Incredible growth opportunities for UAE’s Conferences and Events Industry
Special to ArabianGazette.com: by Shveta Pathak
Ludhiana, an industrial city located in the North of India, is home to some of the top names in the business world- Munjals of the two wheeler giant the Hero Group, Mittals of Bharti Telecom, Jains of Vardhman Textiles, to name a few. A hub of engineering and hosiery activity in the region, contributing significantly to the country’s export-import revenues, this city also boasts of the highest concentration of Mercedes Benz cars in the country. It is a routine for high income families from here to head to London or Dubai for their shopping trips.
Far from the impact of global economic crisis, this industrial town appears to be racing toward development. Entrepreneurs here are continuously seeking fresh business opportunities. And while they clearly stand an advantage in terms of easy and economical availability of manpower and resources, networking, for them, comes with an effort. The city has not more than two five-star hotels and a wide majority prefers to host their business meetings in the national capital, New Delhi, which is around four hours by train, due its better connectivity and superior infrastructure. Hosting a business meeting in New Delhi is definitely not a cheaper option, but its all about quality for the business owner from this midsize city which holds a fortune of untapped growth opportunities.
With over 80 per cent of its population residing in small towns and rural areas, India, one of the fastest growing economies in the world, has several such rapidly growing business hubs. These midsize cities are all set to lead the growth in emerging economies.
A latest report by McKinsey Global Institute says midsize cities in emerging economies will be world’s next growth frontiers.
Clearly, the debate is not whether or not these present an opportunity for the meetings industry but how to actively tap into this opportunity. For the United Arab Emirates (UAE), close proximity to the two Asian giants-China and India, projected to grow at 9.6 per cent and 8.4 per cent respectively in 2011 by the IMF, presents an open advantage.
Understanding the requirements of these markets would go a long way toward reaping incredible opportunities out of the changing economic dynamics and accelerating the growth in UAE’s meetings industry, the share of which is expected to rise significantly in the economy.
An analysis of Indian markets shows that availability of venues with superior infrastructure is more or less restricted to the metropolitan cities or large cities. In addition, the room rates in top-end hotels continue to stay high and the proportion of price reduction on this front has been lesser in comparison to other markets like the UAE. In case of many cities, ease in connectivity remains an issue.
Even as rapid development is taking place in these cities, the opportunity is immense. Given that the corporate world has set its eyes on India, entrepreneurs are keen on availing the most of the opportunities coming their way.
In the present scenario, an entrepreneur from a mid-size city in India looks for attractive travel options, low room rates alongwith strong infrastructural support to zero in on a place to hold meetings and events.
Forging liaisons with industry chambers, trade associations, government organizations and third party organizers and offering them attractive travel and room rates-with a special attention to catering to high opportunity towns and cities would foster growth in UAE’s meetings industry.
The UAE has numerous advantages to its side. Its close proximity apart, the fact that the prepositions available in this region are quite unlike elsewhere can be effectively turned into gains for the sector.
Travel costs and room rates have witnessed a sharp reduction in the past two years. Different reports show that room rates are almost 60 per cent cheaper in the UAE than what they were in the pre-crises period.
As supply continues to grow, inspite of the delays in various projects, competition on the price front can also be expected to intensify. A recent Middle East STR report listed 55,629 active hotel rooms in the UAE . The UAE saw 57 per cent increase in supply of hotel room and 40,000 are in the pipeline, according to STR report on Middle East/Africa in January 2011. A large number of upcoming business hotels facilitate reaching out to customers with lower budgets, thereby widening their reach. This scenario is encouraging and it sets the stage for high growth in meetings sector.
Another positive factor is that the sector is open to innovations and fresh initiatives. Many of the region’s leading hotels have been encouraging group and block bookings in the last two years, offering special rates, marking a clear change in their previous focus.
Affordable luxury is the positioning of most destinations in this region and that, being a growing requirement of the business segment in the emerging markets, presents a strong opportunity to reach out to the target customers.
The UAE stands tall when it comes offering the best in terms of infrastructure and the quality of services. The government’s focus on economic diversification will witness an increased allocation of funds toward this high potential sector.
The region is already witnessing benefits of its continuous efforts toward exploring fresh segments as a result of which the number of events organized reached an all time high in 2010.
A recent research by GIBTM shows that it is the most popular region and Dubai is the most popular emirate when it comes to organizing events and meetings.
As the interest has been equal from various sectors-pharmaceuticals, banking, education and even non profit organizations in recent parts, efforts will be required to be made across all sectors.
Given that the UAE is well placed to cater to the requirements of the “high growth” markets, the key challenge would be to reach to its target audience. The answer lies not in blindly following the path treaded by other sectors or economies but in maintaining a sharp strategic focus on target segments.
Attractive pricing too would present a challenge. Hotels will need to ensure that high standards and quality are maintained as supply increases and offer these services on costs that continue to be attractive for prospective clients in the emerging markets.
As the UAE’s meetings industry matures and looks forward to a rewarding 2011, the sector needs to continue exploring fresh opportunities so as to accelerate its growth in the long run and increase its contribution to economic growth.
‘Destination UAE’ is a series of special reports from ArabianGazette.com, focusing on potential opportunities in various sectors.