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Mice Asia Net : July 2008
oil price rises already affecting business Story by Mark arMsden The booming miCe indusTry throughout the Asian region is starting to feel the effects of higher than ever oil prices. While most senior industry players mice.net spoke to say the oil cost issue has not really had an obvious effect on delegate numbers, they say ground costs – specifically transportation – has been the victim of an immediate spike and they expect all future business to be booked will be impacted in some way. Singapore-based regional managing director of leading destination management company Pacific World, Bob Guy, says the company is “watching” the situation relating to oil prices closely, with Mr Guy constantly in touch with his regional offices to monitor costs. “Thus far, we have not seen any appreciable impact on programmes or attendance,” he says. “With airline surcharges at relatively high levels, it is possible that programmes might be curtailed or have fewer participants but this has not proven to be the case so far.” Bangkok-based director of business development for the Exotissimo Travel Group - head office, Hamish Keith, says his regional destination management company network is also yet to see cancellations from rising oil prices. “So far oil prices do not seem to be having a significant effect on business,” he adds. “Costs and prices are up but clients seem undeterred and we have not experienced any cancellations due to price increases. Vietnam and Cambodia continue to be very hot destinations and Thailand has recovered significantly after the coup (in September 2006) and we are seeing a significant increase in MICE groups compared with last year. “Myanmar is down but that is certainly due to politics and Cyclone Nagis.” T 4 miceAsia.net he impact has not been hugely detrimental to business thus far, but leading business figures are all united in believing they must plan for increased costs for 2009 and beyond. Venues are also reporting the same story with the Kuala Lumpur Convention Centre (KLCC) saying they have noticed no apparent trend in delegate numbers dropping for their events, but operating costs were increasing. KLCC general manager, Peter Brokenshire, says the venue has yet to see any apparent short-term effects, with no changes or cancellations to bookings, but added the costs of operating events at the centre were beginning to increase and organisers should be prepared for rising costs in the future. “This year alone witnessed an increase in food costs by 30 per cent. This, coupled with rising electricity bills, has resulted in higher operating costs,” Mr Brokenshire says. “These increments in utility costs have already been factored into annual price increases, and the centre continues to monitor the market. Efforts are made to reduce wastage and minimise costs, but never at the expense of the centre’s service.” Australian-owned Offsite Connections managing director, Peter Kinnane, says costs of operations for his offices in China and throughout the region are rising and this has seen around a five per cent drop in delegate numbers across the board for some of his events. He puts this down to the cost of freighting in equipment for events. “Freight costs have risen and also attendance for international conferences has declined approx five per cent for us locally in Shanghai,” Mr Kinnane says. “Unit prices of imported items are also higher and local operators and wholesalers producing large merchandise and collateral are increasing shipment costs out of areas like Guangzhou and Shenzhen.” Starwood Asia Pacific Hotels and Resorts director, corporate communications, Yeo Hwee Peng, also agreed her regional network of venues had seen some drop in delegate numbers, which could be put down to rising air fares.