Meeting the need: Renewed focus on conference facilities to incentivise business travel

Business inspired a modest 15% of international arrivals in the Philippines in 2010, according to Department of Tourism (DoT) statistics, which might go some way to explaining the country’s low stake in the international meetings, incentives, conventions and exhibitions (MICE) market. However, as with much of the nascent international tourist industry across the archipelago, a vibrant and dynamic domestic market underlies it all and is beginning to attract international attention once again.

While it was a regional leader roughly 40 years ago, the Philippines’ reputation as a MICE destination has suffered more recently from perceptions of poor peace and security, low infrastructural capacity, as well as a simple lack of venues.

It was these perceptions that the DoT’s Tourism Promotions Board (TPB) sought to change in MICECON, a three-day MICE conference held at the heart of the country in Cebu in August 2011. With a wide range of MICE experts and guests from the US, France, Ireland, Australia, Singapore, Malaysia, Taiwan, China, Vietnam and the Philippines, the conference attracted some 424 delegates.

NEW COMPETITIVENESS: MICECON was seen by some as the first step on the road to recovery for the industry. Many in the MICE industry say that it cannot compete in South-east Asia, but the Aquino administration has rallied behind the industry.

Support is being spearheaded by the TPB, which is currently working to increase coordination between the public and private sectors, using an impressive array of developments in Manila, as well as in Cebu and the often-overlooked Davao.

As the nation’s capital, Manila has continued to attract the most attention and investment. Ongoing developments at the satellite central business districts and multi-purpose complexes in Fort Bonifacio, Newport City and Mall of Asia, increasingly favoured as a location for new offices and hotels thanks to their modern feel and urban planning, have drawn much of the business away from the traditional MICE hotel venues in Metro Manila.

SETTING A TREND: Launched in 2005 by Megaworld Corporation, the P7.6bn ($176m), 25-ha Newport City – adjacent to Ninoy Aquino International Airport’s (NAIA) new Terminal 3 – successfully set the template for many to follow. The SMX Convention Centre at the Mall of Asia, which opened in 2007 as the largest private venue in the Philippines, is posting 10-15% growth each year, with an average occupancy rate of 60-70%, according to Brie Caces, the marketing communications officer at SMX (SM Hotels and Convention Corporation).

With a floor area of 46,000 sq metres and a leasable area of 21,000 sq metres, such growth is not only impressive, but indicative of the industry’s potential. Moreover, it comes ahead of the opening of an adjoining 500-room Radisson hotel and 18,000-seat arena due in 2012 that will elevate the venue’s profile and available services.

MICE centres such as SMX, which is able to host meetings and exhibitions ranging in size from 10-8200 persons, have eroded hotels’ MICE market share. These conference centres benefit from their dedicated designs, which has meant less compromise for businesses on the scale of their events, as well as competitive and bespoke catering arrangements that provide an edge on many hotels.

RESERVATIONS: Yet despite the advances in dedicated convention centres and the government’s drive to attract both big- and small-ticket events equally, the business sector has reservations concerning limited infrastructure capabilities (see Transport chapter). “For the MICE and incentive business it’s really Manila and Cebu and the reason for that is simply the infrastructure. The smaller island destinations still struggle to handle larger groups mainly because of restricted air access,” said John Paul Cabalza, the executive vice-president of the Philippine Travel Agencies Association. “Right now, it’s not really a priority among our neighbouring countries to go here.” These sentiments are supported by Goran Aleks, the general manager of the Sofitel Philippine Plaza Manila. “Manila has the right hotels for the MICE market,” said Aleks. “I don’t see large delegations of over 300 going to beach destinations in Asia.”

That does not mean the two segments are not mutually compatible, however, and the industry has been marketing their venues based on business and leisure with particular attention being paid to the BRIC (Brazil, Russia, India and China) markets.

It is unlikely that the Philippines can compete against its established South-east Asian neighbours just yet, but it is being flagged for future development. The attending demographic of conventions and exhibitions may be domestic, said Caces, but the hosts are principally international, partnering with local associations and bringing in international exhibitors. With strong interest seen from Asian manufacturers to tap the Philippine market, associations are a growing revenue stream and the MICE business is flourishing outside Manila.

CONVENTIONAL THINKING: Cebu, with a well-established MICE industry, is home to the 28,000-sq-metre Cebu International Convention Centre, built for the 12th ASEAN Summit in 2007. Elsewhere, 2012 will see the opening of the Davao Convention Centre, also by SMX, which is competing with the Davao International Convention & Exhibition Centre for the Philippines’ 2013 MICE Convention. While both are smaller venues than Manila’s SMX, competition within the industry is rapidly accelerating, which should bring growing international attention.

IN THE SPOTLIGHT: “We hope to invite more international conferences and meetings, and 2012 will see several important events in the country,” said Rolando Cañizal, the DoT’s director of planning, research and information management, pointing to the 45th Annual Meeting of the Asian Development Bank in May 2012, which will be attended by some 4000 delegates from around the world and the Pacific Asia Travel Association Travel Mart. Squarely in the government’s targets, however, is the Asia-Pacific Economic Cooperation Leader’s Summit in 2013. Attended by 21 heads of state this would be a coup not only for the Aquino administration, but also for the tourism industry as an endorsement of the nation’s re-entry into the international market.

Further down the road the success of the business segment will depend on the quality of connectivity and attractively priced new facilities. With the rise of Chinese business travel, as well as visitors from the rest of the ASEAN members, the Philippine MICE industry faces an unprecedented opportunity to increase its regional market share. Rising from a relatively low base, it has ways to catch up with other ASEAN countries such as Thailand, but investors in this niche can look forward to double-digit growth.