CHAPTER 1 INTRODUCTION Aims and Objectives With the increasing significance of business tourism internationally and particularly the growth of the sector in the South African tourism context, the aim in this research is to examine the role the exhibition industry within the business tourism sector in South Africa. Several key themes are explored: • The research positions business tourism within the broader international framework. • Business Tourism is discussed within a South African context, analysing the development and the challenges facing the future of this sector. The role and influence of particular tourism bodies and associations is investigated. • The exhibition industry is assessed in detail as a component of the business tourism mix in relation to the more dominant components of conferences, meetings and incentive travel. This involves a study on the internal dynamics of the South African exhibition industry, unpacking how the industry is structured, who the key players are, which are the top consumer and trade shows nationally, and impacting factors on the evolution of the industry over the past decade. • A case study on the annual tourism trade show, Indaba, is used to show the dynamics of the exhibition industry on an operational level. Overall, this study is focused on the organisational elements of the exhibition rather than the economic impacts of business tourism. Context As highlighted by Rogerson (2005), the current available research on business tourism is fragmented and predominantly focused on the developed world, namely North America and Europe. It is observed that the ‘developing world as a whole has been a limited focus for research on business tourism, not least the continent of Africa, which has received no scholarly attention’ (Rogerson, 2005: 177). Swarbrooke and Horner (2001) also raise several problems in the study of business tourism, such as there is a general lack of literature and reliable statistics in this field. The existing data has been collected in different countries with different set objectives, therefore, it is difficult to make global comparisons. In addition, JH Reynolds -1- there is a problem of terminology, whereby terms and positions within the industry differ on a national and cultural level, which does not aid a global study (Swarbrooke & Horner, 2001: 11). For the development of business tourism in South Africa, it is essential that the players within the sector have an understanding of the international dynamics of the industry in order to best capitalise on opportunities for South Africa. In order for the growth of the exhibition industry to be recognised for its value and contribution to this tourism sector, it is necessary also to develop an understanding of the inner workings of the industry. Minimal academic research has been compiled on the exhibition industry in South Africa, therefore the original findings in this report provide a rare detailed profile of this industry within the business tourism economy. Research Methodology This report uses both primary and secondary research in order to gain an accurate picture of business tourism and the exhibition sector in South Africa. In terms of primary research, qualitative research has been gathered through the method of personal interviews with the following groups: • Representatives from tourism bodies and business tourism companies: Small scale qualitative research was undertaken in 2006 with senior personnel in the business tourism sector in South Africa. The individuals were strategically selected to provide an overview of business tourism from the private sector, government and media perspectives. The findings are largely subjective, giving insight into how people perceive the current state of the industry. Certain topics were explored such as the key developments for growth of the sector; challenges that business tourism currently faces; the role of various tourism bodies and what should be done differently; and the inter-relation of components of the business tourism mix. • Representatives working in the Exhibition Industry: Key players were approached for personal interviews to gain a wider understanding of the dynamics of the exhibition industry in South Africa. These key players hold senior positions within top exhibition companies in South Africa. The selection of interviewees was specifically intended to reflect a cross-section of the industry, from the various backgrounds of exhibition organisers, venue management and suppliers to the industry. JH Reynolds -2- • Representatives from Convention Centres: Relevant spokespeople from the three major convention centres were approached to give their viewpoints on the value of exhibitions for their business. These findings were incorporated into Chapter 4. Structured questionnaires were designed specifically for each target group. The key theme for the first group of representatives from tourism bodies was to ascertain the development and growing significance of business tourism in South Africa as well as to understand the role that these groups interpret for exhibitions within the business tourism framework. With regards the questionnaires for the exhibition industry and convention centre components of the study, the questioning was more targeted to the specific nature of these groups with a focus on the inner workings of the exhibition industry. The secondary research undertaken for this report analysed key international literature on business tourism and the exhibition sector. The NEDLAC FRIDGE (Fund for Research into Industrial Development Growth and Equity) study, commissioned by South Africa’s Department of Trade & Industry, was the result of extensive research into the business tourism sector (Grant Thornton and Prodigy Business Services, 2006). The primary findings of the study have been incorporated into this report. In addition, analyses from South African Tourism’s segmentation reports and the Tourism Growth Strategy have also been reviewed. Additional secondary research, providing an overall review on the nature and scope of the South African exhibition industry, makes use of an independent study of the Exhibition Association of Southern Africa’s (EXSA) databases and criteria for defining the players in the industry. For the purpose of the report, only EXSA members were included in the analysis in order to set some parameters for the research. The case study on Indaba elaborates on the operational elements of an exhibition, demonstrating the planned execution of an event working in conjunction with various city authorities and VIP protocol. The study highlights the profiles of the exhibition, exhibitors, visitors and special guests. Source material includes project timelines, a mechanics planning document and media releases. JH Reynolds -3- Report Structure The report is structured into three sections of discussion. Chapter 2 provides an analysis of key international findings related to business tourism, establishing a platform and framework for the research element of the report. This chapter gives an historical overview of the development of business tourism globally before focusing on various facets of business tourism, namely the benefits and impacts, the role of the destination and event tourism, development strategies and the future of the industry. This review of the international context and global standards for business tourism sets the scene for Chapter 3, which unpacks the relevance and impact of business tourism in South Africa. This chapter provides an examination of the development of South Africa’s business tourism sector according to governmental mandates and objectives, incorporating the contribution made by industry organisations and associations. The chapter reviews the outcome of small scale qualitative research, in which findings are analysed and discussed in terms of the key reasons for an increase in significance of the sector; perceived challenges; various changes that need to be implemented; and, of the contributions made by different components of the business tourism sector. Chapter 4 assesses the exhibition sector as a sub-sector of the business tourism industry in South Africa. This chapter provides a discussion on the dynamics of this marketing medium and its significance in terms of business tourism, incorporating aspects such as the evolution and current structure of the industry and the role of the national association. A case study of the annual tourism trade show – Indaba – demonstrates the operational elements required for the successful execution of a large-scale event. Lastly, the chapter reviews the future of exhibitions in South Africa. Chapter 5 offers a conclusion, highlighting possible improvements for the sector in order to compete more effectively on the global scale. JH Reynolds -4- CHAPTER 2 INTERNATIONAL LITERATURE REVIEW ON BUSINESS TOURISM Introduction The aim in this chapter is to establish a platform and framework for the research element of the report, providing background literature and contextualising international key findings on business tourism. Chapter 2 is divided into four sub-sections, starting with an understanding of accepted definitions for the industry and an historical overview of the development of business tourism globally. The second section of this chapter will focus on various facets of business tourism, namely the benefits and impacts, the role of the destination and event tourism, development strategies and the future of the industry. Section three considers the international context and global standards for business tourism, ahead of the review of the South African context in Chapter 3. The last section of this chapter reviews exhibitions as a sub- sector of the business tourism industry. Definitions and Development of Business Tourism Previously known as the ‘MICE’ sector – namely Meetings, Incentives, Conferences and Exhibitions – the more widely used term ‘Business Tourism’ encapsulates the essence of what these gatherings represent. This sector constitutes a ‘special kind of tourism’ in that the ‘meeting, convention or exhibition serves as the primary purpose for travel and the focus is a multi-faceted event of a fixed time duration that involves speakers, seminars, workshops, exhibitions, banquets, association meetings and social events’ (Hiller, 1995:375). In a report conducted by the United Nations World Tourism Organisation (UNWTO), the International Congress and Convention Association (ICCA), Meeting Professionals International (MPI) and Reed Travel Exhibitions (RTE), certain definitions have been proposed to the industry in order to achieve a global standard (UNWTO, ICCA, MPI, RTE joint industry report, 2006). Most notable is the proposed adoption of the terminology ‘Meetings Industry’ to incorporate the whole sector. Table 2.1 highlights these new definitions. JH Reynolds -5- Table 2.1: Recommended Meetings Industry Definitions and Rationale for Definitions (Source: UNWTO, ICCA, MPI, RTE joint industry report, 2006) Issue Recommendation Rationale Nomenclature for Meetings Industry This name represents the supply side the Industry It has support from key industry participants Meeting Aims To motivate participants, to These aims, or similar aims, were the most conduct business, share ideas, common in the industry and academic literature to learn, network and hold discussions Meeting Size Minimum number of ten (10) Many meetings organisations use this number participants Meeting Venue Venues where there is Where there is payment for the use of a payment for the use of the contracted venue, there will be an economic venue for meetings contribution to the economy Meeting Duration A half-day (four hours) or more Although a minimum duration may not be needed, the limit of four hours will provide a practical and sensible in-scope boundary for data collection The NEDLAC FRIDGE (Fund for Research into Industrial Development, Growth and Equity) Business Tourism Sector Study, commissioned by South Africa’s Department of Trade & Industry and released in 2006, initially defined a number of factors which can be included under Business Travel and Tourism, including trading (shopping tourism). In order to further refine the categories, business tourism was divided into: • business tourism meetings, ie. meetings, conferences, incentives and exhibitions; and • business tourism events, ie. non-meeting events such as concerts and sporting events. (Grant Thornton and Prodigy Business Services, 2006b) The FRIDGE study undertook to focus predominantly on business tourism meetings and more detail from the study will be unpacked in Chapter 3. JH Reynolds -6- It is significant that there is a large crossover in the relationship between Business and Leisure Tourism (Swarbrooke and Horner, 2001; Rogerson, 2005). There are numerous links in the chains of demand and supply albeit the two groups tend to use the same facilities in different ways. Swarbrooke and Horner (2001) highlight these overlaps as the following: the business traveler usually becomes a leisure traveler once the working day is over; conferences often include a programme of leisure activities in between conference sessions for delegates; and, many business travellers are accompanied by their partners and/or children who become leisure travellers for all or most of the duration of their trip (Swarbrooke and Horner, 2001: 10). Incentive travel, which offers leisure travel as a reward for good performance at work, is considered a key component of business tourism even though it has its own set of characteristics quite distinct from the other components. For the purpose of this report, the primary focus is on the meetings, conferences and exhibitions components of the sector. In spite of the relationship between the two sectors, business tourism has become a stand-alone concept, growing in awareness and understanding by governments, academics and tourism professionals. Business tourism is not a new phenomenon. From the early days of agricultural trade between communities and the days of the Egyptian, Persian, Greek and Roman empires, people have travelled – often vast distances – to take their produce to market to trade. ‘By the medieval period business travel for trade was well established and its infrastructure included a number of massive trade fairs in strategically located towns and cities’ (Swarbrooke and Horner, 2001: 15). Historically, the development of the Silk Route was particularly significant for business tourism as it enabled transportation of goods and scientific inventions between Asia and Europe, ‘which brought phenomena as diverse as gunpowder, new religions, knowledge of astronomy and advances in medicine to Europe and the Middle East, from Asia’ (Swarbrooke and Horner, 2001: 16). The Silk Route also resulted in a strong network of stop points – ‘kervanserai’ – which provided accommodation and a support system for travellers enabling the re-stock of provisions, camels and guides. Other early forms of business travel, still in existence today, were for religious, military and employment purposes involving priests, soldiers or migrant workers. The industrial revolution saw an increase in production volumes leading to increased demand for raw materials. Coupled with improved road and rail infrastructure, these factors all spurred the growth of the business tourism sector (Swarbrooke and Horner, 2001). JH Reynolds -7- Business tourism pioneered in the United States in the twentieth century with the establishment of convention bureaus dating back over a hundred years, resulting in the fastest growth of the industry taking place in recent times. With the inventions of passenger airlines and incentive travel, as well as the development of specialist venues and formalised meeting concepts, business travel and tourism has ‘changed dramatically in the latter half of the twentieth century as new forms of business tourism developed and the supply side responded with new products and services’ (Swarbrooke and Horner, 2001: 14). Characteristics and Elements of Business Tourism Business tourism has a number of distinct characteristics and specific benefits for destinations (Law, 1996; Getz, 1997; Swarbrooke and Horner, 2001; Rogerson, 2005). Business tourists are considered economically attractive and more and more countries, regions and venues are trying to secure their share of this profitable market. Figure 2.1 presents the major benefits for destinations in terms of business tourism. The most notable benefits include providing solutions for addressing seasonality challenges; job creation to meet higher standards of demand for business travellers; justification for development and funding of infrastructure that can benefit the host community; spin-off for local suppliers and related industries such as photographers or florists and; higher average daily spend per business traveler as compared to leisure travellers (Swarbrooke and Horner, 2001). Comparing several destination’s business tourism yield, Lee and Josiam found that in New Zealand and South Korea business travellers spend three times more per day than the average tourist spending whereas in Australia convention delegates and their companions spend an estimated five times more per day than average visitors (Lee and Josiam, 2004). These economic benefits of business tourism need to be effectively managed in order for destinations to yield the maximum benefit. When this is the case, the ‘impact of this industry on a nation’s economy is tremendous’ (Lee and Josiam, 2004: 105). Figure 2.1 below highlights both the positive and negative impacts that can develop through the influence of business tourism on a localized level highlighting the need for careful structured management. Without proper consideration, environmental and social factors may have a negative impact. From creating additional pollution and waste to the demand for infrastructure, the physical environment may suffer negatively from an influx of business tourists. Socially, business tourism appears to have mixed impacts, with the business traveler experiencing a more favourable time than the local community in the destination who may suffer negative impacts (Swarbrooke and Horner, 2001). JH Reynolds -8- POSITIVE NEGATIVE Income for destinations and The need for public funding or individual enterprises subsidies for the development and management of facilities such as convention and The creation of jobs exhibition centres The generation of tax BUSINESS revenue for local and central TRAVEL AND Opportunity costs where government TOURISM communities spend money on facilities and services to attract The multiplier effect of business tourists, where the business tourist expenditure money could have been used within the local economy for other purposes such as health and education The potential stimulation of inward investment The injection of foreign Possible costs caused by currency where the business congestion if there are too tourists are foreign many business tourists Figure 2.1: The economic impact of business travel and tourism (Rogerson, 2005:179) Large cities are multifunctional and therefore any business tourism operations become part of the mix of activities in a big city. In Law’s categorisation of cities, he found that the ‘invisibility of tourism in cities partly arises from the fact that many facilities are used both by residents and visitors. Improving these facilities therefore provides benefits for residents as well as assisting the promotion of tourism’ (Law, 1996: 5). New projects and development of convention centres and arenas are often the ‘centrepieces of the regeneration of derelict areas on the downtown areas’ (Law, 1996: 12) and can be used effectively to secure funding for upliftment of the community. One example of this is the development of Birmingham’s National Exhibition Centre in England, which was based on the USA model (Rogerson, 2005). 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Geographical features including climate, topography, and landscapes Transport networks, incl airports, Destination seaports roads, and marketing agencies railways within the which provide destination, and information for links with the potential visitors outside world Specialist DMCs providing orgfoarn icsoantifoenre snecrevsic, es DESTINATION eessAAttccaaccbboolliimmsshhmmmmooeeddnnaattttssii ooiinnnncc ll trade fairs and hhootteellss aanndd uunniivveerrssiittyy incentive travel hhaallllss ooff rreessiiddeennccee Human-made Ancillary services attractions such as such as florists, historic buildings, audiovisual theme parks, specialists, sign- restaurants, bars, makers etc. museums, theatres Venues such as convention and exhibition centres, hotel meeting rooms Figure 2.2: VVVaaarrriiiooouuusss cccooommmpppooonnneeennntttsss ooofff ttthhheee dddeeessstttiiinnnaaatttiiiooonnn ppprrroooddduuucccttt (((SSSwwwaaarrrbbbrrrooooookkkeee aaannnddd HHHooorrrnnneeerrr,,, 222000000111:::555999))) JH Reynolds -10-