FOCUS ON M.I.C.E. - MEETINGS, INCENTIVES, CONFERENCES, EXPOSITIONS

THE PERFECT STORM HITS M.I.C.E. FOR 2009

The spreading financial crisis, dismal economy and frozen credit markets have created a perfect storm that will not only sour the global M.I.C.E. outlook for 2009, but could fundamentally transform the industry.

What started out as a banking crisis in the United States 15 months ago has mushroomed across geographies and business sectors and spawned a credit crunch that now threatens to plunge major economies throughout the globe into recession.

I usually restrict my commentary in this column to things related to the M.I.C.E. (meetings, incentives, conventions and expositions) market. However, events unfolding due to the current financial crisis are having such wide spread effects that I feel compelled to share some of my thoughts about how these changes could impact the travel industry and affect your ability to conduct M.I.C.E. activities.

Here are a few of my observations about things that are happening now and how they may impact the MICE industry in the near future:

Credit markets. The credit markets have virtually collapsed as trust between parties in the system has evaporated. Banks are no longer willing to lend even short term money to other banks fearing that the borrower will default. Governments all over the world have had to step in and act as a guarantor for these short term lending transactions. But banks aren't the only sector to suffer from this credit crunch. Frozen credit markets are depriving companies and consumers of credit lifelines. This is endangering a range of economic sectors from real estate to automotive, insurance, IT and telecommunications - all of which are major buyers of motivational travel and drive the corporate meetings and conference business.

Government intervention. Led by the U.S. Federal Reserve, central banks from all over the world have injected TRILLIONS of dollars into the financial system. Although much of this money may ultimately be recovered, a substantial amount will be lost and taxpayers will be forced to cover the difference. Look for additional taxes on hotel room rates, airline tickets, food and beverages. The costs of conducting your meeting or conference could increase substantially.

The economy. It's becoming clearer that the United States and the world are heading toward (if not already in) a global recession. With reduced consumption in the U.S., exporting nations like China, Canada and Japan are getting hit hard. Signs of a slowdown in meetings and incentives from these countries to the U.S. are already starting to emerge. Inbound U.S. operators have indicated that enquiries for 2009/2010 programs have slowed considerably.

Fundamental changes in society. The very lucrative and highly paid executives of the financial institutions may have much different worries in 2009, than thinking about what exotic destinations to take their high achievers to over the next few years. With the glaring eye of the U.S. Congress watching over them, many companies will be forced to placate shareholders and angry taxpayers by scaling down their incentive programs to practical gifts rather than glitzy vacations. In a tight credit market like this, traveling to Hawaii, the Caribbean or Mexico, even if the trip is well earned, is going to be seen as frivolous.

Many of you will remember the turbulence the travel industry endured in 2001. The downturn we're currently facing looks a lot different. With 9/11 and SARS, people had the cash to travel but there was a fear of traveling because of terrorism or disease. This time, credit is frozen, jobs are being lost and companies are saying "we have to cut budgets." Companies large and small will be asking "what's my ROI" for every trip that is being considered. If they can't measure it, you're going to see incentives eliminated and meetings significantly reduced.

Questions or need more information? Please contact Matt at matt@bmtmag.com.