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The Incentive for travel
Suites at luxury retreats all around the Gulf have been in short supply at times recently – leisure traffic having been supplemented by demand for high-end meetings and incentive groups who prefer to work and play away from prying eyes.
As an indication of the state of the sector, it bodes well for 2012 and beyond.
However, with the see-saw nature of the global economy, no pundits are predicting a return to the good old days of limitless budgets and brazen opulence. And, in fact, while EIBTM reported record attendance, 10 percent up on 2010, year-end research has tempered earlier optimism that indicators were on the way up with recession in the rear-view mirror.
The Incentive Research Foundation report issued early in December stated there was less optimism than six months ago, with more than 60 percent of those surveyed indicating the economy was having a negative impact on programme planning – 41 percent said they were reducing the number of nights and 40 percent shrinking non-meal components.
As a largely US focused study, the findings are just one piece in the jigsaw, and operators in the Middle East can take heart from other research, including the EIBTM Global Industry Trends report which cited the BRIC (Brazil, Russia, India, China) economies, as the engine of global recovery – regions where savvy destinations and DMCs are already on the ground touting for business.
IMEX research, too, was broadly positive, with two-thirds of respondents predicting more business – although half reported that cutting costs was of paramount concern.
The latter is also behind the trend towards combining meetings with incentive programmes, according to a joint research project carried out by MPI and SITE, which cited public perception and tax considerations as pushing this convergence.
And, Fast Future’s recent Meetings Sector in 2012 report also stressed that cost reductions and clear measurement of ROI were the two clear themes emerging from the dust of 2008 and the AIG ripple factor.
Meanwhile, for the Middle East, there has been further muddying of the waters with the events of the Arab Spring temporarily denting confidence in the region – particularly for those countries directly affected, such as Egypt.
Election-related protests in that country late last year again propelled the region centre-stage in the global media, and quelled optimism that Egypt was poised to rebuild its events business at any time in the near future.
In Jordan, however, the outlook is rosier, as planners that had cancelled trips scheduled for 2011 came back to the market to reschedule for this year and next, according to Mohanad Malhas, managing director, Abercrombie & Kent DMC – Jordan.
“We started receiving new demands from October last year, with new business from Eastern Europe as well as traditional markets such as Spain, the UK and France,” he said.
“It is mostly for big groups, combination of incentive and meetings, with the majority very budget-oriented with less spend on awards and extravagant events.”
With iconic attractions such as Petra, Wadi Rum and the Dead Sea – plus a short fl ying time from Europe – Jordan has a distinct USP, and an advantage that Egypt, as one of its prime competitors, is currently out of the game.
But, the theme of restricted budgets is one that has resonance in the Arabian Gulf, where Dubai in particular is enjoying a renaissance as a destination of choice for event planners.
LITTLE AND LARGE
At Atlantis The Palm, group business increased 15 percent in 2011, with bookings for 2012 up an estimated 25 percent; Arabian Adventures is experiencing double digit growth for incentives, and business for 24 Degrees (an Abu Dhabi-based DMC) has been ‘non stop’ since its formation 18 months ago.
With RFPs for 5,000, 6,000 and even 13,000 pax in the market, there is no doubt that Dubai is fi rmly back in the spotlight as an incentive and event venue of global stature.
What has changed is the nature of the business, not only confined to European and the odd US or South African group, but now morphing across continents with China, Russia, India and Brazil offering vast potential to inject the mass in to market.
And, a contrasting trend has been for exclusive group meetings and incentives at the region’s premier hideaway resorts in Ras Al Khaimah, Abu Dhabi and Dubai.
“We are doing up to 15 percent meeting and incentive business from markets such as France and Spain,” said Pascal Eppink, general manager at Banyan Tree Al Wadi. “Last year, we had two big events that took 70 percent of the resort, although we have had one cancellation from a major bank event.”
At Al Maha, complex general manager Patrick Antaki reports a similar demand for exclusive meeting/incentives with, again, banks inviting worldwide department heads to brainstorm in the exclusive luxury of the dunes, while regional director of sales & marketing at Meydan Hotels & Resorts, Craig Senior concurs on the trend.
“Company retreats with one day meetings and one day R&R are popular at Bab Al Shams, particularly for big local companies,” he said. “We are all starting to position The Meydan Hotel for incentives and events too, and we started back in September getting enquiries for incentives for 2012.”
Anantara’s regional director of sales and marketing, David Garner, too, is enjoying top notch business at Qasr Al Sarab and Sir Bani Yas in Abu Dhabi: “Abu Dhabi is now seen as a viable option for events, and we are getting fi nancial companies opting for an executive retreat at Qasr – perhaps because they don’t want to be seen high spending."
With the Golden Triangle of options, encompassing desert, island and city locations (from Q2 when the Eastern Mangroves Hotel & Spa opens in Abu Dhabi), Anantara is forging ahead with promotion of that emirate as an incentive destination, in particular aiming to defi ne its image as more than just a city.
“Germany is our biggest market, double that of the UK, since the Germans will invest in a new destination,” he said. “Unless we can get event management companies to buy in to Abu Dhabi, we have no chance with the end client — and with the DMCs in the country being mainly Dubai based, we need them to embrace the upgrade of the Abu Dhabi product.”
His view that DMCs locally are Dubai-centric is echoed by Anita Cremer, director of sales and marketing at Emirates Palace in Abu Dhabi, who said that while incentives have started to pick up, there was a need to promote this sector.
“We do have something different to sell, but we need to get the planners in and more fam trips to push the destination,” she said. “DMCs don’t push Abu Dhabi and their offi ces and fl eets of cars/buses are based in Dubai. We even have cases of planners saying they are offered Dubai even when they request Abu Dhabi.”
But, with the capital as a work in progress, and a plethora of new hotels on the scout for new business, one prime factor in favour of Abu Dhabi might be rate — particularly given the resurgence of visitor numbers to Dubai which prompts speculation of a return to the bad old days of spiralling costs.
THE CREATIVE APPROACH
What is apparent in Dubai is a divergence between the off-the-peg and bespoke in terms of incentive programmes.
Smaller operators such as 24 Degrees and Arabian Incentive cite creativity again and again as the key to winning business from established markets in Europe: “We don’t really have to sell Dubai in Germany, Austria, Switzerland, the UK etc, since clients know the destination and there are a lot of professional and personal connections,” said 24 Degrees’ business development manager, Simon Tempest.
“We work with probably eight out of the top 10 planners in Germany and also the UK, and we are selling differently, offering what others don’t rather than the cut and paste RFPs of others — creativity will sell and the budgets are out there.”
Competing with destinations such as Barcelona, Istanbul, Morocco and Cape Town, he said that programme costs had come down in Dubai, and value for money was greater. Although he warned against over-confidence.
“Dubai works, but there is danger of competition for rooms again as FIT markets such as China and Russian have picked up. Our clients have supported Dubai long-term and don’t like to be told that timing is diffi cult because it is a Russian holiday, for instance.”
This numbers game is apparent with the massing of desert camps in the Al Awir area, giving Arabian Incentive the impetus to create a venue in Ras Al Khaimah that harks back to the early days of the incentive market.
“We are not reinventing the wheel,” claimed executive manager, Emanuela Petrelli. “The Bedouin Oasis has candles, lanterns and gas lamps, oud music rather than bellydancing, a sunset ‘lounge’ and access to camels and horses from the Banyan Tree Al Wadi nearby.”
This move to counter market saturation at the lower end is reaping dividends, with high demand from the Italian market following destination advertising there by cruiselines plying Gulf waters in the winter, according to Petrelli.
“We are also getting business from Germany which responds to our drive to be different and offer an Arabian experience, something more adventurous from self drive in the Liwa sands to the mountains of Ras Al Khaimah.”
One point that often counts against this ‘do it differently’ trend is product knowledge of the planners, she added.
“What is killing the business is that while there is client demand, planners who have been here long term think they know the destinations and almost want to give you the itinerary — the generic city tour, desert dinner and gala.
“Many DMCs like this direction, but for us, we prefer to take time to create a specifi c programme and include something different.”
In the hotels, too, there has been a seachange with event teams cosying up to buyers to provide smart programmes, according to Brett Armitage, SVP sales for Atlantis The Palm.
“Hotels have to be advisors and be prescriptive to fl esh out ideas in a hand holding role,” he said. “Incentives are still about bragging rights, and while razzmatazz is not as elaborate as it used to be, we now have people being innovative and creating wow since they can’t just throw money at it as in the past.”
He also stressed the role the hotel can play in engaging with the planners on attrition policies, building value into programmes so they can negotiate with clients: “Suite upgrades, F&B or spa freebies have a perceived value that makes the planner look good, while we will always work to evaluate what we can offer for a price, without compromising a programme.”
Offering Dubai’s only integrated destination resort, the sales pitch is global, and Armitage is optimistic across both old and new markets: “Germany is strong for 2012, as well as the traditional UK, French and Italian groups and we see opportunities to grow in China,” he said.
“We have a very strong increase out of Russia with demand for fi ve-star Dubai at a price — whether it is Meydan, Festival City or Atlantis, the rate is the same — and the same applies to India to a degree, while we have seen nuggets of business out of South America.”
Armitage also stressed that the industry in Dubai should look regionally too, reporting good business out of Saudi Arabia for meetings and incentives.
“Following the correction of pricing, companies are looking to come back to Dubai and even repeating at Atlantis because that desire to wow remains.”
NEW MARKET POTENTIAL
In emerging markets, the Dubai sensation is also beginning to sell, according to Annemarie de Waal, head of Dubai operations at Royal Arabian Tours, who attended a promotion there with Dubai Convention Bureau (DCB) recently: “There is great potential — budgets are there and these need to be followed up, with adjustment of pricing to high end groups such as incentives, rather than low cost leisure,” she said.
“The big agents in China are very experienced, with a previous focus on Europe and the Far East – Dubai is attractive as an exotic new option, particularly with new routes there by regional carriers.”
In complete contrast to traditional markets, the Chinese are less adventurous, preferring their own cuisine for instance, and opting for the usual city tour, shopping, a desert trip and an Abu Dhabi side trip.
“Smaller high budget groups might do the Burj Al Arab, while Atlantis The Palm is a strong option as well as Madinat Jumeirah – the Jumeirah name is becoming known in China,” she added.
What would incentivise even more business, according to de Waal, is alternative bedding: “A usual special request is for twin rooms and this has limited us as to which hotels we can offer — for a 500- pax group, we need 250 twin rooms and Atlantis is the only option then.”
While this nascent business has huge potential, de Waal said more government incentives could help in competing against destinations such as Hong Kong, for instance: “There is demand from organisers and incentive houses for some sort of inducement, whether this is in the form of monetary incentives, hosted visits, free rooms, help with visas and sponsors, etc.”
While Abu Dhabi has begun down this route with a programme of incentives, to date Dubai has held back from funding to capture business, according to Luc Delcomminette, VP at Arabian Adventures.
“As we develop the destination, that might come, but we have a unique sell without this – the essentials are still there in that it is safe, there is good access and flying times, infrastructure is in place, etc.”
With a significant increase in incentive events during 2011 and enquiries up for 2012 at Arabian Adventures, Delcomminette reported a mix of old and new business: “Europe is still strong and we have seen an increase in demand from long-haul markets such as the US and Australia – while BRIC countries are very much on the rise.”
He said Dubai was in competition with countries such as Mauritius, Turkey, SE Asia and even New York, but to a degree, the emirate had had a new lease of life in the market.
“Previously, planners were telling us that we have a perfect incentive location ‘but’ — there was always a ‘but’ — whether it was the cost of the hotels or the construction work. Now that is all being addressed.”
And, as well as putting in new attractions for Dubai, Arabian Adventures is also pushing neighbouring destinations, including both Oman and Abu Dhabi.
“We are promoting the whole of the UAE — Abu Dhabi complements what we have in Dubai and product development there is huge, while Oman is an option for an authentic Arabian experience,” said Delcomminette. “In Dubai, occupancies and levels of business have returned to normal, but the lesson has been learned that you have to be creative, flexible and co-operative.”
