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After the health crisis, the MICE sector faces new challenges - Part 1

While tourists are heading back on holiday after two complicated years, business tourism also seems to be getting back on track. Admittedly, the recovery is taking place in a more discreet manner, but it is clear that the MICE activity is well and truly back. However, the health crisis having passed, the sector has had to adapt. A metamorphosis that goes hand in hand with societal evolutions such as the digital transformation and the sustainable transition. No sector of activity is immune to these changes, as the MICE industry demonstrates.

A sector strongly affected by the health crisis

A succession of cancellations and postponements have been the daily lot of actors in the MICE sector over the last two years. According to a survey conducted by Atout France, 54% of the events planned for the spring and summer of 2020 have disappeared from the calendars and 20% have been postponed. At the same time, 21% were maintained but in a hybrid format in order to ensure the safety of all.

The entire industry was thus shrouded in uncertainty about its future. This uncertainty had an even greater impact on Paris, which had a prime position among international congress and exhibition destinations. Indeed, the City of Light was at the top of the world ranking established by the Icca (International Congress and Convention Association) in 2018 and 2019 with 237 international events. France ranked third in the world with 595 international events, behind the United States and Germany.

The Paris - Ile de France Chamber of Commerce and Industry shared figures showing the extent of the damage the pandemic has had on MICE activity in the destination. This report shows that 202 trade fairs and 432 congresses were cancelled, postponed or digitised. That is 45% of the number of annual trade fairs. Nearly 5.4 million visitors and congress participants and 58,000 companies had to cancel or postpone their sales, resulting in a loss of 3.2 billion euros in terms of economic spin-offs.

Paris is not the only French city to be heavily dependent on business tourism; Cannes, with its Palais des Festivals et des Congrès, has also suffered significant financial losses. Due to the health crisis, 17 events were cancelled in 2020, resulting in a loss of around 800 million euros in economic benefits. The destination's hotel operators also recorded a decline in performance with almost 390,000 fewer overnight stays.

In July 2020, the UFI (Global Association of the Exhibition Industry) estimated that the recovery of major international events would not take place before 2021. However, opinions on the prospects for recovery differed widely among the individuals and entities surveyed. While the sponsoring companies did not envisage a real recovery before the second half of 2021, or even later for seminars and trade fairs, the associations and organising agencies were rather counting on a rebound during the first quarter of 2021. According to Atout France, the recovery of the sector should take place in "concentric circles, first of all on local and national events".

Signs of recovery are there

The recovery of the MICE sector is taking place gradually around the world with visitors and exhibitors sometimes difficult to convince of the need to travel again. According to the Business Travel Barometer published by American Express Global Business Travel (Amex GBT), business travel has reached 50% of the 2019 level by early 2022. Visibility on health conditions and traveller safety remain key criteria for the effective recovery of the sector. Although this recovery is indeed underway, the levels remain well below those recorded in 2019.

One of the key findings of the latest edition of the GBTA Business Travel Index Outlook - Annual Global Report and Forecast published by the GBTA is that due to the economic and geopolitical context, the full recovery of the industry may not take place until 2026 and not 2024 as previously forecast. This adds around 18 months to the industry's recovery compared to the previous GBTA Business Travel Index forecast published in November 2021.

To understand the headwinds that have impacted a more accelerated recovery in global business travel, one need only look at the headlines since the beginning of 2022. Factors affecting many industries around the world are also expected to impact the recovery in global business travel through 2025. The expected outcome is that we will approach, but not reach and exceed, pre-pandemic 2019 levels until 2026. 

Suzanne Neufang, GBTA CEO 

Total spending on global business travel reached $697 billion in 2021, 5.5% higher than the pandemic-era low in 2020. In 2022, global business travel spending is expected to increase by 34% from 2021 to $933 billion, 65% of the pre-pandemic level. Overall, global business travel spending is expected to grow by 33.8% in 2022, but differences are expected between the world's major business travel markets. Indeed, the US and Western Europe are expected to drive this recovery with compound annual increases of 23.4% and 16.9%, respectively, by 2026. While Latin America and APAC will lag behind for various reasons, including health. 

Sophie Hulgard, Senior Vice President of Sales for Northern Europe at Accor, agrees with this more or less pessimistic observation. At Accor Northern Europe's annual Masters of Travel 2022 event, she said she expected business travel to be down 20% in 2022 compared to 2019. It went even further and said that this 20% could be lost forever to virtual editions.

However, other actors are more optimistic about the recovery of the sector, such as Eurostar. According to the latest figures published, business travel is now at 70% of 2019 levels. Nearly 80% of professionals plan to travel more or as much between the UK and Europe as before the health crisis. The rail company said that according to its Eurostar corporate customers who have a travel account, the number of accounts would have increased by 40% between 2019 and 2022.

Business travel has picked up faster than we expected in 2022, especially considering that we are still only running about three quarters of our pre-pandemic transport plan.

François Le Doze, Eurostar Commercial Director

According to the Cvent Travel Managers Report: Europe Edition, 81% of companies surveyed expect their business travel budget to increase in 2022, compared to 2019 spending levels. This is due in part to rising airline and hotel costs in a highly inflationary environment.

Many European countries are already benefiting from the recovery of the sector, such as Italy, as highlighted by a study commissioned by Federcongressi&eventi. In 2021, the country hosted 86,438 events in physical and hybrid formats, an increase of 23.7% compared to 2020. The indicators for conferences and events held in Italy in 2021 are therefore very positive. Conference hotels were the most popular, hosting 72.8% of total events while conference centres and trade fair venues hosted 4.4% of events. In addition, 67% of venues resumed business with an increase in revenue over 2020, with almost half, 48.9%, reporting an increase of at least 50%. Domestic events accounted for at least half of the total for 42.4% of venues, while international events were hosted by 38.3% of venues.

For their part, Spanish professionals expect to return to pre-pandemic levels by 2023. This is despite the uncertainty generated by rising costs due to inflation. According to Iker Goikoetxea, President of PACE (Spanish Association of Conference Centres), after two years of health crisis, the sector has passed the test "with flying colours". If in 2020, the MICE sector's activity was at 30% of 2019, in 2021 it had risen to 70%, and this year to 90% of the pre-pandemic figures, he explained. These figures are corroborated by Nick Dugdale-Moore, Director for Europe of the Global Exhibitions Industry Association (UFI). Both are hopeful and say that by 2023 it will reach the 2019 figures.

Austria also welcomes the good momentum of the recovery of events in 2021. A year that saw 10,400 congresses, company meetings and seminars with half a million participants. These figures represent a 20% increase in activity compared to 2020. The MICE sector generated 811,000 overnight stays throughout Austria last year. As Gerhard Stübe, President of the Austrian Convention Bureau (ACB), points out, "the record figures for 2019 have not yet been achieved, but there is confidence in the sector again. The results for the year 2021 are a strong sign of life for the industry.

MICE of tomorrow

The health crisis will have deeply changed mentalities and modified our relation to work. Starting with digitalisation, which has seen an unprecedented boom during these two particular years. Many events were maintained thanks to digital technology and when restrictions were somewhat less strict, hybridisation appeared. A phenomenon gave birth to phygital, a contraction of physical and digital. Videoconferences, webinars and other digital events have thus taken precedence over traditional events.

If a return to normal in terms of the health context means the return of face-to-face events, it does not mean the death of virtual events. On the contrary, a large number of actors have understood the relevance of such a tool. In the years to come, we should see an increasing number of virtual events alongside physical events where people can meet face to face. Attending an event on your computer not only reduces the cost of business travel, but also makes it more sustainable as there is no need to take a plane or a car to get to the event.

Indeed, business travel weighs heavily on the carbon footprint of companies. These same companies are all developing strong and committed CSR programmes with the ambition of reducing their emissions, or even achieving carbon neutrality in the coming decades. Giving priority to the virtual when possible would therefore be one of the most appropriate solutions. Furthermore, according to a study conducted by SAP Concur, almost half of the people responsible for business travel in Germany and France want to reduce their CO2 emissions.

Leisure and business travel must now be meaningful in a post-covid world. A need that is impacting the MICE sector and pushing its actors to evolve. Business travellers want to make travel count on a professional, economic, sustainable and personal level. This desire is leading to a growing trend: bleisure. This term comes from the contraction of business and leisure, which means turning a work-related trip into a tourist stay by adding leisure components. According to a study by BVA Group and American Express, 87% of business travellers practice bleisure at least once a year. From sightseeing to cultural activities to discovering the local gastronomy, the possibilities are numerous.

Although bleisure was sometimes, even often, viewed with a negative eye in the past, the health crisis has helped to change people's attitudes. The number of travellers using this type of tourism continues to grow. According to a study by Expedia, 43% of business trips now include a leisure component. In particular, bleisure allows for a better balance between work and personal life. A happier and less stressed employee will subsequently become a more productive employee. A win-win situation for both companies and employees.

A growing trend confirmed by a survey conducted by Eurostar. More than a quarter of business travellers feel the need to make up for time lost during the pandemic by extending their business trips. 86% of them plan to extend their trips in 2022 in order to make the most of the destination they are travelling to. In addition, 85% of business trips booked in May and June include a minimum one-night stay on average. The younger generations, Y and Z, would be more receptive to this new trend, as a study by Business and Travel Technology shows.The rate of bleisure reached 36% for these young generations against 18% for the 40-50 year olds.

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