How MICE is Fueling Hospitality Industry Growth in China

By Deborah Popely Assistant Professor, School of Hospitality Management , Kendall College | May 08, 2016

“Growth” and “China” are so often used in the same sentence that it has almost become cliché. Even recent reports of economic slowdown in the world’s second largest economy seem to barely make a dent in the continuing upward trajectory of China’s service sector, of which hospitality and tourism are significant parts. Estimates are that by 2023, China’s hotel industry will become a $100 billion industry with 6.3 million rooms and reach 8 rooms per 1,000 capita (approximately on par with the U.K.)(1). Some analysts believe that China is the most important market for global operators such as Marriott, Starwood, Intercontinental and Accor, which have over 400 new Chinese hotels in the pipeline. Although luxury brands have been at the forefront, the even greater growth opportunities appear to be in the mid-scale and budget categories, while the high-end brands are in a consolidation phase(2).

Within the context of the hospitality industry, the conference and events sector is a rising star, estimated to be growing at a rate of 20% annually. In 2013, 340 meetings took place in China, making it 8th largest meeting destination in the world(3). The 2014 China MICE Buyers Report found that the majority of Chinese event planners anticipate planning more meetings in the coming year, although these meetings are likely to be shorter and more cost-efficient in response to the Chinese government’s efficiency measures(4) (although it should be noted that shorter events and smaller budgets are consistent with worldwide MICE trends). Tier 2 and tier 3 Chinese cities such as Chengdu, Wuhan and Tianjin are building convention centers, hotels and other venues to keep up with growing domestic and international demand for meetings in China.

International MICE Market

Marquee events traditionally gravitate to first tier or “world cities” that have the infrastructure and image to draw global attention. New York, London, Paris, Tokyo and Hong Kong hold the top five positions due to their worldwide financial, cultural and political influence(5). By contrast, second-tier and third-tier cities, typically provincial capitals or coastal cities, tend to attract less prestigious local and regional events that demand less in terms of space, transportation, technology and communication capabilities. However, with recent growth in the size and mobility of the international MICE industry, spurred on by the end of the 2008 recession, many smaller cities around the world (for example, Austin, Auckland, Amsterdam, Dublin, Barcelona) are beginning to compete on a global basis for high visibility international events(6).

According to Greg Clark, chairman of London’s Business of Cities think tank, multinationals are becoming more agile and willing to experiment with new destinations, as long as these locations can provide a commensurate level of “accessibility, talent, tolerance and technology.”(7) This necessitates the development of sophisticated, full-service, business-oriented urban environments that deliver engaging visitor experiences while facilitating high-level business interactions.

Smaller cities are recognizing that business events can be an engine for attracting corporate investment, but this may necessitate creating a shift in perception. For example Miami, long viewed as a vacation and retirement destination, has invested heavily in developing MICE infrastructure as part of a business-focused rebranding strategy. Some cities are purposefully differentiating to serve particular business niches. Dublin is leveraging its academic, research and technology assets to identify itself as a “knowledge hub.” San Francisco has developed as the first choice for hi-tech industry events thanks to its favorable association with Silicon Valley’s startups and superstars.

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Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.