The ‘True’ Value of Business Events

1. The ‘True’ Value of Business Events Boston Convention Partnership Meeting 30 November 2010 Professor Leo Jago PhD DeHaan Institute

2. FACT • Business events make key broad-based contributions to host economies BUT • Most of our efforts focus on the tourism contribution of business events CONSEQUENCES • Business events don’t get the recognition and support they deserve • Destinations lose opportunities to leverage the benefits SOLUTION • Need to assess and promote the ‘beyond tourism’ value of business events

3. Presentation Outline • Traditional Approaches to Valuing Business Events • Problems with these Approaches • Change Prompted by the Global Financial Crisis (GFC) • Business Events’ Contribution to Innovation • Assessing the Broader Value of Business Events • Next Steps

4. Traditional Measures for Estimating the Value of Business Events • Delegate Numbers • Delegate Hotel Nights • Number of Accompanying Persons • Pre and Post Event Touring Activity • Total Delegate & Accompanying Person Spend • Economic Impact of Delegate & Accompanying Person Spend

5. Traditional Measures for Estimating the Value of Business Events(Cont) • Often done for an individual event • Sometimes aggregated across a year for the destination • The sector has been “sucked into” narrow measures of performance We are focusing on the wrong thing and often not measuring it well anyway

6. Economic Impact of Business Events • Australia’s National Business Event Study (2005) • Business Events generate $17.3 billion spending per year • Contribution to total employment of 213K • Contribution to Gross Value Added of $11.4 billion • Obtained substantial ‘traction’ with government • Prompted a UNWTO study

7. Economic Impact of Business Events: Boston • Economic Impact from Academic Events (2009 Annual Report) • From 2011‐2013, the MCCA projects its activities will: • generate over 1.62 million hotel room nights; • generate $1.65 billion in economic impact to the Commonwealth;

8. Fundamental Problems • The commonly used measures focus exclusively on the tourism impacts of business events • Many see the impact to only benefit hotels, convention centres and restaurants • Tourism benefits are seen to be more frivolous and have lower credibility than benefits from other sectors • Until recently, not even those in business events often promoted the additional benefits of the sector

9. Why the Link with Tourism? • Dates back to at least the nineteenth century where business events were seen as a way to promote destinations and fill hotel rooms (Detroit in late 1800s) • The attraction of delegate visitors and their spending pushed business events into Tourism Departments • Tourism Departments measure value through visitor numbers and spend, hence the flow of this approach to business events • This impact is fairly easy to measure and short term so can be estimated soon after the event

10. Consequences • Grossly understates the value of business events to the region • Understates the range of dimensions / variables / benefits • Understates the range of beneficiaries • Understates the total value • Connection with government tends to be through Tourism Minister (usually lower status in government) • Rarely do ‘Industry Ministers’ let alone the Governor, Prime Minister or President see tourism / business events as key high profile drivers of economic development

11. Beyond Tourism • The fact that the funding for business events has often come from Tourism Departments has meant it has been difficult to extend outside tourism • There is now a push for this to happen but it tends to be ‘rear guard action’ • Most Convention Bureaux Boards dominated by people with strong tourism affiliations • Boston a notable exception (only 2 in 12 from tourism)

12. AIPC’s Guide to Calculating EconomicImpact Figures Whilst this Guide focuses on the tourism impact, it does identify the need to consider other dimensions: • “Don’t forget the other business benefits that result from congress centre activities. These can include such things as trade and investment impacts, new business opportunities and creating a showcase for local product and services, and may be of more direct importance to parts of the business community than spending data. • Along with business benefits, your congress centre also generates broader community benefits such as educational opportunities, technology development, professional and cultural development and enhanced tourism. In a time of heightened global tensions, the kinds of activities and events • Conferences and congresses promote international cooperation and create forums that help improve international relations, global communications and professional networking.”

13. Key Messages for the Meetings Industry(Joint Meetings Industry Council) • Meetings and conventions generate uniquely high-yield economic benefits and attract influential visitors; • Meetings generate a wide variety of other economic and community benefits; • Meetings and conventions generate incremental tourism; • Meetings and conventions promote the profile of a city or region and its role in national and international affairs; • Meetings are directly connected to the key issues of the day; • Meetings play an important role in building better understanding amongst different groups and countries throughout the world.

14. Based on the Rhetoric in MCCA’s 2009 Annual Report:Boston Seems to ‘See the Big Picture’ “ Five years since the opening of the BCEC, it has become one of the Commonwealth’s key economic engines, bringing thousands of people from around the world to Massachusetts, and spurring long-term economic ties with local businesses that propel our economy forward.” Deval L. Patrick Governor, Commonwealth of Massachusetts The Hynes and the BCEC have together helped to raise the profile of Boston as a worldwide hub for life sciences, medical research and technology by bringing leading international thinkers together with local talent, creating long-term economic benefit to our industry and economy.” Thomas M. Menino Mayor, City of Boston

15. “Meetings and shows at the BCEC and the Hynes bring some of the best minds in medicine and science to Massachusetts and reinforce the area’s reputation as the hub of our industry.” Sylvie Grégoire, President of Shire Human Genetic Therapies. “One of the best ways to engage in teaching and learning is for people from around the world to get together to explore ideas and share their unique perspectives and experiences. In Massachusetts, we see this globalization of education happening every day as meetings and conventions bring the brightest minds together, across languages and nations. The energy and dynamism of this type of information exchange goes a long way toward making Massachusetts the leader in higher education.” Phillip Clay, Chancellor of MIT If these quotes represent Boston’s widely held view of the value of Business Events, Boston is well placed

16. External Shock Prompts Change • Global Financial Crisis prompted government and companies to cut expenditure • Business travel, especially business events seen as a soft target • Leisure tourism could offset facilities losing business travel • Advances in technology seen to compensate • Attending business events seen by many as a ‘jolly’ • Forced the business events sector to reflect on its true value • A range of studies were commissioned to assist

17. The Return on Investment of U.S. Business Travel(Oxford Economics) • For every dollar invested in business travel, companies realise $12.50 in incremental revenue • The average business in the U.S. would forfeit 17% of its profits in the first year of eliminating business travel • 28% of current business would be lost without in-person meetings • Business travellers stated that 5-20% of their company’s new customers were the result of trade show participation • In order to achieve the same effect of incentive travel, an employee’s total base compensation would need to be increased by 8.5%

18. Oxford Economics Study(Cont)

19. Managing Across Distance in Today’s Economic Climate:The Value of Face-to-Face Communications(Harvard Business Review) • A global survey of 2300 HBR subscribers • 79% said that in-person meetings are the most effective way to meet new clients to sell business • 89% agreed that face-to-face meetings are essential for “sealing the deal” • 95% said that face-to-face meetings are a key factor in successfully building and maintaining long-term relationships

20. Why the Need to Demonstrate Size and/or Value? • Business events must be seen as an investment rather than a cost by companies and destinations • To be taken seriously, an industry must produce credible figures to show its contribution to the economy • Tourism Satellite Accounts (TSAs) were the ‘coming of age’ for tourism • Underpinned investment in infrastructure • Government support for promotion

21. Why the Need to Demonstrate Size and/or Value?(Cont) • Business events adopted this logic but it clearly undervalues the contribution • Even the UNWTO project to estimate value looked only at the tourism value • It also overlooks opportunities to leverage the value of business events

22. Explore the “beyond tourism” broader-based value of business events • “The meetings and events industry should rightly be thought of as a key component of the global knowledge economy, rather than as a branch of tourism” (Leigh Harry, 2009)

23. ‘human interaction, especially face-to-face interaction, drives innovation and inspiration. Accidental connections between leading thinkers studying different topics can unlock seemingly intractable challenges and insoluble puzzles’ (Harry 2009)

24. Beyond Tourism • Tourism is a key beneficiary of business events, not a driver • Business events are staged for specific reasons that have nothing to do with filling hotel rooms – this is purely a spinoff benefit • They are key knowledge creation tools • If business events are to realise their potential, there must be a mind shift on the part of government, destination and event managers about their real purpose and outcomes

25. Key Outcomes • Innovation • Improved organisation performance • Personal development • Increased productivity • Increased sales • New skills and knowledge • Awareness Core Motives or Needs • Develop and share ideas • Educate/inform • Promote • Network / socialise • Change attitudes / behaviour • Sales and performance Business Event Tourism Impacts • Direct spend • Job creation • Infrastructure investment The Role of Business Events in Enhancing Innovation • Maskell et al’s (2006) research argues that: • Meetings and conferences are temporary clusters for knowledge building

26. The Role of Business Events in Enhancing Innovation (Continued) • Enhance science and technology: • which helps generate new forms of technology itself • improves understanding and access to it • helps improve local knowledge and skills by bringing outside information and technology into the host community • providing a vehicle for local businesses and professionals to access the latest developments in their respective fields. • Promote cultural exchange by providing forums and new opportunities to expose local culture to national and international audiences.

27. Industry–science relationships and Face-to-Face Networking

28. Fostering Innovation(Continued) University-industry interactions contributing to innovation (% firms)

29. A Framework for Enhancing Innovation through Face-To- Face Business events ASSOCIATION CONFERENCES CORPORATE MEETINGS & INCENTIVES EXHIBITIONS GOVERNMENT MEETINGS Categories • Exhibition owners • Visitors • Exhibitors • Sponsors • Trade delegations • Media • Government host • Ministers • Parliamentarians • Bureaucrats • Visiting heads of state & delegations • Diplomats • Media • Academics • Professionals • Non-profit organisation hosts • Sponsors • Government representatives • Universities • Media • Employers • Employees • Distributors/franchisees • Corporate guests • Sponsors • Media Participants OUTPUTS: INNOVATION, TRADE, EDUCATION, PROFILE, PRODUCTIVITY, ORGANISATION CHANGE Destination / tourism outputs eg: • Hotel beds • Airline seats • Venue space • F&B services • Shopping • Event managers & suppliers • Ground transport • Pre and post touring • Repeat visitation • Accompanying persons activities • Income generator for non-profit organisations • Development of industry positions and policy • Media profile of key community-related issues • Knowledge dissemination within sectors • Release of new research • Collaboration between colleagues • Community outreachprograms • New members • Performance reward • Collaboration on new products/services • Problem-solving • Corporate plans • Information • Product promotion • Motivation • Team building • Work skills training • Improved organisational performance • Improved individual performance • Business investment • Identification of product gaps in market • New contacts and collaborations • Export markets • Future business leads • Sales • New products and services to market • Encouragement of investment and business migration • Collaboration on common interests • Information exchange • Trade negotiations • Influencing national & international policy • Australia’s international diplomacy and profile Outcomes

30. Host Organisation Post Event Collaboration Relationships and Innovation from Business Events Clusters Innovation Facilitates and underwrites meetings Increased Membership; Increased Income Delegates Attendance Business Events (BE) Speaking • Further spin-off BEs to: • disseminate new information • launch new products to market. Knowledge Contacts Employment Opportunities Professional Development Contribution to Science and Technology in Destination and Broader Community Legacies Improved Sales Approve attendances Contacts Setting Facilities Expertise Profile Investment Short term tourism impact Employers Host Destination Business Development for Destination

31. Four Dimensions that Underpin Value • Value to attendees • Value to employer organisations • Tourism value • Largely under control although standardisation needed • Broader contribution to the host economy

32. Value for Attendees & Employer Organisations • Business events too often portrayed as ‘paid holidays in exotic locations’ • Many in the community have been to events like this which underpins their scepticism regarding the value of business events • Many events are held and/or attended through habit • Often there is no clear purpose or ‘take-away’ from the event • How can one determine whether it is worthwhile?

33. Return on Investment (ROI) • Substantial effort has been made to adapt ROI technique to business events • An excellent technique for assessing and enhancing the value of business events to attendees and employers • Essential that all business events have a clear purpose with strong ‘take-aways’ for attendees that are communicated throughout the event and reinforced afterwards. • ROIs need to be undertaken on a regular basis

34. ROI(Continued) • Although it requires some effort to calculate the ROI, it has been shown to enhance performance and output • The combined value of ROI across attendees and employer organisations is generally substantial and a useful inclusion in the total value of the business event

35. Broader Contribution to the Host Destination • Showcase of local expertise • Provide locals with access to international expertise • Fosters innovation within the host community • Sales and investment potential These contributions are both real and substantial but they are difficult to quantify.

36. Melbourne Convention and Visitors Bureau’s ‘Holistic Value’ of Business Events Study • Two year study tracking 4 business events held in Melbourne • Full economic evaluation at the end of each event • Follow up with key stakeholders for each event at 6 monthly intervals • Document the flow-on benefits

37. Key Benefits To Date(Participants and Suppliers) • Developed new business relationships • Experienced an increased profile of expertise • Gained information that will enhance personal or business performance • Received expressions of interest from potential customers or investors • Increased market and/or competitor knowledge • Improved business practices • Collaborative research opportunities

38. Where to from here? Promote the tourism value of business events as the ‘tip of the iceberg’ Actively promote the ‘beyond tourism’ benefits of business events ‘Innovation’ resonates with government Document examples of benefits to destinations

39. Opportunities for Boston • Already a leading centre in a wide range of areas including technology, life sciences and education. • Associations are increasingly wanting to hold events where there is local expertise not just ‘tourism activity’ • Outstanding universities and a highly qualified local population, which underpins research conferences • American universities more attuned to this area • Business Event collaboration creates clusters that often lead to spin offs or new starts

40. Sustaining and Enhancing a Leadership Position for Massachusetts in IT, Communications and Defence (June 2008) The vitality of the Massachusetts high-tech sector is critical to the state’s future and three initiatives have been identified to achieve this: • Talent Initiative • Develop and maintain a highly skilled talent based focused on technology based clusters; • Innovation Initiative • Reignite the Massachusetts innovation engine through expanded university-industry collaboration; • Massachusetts ITCD Attractiveness Initiative • Make Massachusetts the premier state for launching and growing a high-tech business. Business Events could underpin all of the above initiatives

41. Opportunities for Boston • Demonstrate way that Business Events achieve existing city goals • Create ‘satellite events’ to maximise benefits for local business • Enhance relationships across the city • Relationships are key • Consider a ‘Club Boston’ amongst key researchers & industrialists • Track spin off benefits for the city