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Incentive cut hurts MICE tourism

January 12, 2009 15:30 IST

Cost cutting measures undertaken by companies across the globe, including freezing of incentives to employees and lower spends on corporate travels have hurt the Meeting, Incentive, Conference and Exhibition tourism segment.

MICE tourism, which accounts for 5-10 per cent of the total revenue of tour operators, has taken the maximum hit during this recession.

Companies in the fast moving consumer goods, insurance and entertainment sectors offer the highest number of MICE trips to employees and sales dealers.

The trips are offered as incentive to achieve sales target. Under the incentive package employees and dealers are allowed to take their families for the trip making it a much sought after reward.

"Companies have stopped MICE trips for their employees and for the sales dealers, they have postponed the trips for two to three months," said Deepak Sharma, general manager, channel sales, yatra.com.

A few companies, including insurance firms, which offer this facility, have entirely stopped the incentive for their external sales associates, travel companies said.

An insurance company, which earlier awarded trips to Thailand to their sales associates on achieving the target of Rs 500, 000, is no longer offering the incentive, said Sunil Bansal, Channel Development Associate of a leading private insurance company.

Travel companies, which have seen a substantial drop in their earnings from the incentive package, said companies have been able to save cost on falling airline fares and hotel tariffs. Still, firms are opting for cheaper packages.

"The overall transactional cost of MICE trips has come down by 35 per cent as companies are buying cheaper packages for their sales teams," Amit Saberwal, vice-president of makemytrip.com said.

STIC travel, which deals with inbound MICE as well, has seen a decline of almost 50 per cent from foreign companies sending their employees to India.

"Indian companies are deferring their trips for the time being and we expect them to take packages from us in the next three month, but the foreign companies have cancelled their trips for this year, said Subhash Goyal, chairman, STIC travel.

Singapore, among the most favoured tourist destinations, gets 40 per cent of its traffic from MICE and company related-travels, has seen a decline in its tourist traffic in 2008 from India.

"Due to the economic downturn, which has dampened consumer sentiment, lowered company spends and affected tourism worldwide, we are definitely seeing a slowdown," Jessie Ling, assistant director, MICE, India of Singapore Tourism Board said. She declined to give specific figures.

Switzerland has also witnessed a 2.4 per cent drop in traffic from India till October 2008.

The MICE market accounts for 5.4 per cent of the overall tourism industry in Switzerland and equals to a value of roughly 640 million Swiss Francs.

Neeraj Thakur in New Delhi
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