Business Tourism in the United Kingdom - Case Study Example

Business Tourism in the UK Name Course title Instructor’s name Date Table of Contents Executive summary 3 Introduction 3 Characteristics of business tourism 4 Key components of Business Tourism and their relative importance to the UK economy 4 The conferences and meetings 4 Exhibitions: 5 Incentive travel 6 Outdoor events 7 Importance of Business Tourism to the UK 8 Market challenges for Business Tourism in the UK 9 Successful UK Business Tourism destinations 10 Harrogate 10 Telford 10 Recommendations 10 Conclusion 11 Reference list 11 Executive summary The success of UK business tourism is outstanding and its importance to the economy can no longer be ignored. Business tourism has developed such that the industry is now at the forefront of the government’s priorities and the business community. The sector has highly rewarding careers and offers that stimulate interest of international businesses. The opportunities and challenges that come with business tourism are discussed later on in this report. Introduction Expenditure in the different components of business tourism has had significant growth since 2002, in 2002 alone the expenditure by business tourists exceeded leisure tourist by 10 %. Projections by The British Tourist’s Authority (B.T.A.) indicate that by 2010, the expenditure would rise to up to 45% of the total tourism income with a net worth of £16 billion. This sector has had significant impact on trade as it is through it that UK’s products are showcased thereby facilitating exports and inward investments. Despite the numerous advantages that the sector has, it also suffers a number of challenges which cause drawbacks on the country’s position as a leader in business tourism. The challenges faced will be detailed in this report. To maintain its position, the sector must continue in its provision of quality facilities and services, improve the marketing strategies to national and international audiences (Hankinson 2005). With support of the government, as well as the continuing investment, the sector promises to sustain the growth of trade, tourism and businesses in the UK. Characteristics of business tourism Business tourism has high yield in terms of economic returns. It is active all year round but major peaks are in spring and autumn. It complements leisure tourism and is based on the same infrastructure. Successful business tourism leads to rejuvenation of cities, and tourism facilities. This type of tourism shows high resilience against economic downturns. It stimulates investment and creation of employment and results in improvement of the economy. Key components of Business Tourism and their relative importance to the UK economy The conferences and meetings Corporate conferences and meeting encompasses the diverse purposes for meeting by companies and corporate organization such as product launches and training courses. The economic benefit is hard to pin point as the precise definition of a meeting and description of how meetings are held are not clear. However, this segment is still valuable with incomes of up to £4.3 billion per annum on accommodation alone. The sector records more expenditure on accommodation and registration than any other entire segment with delegates’ expenditures averaging £140, exclusive of travel. In 2002 the expenditure on events by conferences organizers was £109,700 per annum (British Conference Market Trends Survey (BCMTS), 2005). The trend for this sector is under influence of the markets and communication technologies which also affect corporate events. With increased use of internet communication, 72% conferences are teleconferencing and 62% are using video conferencing. The figures of internet use in conferencing have increased from 2002 to 2007(BCMTS, 2005). This however has not reduced the significance of face to face communication. Conferences have retained their importance and popularity as means of effective delivery of messages. Technological advances have also impacted on the presentation in conferences; according to UK Conference Market Survey, 2002, 86% of organizers have adapted the use of pc linked data projector for presentations instead or alongside the traditional white boards. Exhibitions: Exhibitions are organized events that expedite the gathering of buyers and sellers. Exhibitions are classified according to the targeted market niche; whether public or trade. Trade exhibitions are primarily aimed at a particular trade sector. Visitors to the trade exhibitions are required to register the companies they represent. Public exhibitions are aimed at the consumers who are charged for admission. In the exhibition sector there are three main stakeholders, the organizers, the venues and the businesses contracted to supply services at the exhibition. The economic benefits of exhibitions result from the direct and indirect expenditure by the organizers, exhibitors and the visitors. In 2002 the total exhibitor expenditure was estimated to be £2.04 billion. The amount spent by visitors exceeds exhibitor expenditure; in 2002, the daily mail ideal home show had 426,528 visitors with a total of £147 million which means averagely each visitor spent 345. More expenditure occurs immediately after the show and is a direct result of the show which is estimated to total £2.1 billion or £4,929 per visitor. SED, an outdoor trade show attracted 19,430 visitors in 2002 that made a total spend of £555.3 million as a direct influence of the show. The total spend at the show was £135.8 million, while the after show spend was estimated at £419.5 million (Conference Delegate Expenditure Survey (CDES) 2002). Besides the sales made at exhibitions, these functions are important in strengthening customer relations, production of high quality leads, customer education and applications for market research. They result into an enhance market mix and therefore an overall wide range of benefits to the customers. Exhibitions create competition of small and medium sized enterprises which enable the establishment of SMEs in the market place. Other benefits are employment opportunities created; this sector is estimated to provide 27,000 full time jobs and over 5,000 part time jobs. The future of exhibition is challenged by the ever increasing need to have a cutting edge marketing strategy. To achieve this, exhibition products must be enhanced by the inclusion of conferences and seminars alongside the exhibition event. The use of technologies available must be capitalized on; these include audio conferencing, video conferencing and web casting. The promotional activities preceding the exhibition events have now been done long before the exhibition is scheduled to begin. Promotional activities are done by use of web sites or other media modes. The use of internet has allowed for online registration, which benefits the visitors by its convenience. The organizers also continually update their information. With the growth of exhibition, the demand for venues has led to the emergence of new venues with larger capacities such as the EXCEL in London which has 65,000 m2 exhibition space and the most up to date communication technology. Incentive travel This is a staff motivation tool which aims at improving performance of the organization. The staff is required to qualify for a travel experience by meeting set organizational goals. Incentive travel has proved to be the most effective motivator despite its expensive nature. This has limited its use to high profit margin companies such as cars manufacturers and financial service providers. For these organizations, the expense of travel incentive is met by the accumulated profit and in turn leads to an improvement in organizational performance. Economic benefits are difficult to evaluate as most accommodation providers do not differentiate conference and incentive travel bookings. However, most incentive travel uses four or five star hotels and account for up to 10% bedroom revenue. Participants also enjoy top quality entertainment programs, such as excursions theatre trips and lavish dining experiences. The estimate of expenditures on souvenirs is at £320 per person according to the BTA 2003. The market for incentive travel is dominated by the USA which makes up 50% of overseas market; others are Germany, France, Italy, Spain and Russia. The trend for incentive travel is influenced by the strength of the currency and issues of security. It was noted that 2002 had low incentive travel because of the downturns of the US, Japanese and European markets. Most bookings were cancelled or postponed for long term. The popularity of destinations is cyclical and therefore the growth of incentive travel grew steadily over the past 10 years. The rise is a result of the active promotion by BTA of UK as a tourist destination. Outdoor events Jousting tournaments, village fairs have been part of the UK outdoor activity attractions since time immemorial. Modern outdoor activities cover a wide breath, from sporting events to small craft events. Outdoor activities have developed into more standardized and professional activities, with better management, promotion and suppliers of equipment. The annual turnover of outdoor activities is over £1 billion. The economic impact of outdoor activities suffered a drawback in 2002 but the subsequent years have shown signs of recovery. The upturn was a result of the jubilee celebration which created awareness on the importance of outdoor activity on the economy. There has been an increase of activities with the advancements of technology which facilitates concerts. It is now possible to stage concerts or beach sports staged in Hyde Park for mass audiences. These events last 1-3 days and have numerous attendees. These events impact positively on the employment and environment. In 2002, the Southampton Beach Show had an attendance of 37,000 and 100% increase in the business in the area. Much interest has developed on the standardization of outdoor events by the British Standards Institute therefore creating a possibility of a European standard for outdoor events. However, we lack complacency particularly considering the increase in the number of initiatives to enhance the sector. The newcomers have to be made aware of the National Outdoor Events Association (NOEA) code of practice and standards. The economics benefits are being developed by the various regional agencies. These initiatives generate employment and offset the decline in traditional activities. Importance of Business Tourism to the UK In the past ten years business tourism has had 53% growth and surpassed the general tourism growth rate. The two main sectors are conference and incentive travel and still these two are projected to grow even faster in the year 2013. Revenues from business tourism accounts for more than 36% of the total tourism revenue by 2012 as business travellers are noted to spend thrice what leisure travellers spend on average. Attendee to trade fairs and exhibitions rake in a daily yield of £151 which is £89 higher than average for other visitors, this is not inclusive of additional expenditure on logistics of the exhibition. Since business tourism has high demand on service, the degree of expertise has had to be heightened to satisfy this demand. The sector employs approximately 530,000 people either directly or indirectly. For every £30,000 of additional business revenue, a new employment opportunity arises. Business tourism guarantees all year high level activity with peaks in spring and autumn. Market challenges for Business Tourism in the UK Tourism is one of Britain’s fastest growing industries and with more support from the government, the growth will only increase. The government has enacted tax breaks and facilitated new investments in the tourism sector. The gross value of contribution made by tourism to the economy is expected to rise by 3.5% p.a. the impact that tourist have on the economy as pertaining to job creation accounts for 2.9 million of UK jobs by 2020. It is imperative that the VAT on tourists be reduced to make UK competitive destination. Neighboring economies have cut VAT on accommodation while UK accommodation VAT is projected to go up. Germany lowered from 19% to 7% while France reduced to 5.5%. High taxes have increased the deficit on tourism and subjected it to forecasts of further decrease to 25 billion by 2020 (UK Conference Market Survey 2003) Successful UK Business Tourism destinations Harrogate Harrogate district has had an estimated £144.1 million in economic impact as a result of business tourism. The expenditure by visitors for both business and leisure totals to 200 million for 2002 alone. The district has had approximately 400,000 visitors attending events, conferences or exhibitions. The success of the district is associated with its cosmopolitan population and the central location in the UK. It offers premium facilities with high standards of customer service. The main venue is the Harrogate international center which hosts 150 events in a year with visitors exceeding 290,000. This is acknowledged as UK top venue. Telford Telford is another attraction for business tourists; the international center at Telford gives organizers a wide choice of venue for any event. It has 15,000m2 of space with versatile facilities for any sixe of event be it small conferences or large scale exhibitions. The center is well equipped with the latest communication technology and is very secure. There is daily housekeeping, last minute or emergency cleaning services are also catered for. The center has booked over 104 events and hosted over 622,000 visitors in 2003. In implementing of a five year schedule, Telford had hosted 186,000 delegates in only eighteen months. It has 179 staff directly employed and 236 indirectly (UK Conference Market Survey, 2003) Recommendations The business tourism industry should discuss the establishment of mechanisms that will result in a more cohesive tourism sector. This mechanism should involve all stake holders in the standardization of services offered so that UK can maintain a competitive advantage over other destinations. There should be a well-developed standardized definition of the industry which considers the input of other industries and should be communicated to all stakeholders upon completion. Further research on the industry particularly, the employment and skill level needed, industry performance and transformation. This should be conducted on regular basis and should be part of a research program established by the stake holders. Conclusion Business tourism deserves support as government is now coming to a realization of the important role it plays in development of the economy. This is indicated by the increase in trade and flow of information during the international business functions. Major profits are reaped by those directly or indirectly employed by this sector. Data from BTA, 2003, show that business tourism has contributed 53% growth in the number of business trips made to the UK. This sector generates 29.7% of all overseas and 31.7% of internal tourism earnings according to BTA, 2003. The main components of the sector are conferences/ meetings, exhibitions, incentive travel, outdoor events. Reference list British Conference Market Trends Survey 2005 Annual Report British Tourist Authority (BTA) 2003 Annual Report Conference Delegate Expenditure Survey 2005 Annual Report Hankinson G 2005 ‘Destination brand images: a business tourism perspective’, Journal of Services Marketing, Vol. 19 Iss: 1, pp.24 – 32 International Passenger Survey 2002 Annual Report UK Conference Market Survey 2002, Findings for the UK Conference Industry Read More