons, however, will be different across the four sub-segments.
In our view, Exhibitions and Corporate Meetings are likely to record a faster recovery, while Incentive travel is expected to witness better growth in the medium-to-long-term.
As the world adapts to videoconferencing to ensure business continuity and faces increasing cost pressures, the corporate meetings will see limited growth, driven mainly by essential travel. On the contrary, corporates are expected to resume incentives travel in the medium-to-long-term, i.e., once it will be considered safe to travel; travelers will prefer to travel more actively, especially given the prolonged hiatus.
Associations believe that digital platforms could be the future of conventions as they offer higher turnouts, lower costs and limited focus on logistics; however, virtual events witness reduced participant attentiveness. Thus, though some associations are likely to adopt virtual platforms to host conventions in the long-term, most will opt for hybrid events.
Stakeholders believe that virtual exhibitions cannot replace face-to-face interactions, and given the need for the economic recovery, physical exhibitions will be back once traveling restarts and organizers align with the evolved requirements.
The above horizons will largely depend on how the virus spreads, when the vaccine is developed, or other factors that we cannot preempt at this stage. Still, to steer the recovery and resuscitate the sector, the ecosystem needs to consider certain key imperatives:
1. Steer recovery via local, regional, and bubble-based travel. Introduce ‘green lane’ reciprocity.
In the short-term, the sector will need to focus on short-haul and direct travel. Geographies with similar health standards and pandemic conditions as well as mutual trust will benefit from travel reciprocity through travel bubbles and green lane agreements. Reliance on domestic and regional markets will be more prevalent than ever before. Evidently, industry stakeholders expect the domestic tourism demand in their geographies to recover in Q3 2020 (45%), while more than 70% pegged the timeline for the recovery for international tourism to Q4 2020 (34%) or in 2021 (39%). As of July 2020, the European Union had already lifted restrictions on movement within the Schengen zone; Asian markets, such as Singapore, had introduced bubble-based travel for select regions like specific provinces within China.
2. Instill delegate and attendee confidence through information and communication.
The concept of delegate boosting will have to be redefined. It will be key for the sector and service providers to actively communicate the state, readiness, and measures related to health, hygiene, and safety, to boost delegate confidence and attendance. Governments, convention bureaus, and other relevant authorities are constantly sharing guidelines and best practices for organizing events in the post-COVID-19 world, to raise awareness and contain the spread of the virus.
All stakeholders in the industry value chain—hotels, DMOs, airlines, and convention centers—would need to regularly update the organizers and attendees on the steps taken at each level to ensure the safety of event participants.
3. Mitigate uncertainties through industry-friendly policies.
Travel, in the near term, will come with a significant level of uncertainty, which will impact the decision-making of most stakeholders. Travel organizers and hosts will have to offer certainty through travel insurance, favorable refund policies, among other delegate- and business-friendly policies.
Event organizers across the globe are either refunding fees already received or are moving bookings to the next year’s event. Some economies are learning and taking focused actions to mitigate uncertainty from the future. For instance, the US has introduced a bill to create a Pandemic Risk Insurance Program. The bill aims to protect business events in case of a pandemic situation in the future, by ensuring coverage for such losses by insurance companies.
4. Regulate the nature, format, and size of events.
The sector will—need to—introduce stricter safety and hygiene protocols and leverage technology-based solutions, to create safe event environments and to adhere to aspects such as social distancing. While virtual has been the keystone for hosting events in 2020, it is unlikely to replace in-person meetings in the future, as suppliers and planners prefer live events or hybrid solutions over a completely virtual experience.
Hotel chains and convention centers are currently enhancing their existing processes and protocols regarding hygiene, sanitation, and social distancing, complying with government and international authorities, and in some cases, creating new benchmarks for the industry.
Though the MICE travel may restart before long, it is not likely to see actual recovery anytime soon. One thing, though, is certain. Irrespective of the horizon, the manner of recovery will be phased—with sub-segments such as Exhibitions and Meetings leading the way—and will depend on how the destinations, and the ecosystem stakeholders, align their strategies with the new, post-COVID-19 normal.