The main events: Building on strengths in a key high-value niche

After hosting a number of international events, following the launch of a new national strategy to develop business tourism, Indonesia is becoming a choice destination for the meetings, incentives, conferences, and exhibitions (MICE) segment. Jakarta, Bali and emerging regional centres have expanded facilities to meet demand, with the Ministry of Tourism and Creative Economy (MTCE) designating 2013 the year of MICE tourism. As business tourism revenues rise, 2014 will see Indonesia bolster its MICE offerings on the back of continuing promotional campaigns, a new landmark convention centre, and high-end hotel builds.

Identifying MICE

MICE tourism was identified as an important segment of overall tourism activities in 2004, when President Susilo Bambang Yudhoyono instructed the MTCE to increase MICE activities nationwide. Since then, the country has hosted major events, including the inaugural UN Framework Convention on Climate Change, held in Bali in 2007; the 2009 World Ocean Conference, hosted in Manado; and the 2011 ASEAN Summit, hosted jointly in Jakarta and Bali.

Indonesia’s MICE segment showed tremendous growth between 2005 and 2010, according to the MTCE’s 2012 report, “Indonesia MICE Promotion.” The ministry reported that MICE tourists comprised just 67,147 out of 5m total tourist arrivals in 2005; by 2010 this number had grown by 251% to reach 236,082 out of 7m total arrivals. Nonetheless, the MICE tourists still comprised just 3.37% of total arrivals in 2010.

MICE promotion is an important facet of Indonesia’s Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development 2011-25 (MP3EI). In an effort to bolster MICE activities, the MTCE offers support for MICE events, including bidding assistance, support for media campaigns, help desks at international events, pre- and post-event tours and activities, and coordination with relevant government institutions. To qualify for these benefits, an event must have a minimum of 500 international participants from 10 countries, include a three-night stay in Indonesia, and receive broad media coverage. The ministry also partnered with Bank Danamon American Express and RajaMICE.com in 2008 to launch the annual Indonesia Corporate Meetings & Incentive Travel Mart (ICMITM), which promotes MICE events. However, with the MTCE marketing budget shrinking as it rolls out multiple promotional campaigns, the ministry announced in May 2013 it plans to re-evaluate its role in ICMITM, following the loss of former sponsor RajaMICE.com in 2012.

Promotional Events

MICE promotion remains strong in Indonesia. In July 2013 MTCE minister Mari Elka Pangestu announced that 2013 was the year of MICE tourism in Indonesia, with a number of high-profile MICE events planned for the country, including the World Trade Organisation (WTO) Conference, the Asia-Pacific Economic Cooperation 2013 summit, the Forbes CEO Summit, and Miss World 2013. Promotional activities in 2013 included a tourism trade mission to India, while Japan’s National Tourism Organisation later opened its 14th overseas office in Jakarta in 2013, hosting a MICE seminar in Jakarta in June, which was attended by Japanese suppliers and convention bureaus.

“The MICE segment in Indonesia will grow rapidly over the next 10-15 years as there is a strong appetite for doing business here. However, until now most of the exhibitions have taken place in neighbouring countries,” Andy Wismarsyah, president director of Dyandra Promosindo, a local exhibition organiser, told OBG.

The World Travel and Tourism Council reports that business tourism spending comprised 20.8% of overall tourism revenues in 2013, reaching $8.92bn, and anticipates business travel revenues will grow by 9.9% in 2014 to reach $9.8bn in 2014. According to the MTCE, average tourist spending in Indonesia hit $1333 per person in 2012, but Pangetsu has said MICE tourists spend three or four times more than other segments, preferring high-end dining, accommodation and transport during business trips. Indonesia is also an emerging golf destination, with 114 golf courses offering attractive recreational opportunities to MICE tourists.

Jakarta

Capital city Jakarta remains a dominant force in the MICE segment, with MICE activities largely divided between Jakarta and Bali. The city has experienced steady growth in visitor arrivals in recent years; according to the Jakarta City Government Tourism and Culture Office, Jakarta welcomed a total of 28.8m air arrivals in 2012, with real estate consultancy Cushman & Wakefield reporting in its “Hotel Views Asia Pacific 2014” report that the government’s MICE promotions have bolstered Jakarta’s growing demand for new hotel rooms. According to the report, Jakarta’s total room inventory stood at 26,113 in 2012, with demand expected to grow on the back of new infrastructure, including airport upgrades, which will increase the country’s attractiveness to MICE organisers. Cushman & Wakefield expects an additional 5900 rooms will be added to the existing room inventory before 2016. Indeed, the MICE consumer preference for high-end hotels and restaurants has contributed to a surge in luxury hotel builds in recent years; for example, the Accor group announced plans to increase its Indonesian portfolio to 100 hotels by 2015, opening 18 in 2013. A week after announcing plans for its first Waldorf Astoria Hotel in Bali, Hilton Worldwide unveiled plans to build the Waldorf Astoria Jakarta, featuring several MICE facilities: a business centre, meeting room and ballroom. Jakarta is already home to a handful of MICE facilities, most notable of which is the Jakarta Convention Centre (JCC), which was built in 1992 to host the 10th Non-Aligned Summit. The JCC is Indonesia’s largest convention venue, offering a plenary hall with a 5000-person capacity, 11,000 sq metres of exhibition halls, and assembly halls capable of hosting 3500 guests. Jakarta’s offerings are poised to expand, with the construction of the Jakarta International Exhibition and Congress Centre, a 60,000-sq-metre exhibition space that will include an arena, outdoor meeting space, 45 meeting rooms, and a plenary hall with capacity for 18,000 people. The centre is due to open in March 2015 and will be 30% larger than any existing Indonesian facility.

Bali

Meanwhile, Bali has shown impressive growth in MICE activities in recent years. The MTCE has identified the Bali-Nusa Tenggara Corridor as one of six economic corridors in the country that will receive special tourism development focus, placing emphasis on BaliNusa Tenggara’s MICE segment, which could include cruise ship and yacht-based business events. Hotel development has also taken off in Bali, with Badan Pusat Statistik Indonesia reporting Bali held 24,215 hotel rooms at the end of 2012, with the classified segment increasing by 6% over 2011. Cushman & Wakefield estimates an additional 6600 rooms entered the Balinese market in 2013: 11% in the upscale segment, 31% in the upper upscale segment, and 11% in the luxury segment, with an additional 4600 rooms to become available in Bali before 2018. Brands including Ritz-Carlton, Ramada, Best Western, Sofitel, Shangri-La, Regent, Mövenpick, Renaissance and Jumeirah currently have projects in the pipeline. The surge in Bali’s hotel rooms can be partly attributed to the growth of the MICE market; Bali co-hosted the 2011 ASEAN Summit and recently hosted the APEC and WTO summits, as well as the Miss World Contest, in 2013. Bali has two high-capacity convention centres catering to MICE activities, including the Bali International Convention Centre, which has 13,827 sq metres of meeting space, including two ballrooms, one auditorium and up to 25 meeting rooms, and which also hosted the 2007 World Climate Change summit. The Bali Nusa Dua Convention centre (BNDCC) was opened in September 2011, with its first phase completed in just seven months, providing 19 meeting rooms, a 4400-sq-metre convention hall with capacity for 5000 people. In preparation for the APEC 2013 Summit, the BNDCC’s expansion opened in August 2013, covering a 2.4-ha site, which includes 3974 sq metres of additional meeting space, a plenary space with capacity for 2000 people, a 1000-sq-metre lobby, and 100 five-star hotel rooms.

Regional Growth

MICE events have spread into regional cities and are set to continue growing. Emerging MICE destinations include Medan in northern Sumatra and Batam. Lombok is another strong contender for future MICE development, hosting its first international MICE fair in 2010. Bill Barnett, founder and managing director of C9 Hotelworks, told delegates at the 2013 Indonesia Real Estate Conference that Lombok is a prime future hospitality investment destination, with land costing as little as $50-100 per sq metre. “There’s a finite amount of land in south Bali, so people who want to make rational investments will go further. We see companies like Media Nusantara Citra [buying] land in Lombok,” he told attending delegates.