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Theresa Delia Thesis

Chapter on Business Tourism

In an analysis of business tourism several authors such as Beioley (1991), Middleton (1992), Martins 1991, Rutherford (1990) and SITE (1992, 1993), are in agreement that there are basically four distinct segments of business tourism: (1) business travel, (2) incentive travel, (3) conferences, and (4) exhibitions. The authors have also indicated that incentive travel and conference meetings are becoming more difficult to distinguish by observers in the tourism trade. Increasingly the question of when is a conference meeting not regarded as incentive travel or vice versa, is being frequently raised by professionals in the meetings industry. Perhaps when conferences are accompanied by exhibitions promoting specific products related to the nature of the conference meeting, the identification task in between what is a conference or an incentive is made simpler. Nonetheless a full explanation of the typology of meetings is considered necessary by the study in order to be able to define and discuss the separate segments of meetings. This is discussed in further detail under the section entitled The Conventions, Expositions and Meetings Industry on pages 58 and 66. A discussion on business tourism and incentive travel will now follow.

The first distinction, as also identified by Wootton and Stevens (1995), in their research on business tourism, draw on the wording of resolutions put by The World Tourism Organization to the United Nations in 1992:

"Business tourism denotes the activities of persons travelling to and staying in places outside their normal environment for the purposes of business" (Wootton and Stevens, 1995; WTO 1992).

Business tourism includes all activities, same day travel and staying overnight, for which the principal reason for being away from the `normal environment' is business. It excludes all forms of commuting to work and the regular working journeys of businessmen in their local areas (Wootton & Stevens 1995; WTO 1992).

Incentive travel refers to a second distinction in the segmentation of the business tourism market, as identified by the same authors quoted earlier on. In particular SITE (1993), indicates that:

“The root of incentive travel is in motivating employees of companies to improve sales” (SITE 1993).

Furthermore it continues to elaborate that incentive travel is:

“A modern management tool used to accomplish uncommon business goals by rewarding participants with an extraordinary travel experience upon their attainment of their share of the goals” (SITE 1993).

However, incentive travel is further segmented into motivational travel by SITE (1993). A common trend identified by SITE (1993), found that more corporate companies tended to employ both types of travel in tandem. The report indicates that the difference between the two types of travel lies in the timing of the performance.

“In motivational travel, the participants travel prior to attaining the business goal. An example of motivational travel would be a corporate-wide weekend away to motivate the sales force prior to a sales campaign” (SITE 1993).

Smith (1990), together with Davidson (1992) are both in agreement with SITE (1993), that since incentive and motivational travel is a difficult market to quantify, mainly because of confidentiality and tax purposes reasons, it is commonly hidden as general meetings business:

“All incentive trips are adding an education/meetings related component to allow tax deductibility" (SITE 1993).

Travel for the purposes of attending a conference, seminars, sales meetings, annual conferences, conventions and trade fairs/exhibitions form the third and fourth distinction of business tourism segmentation. This sector has been rapidly expanding over the past 20 years in terms of number and influence and the indication is that conference and meetings tourism has been growing faster than business tourism as a whole ( ETB 1991; Beioley 1991; Wootton & Stevens 1995).

This thesis, within the Maltese context, will focus on the third segmentation of business travel tourism, the conference market.

Since a common feature of all segments of the business tourism market is the generic activity of a “meeting” between people identified as “tourists”, it is not always possible to distinguish business tourists from leisure travellers, as both may use the same forms of transport and accommodation. Davidson (1992) identifies some important differences between the characteristics of business tourism as opposed to leisure tourism. These are shown in table 2.

Moreover, Hampton (1989), asserts that business travel is an important segment of the tourism market, and in certain sectors it plays the major role. Although only about 15% of tourist arrivals worldwide are for business purposes, tourist spending on a business trip is likely to be much higher than on a holiday. Since delegates are not directly involved in the expenses of the trip expenses are paid for by the employer - average spending per day per head is higher for business tourists. It naturally follows that they are more likely to use luxury hotels, first class travel and taxis (Davidson 1992). Consequently the relative contribution of business tourism to the total economic impact of tourism will be higher in value terms than that of leisure tourism. Proof of the market awareness is shown by the considerable investment in meeting facilities worldwide over recent years. (Beioley 1991;Martins 1991; Middleton 1992).

Business visitors are also a major source of demand for hotel accommodation, with hotels relying heavily on business travel to fill beds during the week (Slattery & Littlejohn 1991). Business tourism accounts for a high portion of hotel guests, particularly in the four and five star range where the figure is of the order of 60% (Hampton 1989).

The specific business travel market is characterized by relative lack of seasonality, last minute booking and inelastic response to price (Witt, Brooke & Buckley 1991). “Seasonality”, refers to the tendency of tourist flows, to be concentrated into relatively short periods of the year (Allcock 1989b).

Significantly, the demand for business tourism is likely to be lower at times of peak holiday demand, because the businessmen themselves may well be on holiday (Witt, Brooke & Buckley 1991).

Equally, the fact that many business trips are booked only a short time ahead and that business travellers usually wish to spend the minimum amount of time away on their trips to achieve the required objectives means that these travellers seek maximum flexibility in particular they do not want restrictive conditions attached to flight tickets and are prepared to pay a premium for this (Peterson & Belchambers 1990; Witt, Brooke & Buckley 1991). Interestingly, as far as transport is concerned, business travellers comprise a disproportionately high proportion of air travellers of the order of 50% (Hampton 1989). Furthermore, they usually require good quality accommodation, both in order to be able to function well and also to create the right image with the business contact being visited (Peterson & Belchambers 1990; Witt, Brooke & Buckley 1990; Owens 1992).

Business travel tourism has become a feature of modern commercial life. The growth and significance of meetings is tied to the growth in the quaternary sector in advanced economies which correspond to the transaction of information performed by those in manufacturing, commerce, professional administrative and higher level occupations (Marsh & Burtenshaw 1985).

On the other hand, Wootton and Stevens (1995), in their research on business tourism, indicate that worldwide recession may cause a general levelling off in demand for conference meetings by those destinations bidding for business and may lead to cancellations, late bookings, tighter budgets, and down trading of venues. It may also have an effect in reducing the number of delegates in attendance as well as the duration of events with delegates becoming more cost conscious (Smith 1990; Hartley & Witt 1990; and Beioley 1991).

Within this context, cognizance of key market and environmental trends for the 1990s, is considered important by the study, for the Maltese Islands’ competitiveness in the Mediterranean region. These will now be discussed.

MARKET TRENDS

In the UK and Ireland 8,000 to 10,000 travel agents and fulfillment houses process £3 4 billion sterling in business travel generating commissions of £300 400 million sterling. Large multiple travel agencies account for more than 75% of the business travel market (SITE 1993). Wootton & Stevens (1995), insist that there is however, a dearth of reliable information about the actual size of the meetings and conference market and estimates range from £900 million sterling per annum (Hartley & Witt 1990), for larger conference events to £6 billion sterling including smaller meetings held in a range of different types of venues (Coopers & Lybrand Deloittes 1990). Equally, Smith (1990), indicates that of all the multi million dollar industries, few have such a meagre data base and adds that Americans are better at this than Europeans. Similarly, there has been difficulty in obtaining statistics on the Maltese conference meetings market. As has already been stated in the opening chapter no statistics were available by NTOM (National Tourism Organization Malta) prior to 1993.

Research by the Reed Travel Group (1993), see figure 4, reinforces this theory. It might be estimated that the North American meetings market is worth around $45 billion dollars annually. If the rest of the world were to be estimated at approximately the same amount, it would mean a $90 billion dollar world wide business, increasing at perhaps 8 to 10% per year (Smith 1990). The reasons given for the dearth of statistical information indicated in Britain and the rest of Europe, including for the same reasons Malta, is that because corporate meetings are usually private affairs, costings, accounts, and decisions will remain confidential. It is also fiercely competitive, and no hotel or facility owner will make public their statistics (Abbey 1987; Smith 1990; Wootton & Stevens 1995; Oberoi and Hales 1990).

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