SINGAPORE (May 21): After weeks of speculation, Singapore had been confirmed as the venue for the historic meeting between US President Donald Trump and North Korea leader Kim Jong-un. They traded threats earlier this year, but were set to meet on June 12. Chinese President Xi Jinping was potentially going to be part of proceedings as well.
The meeting might not take place now, but Singapore was picked because of its high internal and external security. It is close enough to North Korea that Kim’s fleet of Soviet-era planes will be able to make the trip without stopping to refuel. And, thanks to Singapore’s maintaining a neutral foreign policy, North Korea has an embassy in Singapore.
Those same factors have made the island state a choice location for the multibillion-dollar meetings, incentives, conferences and exhibitions industry. From 2012 to 2014, MICE accounted for more than 20% of the country’s annual tourism receipts and international visitors.
The tourism sector, which accounts for about 5% to 7% of national GDP, took a turn for the worse in 2015. Total tourism receipts declined 7% to $22 billion, the worst performance since 2010. But things are now looking up. In the first nine months of 2017, MICE revenue increased 4% y-o-y to $3.2 billion and accounted for 12% of tourism receipts.
One indicator of the sector’s growth is the three-cornered fight to run the biggest MICE venue in the country: Singapore Expo. In February this year, a unit of Singapore Press Holdings called Sphere Exhibits teamed up with concert producer UnUsUaL to submit a $60 million bid for a 10-year management contract. Futuristic Store Fixtures, part of Ron Sim’s V3 Group, has also made a $60 million bid. The incumbent manager SingEx Venues, a unit of Temasek Holdings, submitted a bid of $50 million.
The Expo has 108,000 sq m of indoor space across 10 exhibition halls. It hosts 600 events annually and attracts six million visitors a year. SingEx’s licence to manage the Expo was awarded in 1999 and expires this year.
What is driving all this excitement in the MICE space? And as MICE money becomes more important in the region, can the city state maintain its edge?
Collection of factors
The MICE industry’s positive outlook is being driven partly by growing Asean trade flows.
“The MICE sector is an intermediary industry that thrives as a result of economic growth. If you have strong growth in the region with rising income [across the populations], then we get a multiplier effect in business activities. This adds to the growth of MICE events,” says CIMB Private Banking economist Song Seng Wun. The Asean region is expected to grow 5% this year, on the back of growing investments and infrastructure spending, compared with global growth of 4%.
But among the Asean nations, Singapore also has the most business-friendly practices.
“People don’t go to a place because the facilities or attractions are great. It has to be a collection of factors. In addition to great airlift and geographical location, we have a very pro-business environment,” says Ong Wee Min, vice-president of conferences and exhibitions of MICE at Marina Bay Sands (MBS).
MBS hosted 3,500 events last year with a total of 1.4 million attendees. “For MBS, our MICE segment is a key source of business for our integrated [resort] model. People who visit us for events also shop and stay [in MBS]. We should be growing in the next few years as well, as we have been,” he adds. Many MICE customers are repeat customers. For instance, Sibos, among the world’s largest trade events for the financial sector, was hosted here in 2015. That same year, Ong struck a deal with event organiser Swift to host Sibos again in 2021. Other returning clients include Money20/20 Asia in 2019 and Medical Fair Asia later this year.
Other factors that have drawn MICE visitors to Singapore include the diverse tech solutions that venues offer exhibitors. Suntec Singapore was the first to provide venue-wide high-speed, high-density WiFi. It also displays the world’s largest high-definition screen, The Big Picture, for advertisers to engage visitors. “TBP reduces printing costs, improves efficiency for content deployment while driving advertising revenue that assists the venue in being profitable,” says Arun Madhok, CEO of Suntec Singapore. Suntec hosts more than 1,500 events and 4.5 million visitors a year.
In fact, some event venues and organisers may be a victim of their own success. “The key challenge for organisers to be part of Singapore is trying to tap a mature market,” says William Chin, CEO of Mummys Market, which has an 80% share of the baby fairs market here. The Singapore consumer fair market is fairly saturated, with a large number of IT, travel and baby fairs, Chin says. “But it is still a hub for the region, so companies wanting to set foot [in Southeast Asia] need to set [their marks] here. It is not a profitable market, but it is strategic.”
At the same time, other countries in the region are investing heavily in MICE locations. Bali in Indonesia and Bangkok in Thailand, for instance, are increasingly popular locations. And as the MICE industries in neighbouring countries grow more sophisticated, Singapore may have a tough time competing. Space is limited here, leases are shorter and costs are higher. The domestic market is also smaller.
Ron Tan, group CEO and executive chairman of Cityneon Holdings, says he had looked into bidding for the Singapore Expo contract but eventually decided against it. “We thought we could redevelop the entire area and introduce our intellectual properties from major studios into the venue,” he says.
Cityneon owns the rights to organise exhibitions tied to major movie franchises such as Marvel’s The Avengers and Jurassic World. “[But] the tenure of the Singapore Expo is not long enough [for us] to be able to participate and recoup our investments efficiently.”
The company is choosing to focus on the Middle Eastern market instead, which Tan says has diverse types of events and better margins. “We might find ourselves [in Singapore] losing out [while] competing with up-and-coming newer and larger locations in different parts of the world, including the Middle East,” Tan says.
Changing the industry
To stay competitive, the local MICE industry will likely need to change. “There may be an increase in the merging of key industry players and key trade shows to cater to the competing target audience,” says Alice Tan, lecturer at the School of Business Management in Nanyang Polytechnic. “For example, in Singapore, we see the merger of UBM and Singapore Exhibition Services, the organisers of Food & Hotel Asia and CommunicAsia.”
Prem Shamdasani, associate professor at the National University of Singapore Business School, says the industry needs to reinvent itself and expand the scope of events hosted. “There are quite a number of sub-contractors based here supporting exhibition companies, such as PICO, Kingsmen Creatives and Cityneon. The margins down the supply chain are very competitive,” he says. “We need to be more creative with the type of events we hold to broaden our audience size.”
Mathias Kuepper, managing director of global trade fair company Koelnmesse, says experiential events work well here. His company runs the largest dental event in Asia-Pacific, IDEM Singapore, which has seen 5% to 10% growth every year over the last six years. Koelnmesse is continuously on the lookout for new technologies to allow event attendees to participate in a more active manner. Some examples of tech it has used are apps that match attendees based on their business profiles or that facilitate interactive Q&A sessions by allowing people to vote in real time.
Kuepper argues that if Singapore focuses on adding value to its MICE industry, the returns for exhibitors would continue to be better than in larger markets such as Indonesia, China or India. “We do a lot of content-heavy events like EmTech. The ticket prices here can be a lot higher than in Indonesia and China,” he says. EmTech, produced by the Massachusetts Institute of Technology’s MIT Technology Review magazine, is an annual conference highlighting invention and new developments in engineering and technology.
In fact, Ong of MBS says venue size and even an event’s scale matter less these days. “[In the past,] it was all about the real estate,” he says. “[Now, attendees] travel to transact business or trade knowledge. [So, we need to offer them] better returns.” To that end, MBS has created small, informal meeting spaces to allow people to network and strike deals. It has also launched a space called Switchboard, designed as an informal meeting zone. The space was taken up by Money20/20 this year.
What innovations do the new contenders for the Singapore Expo space have in mind? The three bidders have signed non-disclosure agreements and so were not able to provide more details. North Korea’s Kim is now threatening to call off the meeting. But if the meeting takes place, the opportunity will arise for Singapore’s MICE players to shine.
This article first appeared in Issue 831 (May 21) of The Edge Singapore which is on sale now
