Introduction
The MICE industry significantly contributes to economic diversification and the utilization of cultural and natural resources. Before the COVID-19 pandemic, the UAE's MICE industry was a global leader, with business tourism contributing 11.5% to the nation's GDP in 2019. However, the pandemic and subsequent travel restrictions severely impacted the industry worldwide, causing widespread job losses and economic downturn. While several studies analyzed COVID-19's effects on the UAE economy, the specific impact on the MICE sector and effective survival strategies remained insufficiently explored. This study aims to address this gap by analyzing the pandemic's impact on both the global and UAE MICE markets and proposing a competitive survival strategy for UAE MICE companies.
Literature Review
The literature review explores the similarities between business trips and business tours within event tourism, highlighting the importance of business tourism in major business centers like Abu Dhabi and Dubai. Existing research emphasizes the principles guiding tourism infrastructure and management, including tourism product topologies, the role of private and public companies, resource availability, tourist flows, and the importance of independent agency choice. The use of outsourcing in business tourism is examined as a method for global industry leaders to address challenges, while emphasizing the need for efficient resource utilization to ensure competitiveness and long-term success. Studies on tourism competitiveness highlight the significance of infrastructure, support services, environmental sustainability, management of tourist behavior, and the use of various methodologies (quantitative, qualitative, and mixed methods) in assessing industry competitiveness. Different models of tourism competitiveness are discussed, including Porter's micro-level model, Poon's framework focusing on innovation and quality, and other models incorporating macroeconomic factors, pricing, and a broader range of factors. Finally, the review mentions comparative studies using tools like the Importance-Performance Analysis (IPA) matrix to identify areas for improvement in the MICE industry.
Methodology
This study employs a mixed-methods approach, combining quantitative and qualitative analyses. Quantitative analysis involves evaluating various economic indicators, including global and UAE GDP growth rates (2019-2021), international tourist arrivals (2019-2020), global international tourist arrivals and receipts (2000-2020), job losses and economic losses in the travel and tourism industries (2020), and scheduled departure flights (January-December 2019 and January-July 2020). Data sources included reports from the World Bank, World Tourism Organization, World Travel and Tourism Council, OAG, Dubai Corporation of Tourism and Commerce Marketing, Dubai Department of Tourism and Commerce Marketing, Dubai World Trade Centre, Statista, UAE-Consulting, and Oxford Analytica. Qualitative analysis involves examining the effects of government policies and travel restrictions on the MICE industry and identifying suitable survival and competitiveness strategies. A modified DuPont analysis model is used to assess the profitability of MICE companies, incorporating gross profit from sales to improve the accuracy of economic analysis. A production function model is used to express the relationship between service offers and MICE industry factors, considering employment levels and outsourcing strategy spending. Three theoretical forecast scenarios for MICE service sales are developed based on pre-pandemic data. A queuing model is also proposed to optimize MICE companies' performance in the post-pandemic market.
Key Findings
The study reveals a significant negative impact of COVID-19 on the global tourism market and the UAE MICE industry. Globally, in January-April 2020, international tourist arrivals decreased by 44% compared to 2019, with some regions (Asia and the Pacific) experiencing more substantial declines. The largest absolute decreases were observed in countries such as Spain, Thailand, and Turkey. Global international tourism receipts also declined dramatically, and aviation losses significantly impacted global GDP. The UAE experienced a substantial drop in demand for MICE services and air travel, with scheduled departure flights decreasing by 82% in June 2020 compared to the same period in 2019. Despite some recovery starting in June, the long-term impact remains uncertain. Analysis of pre-pandemic data indicates that long-term profitability in the MICE industry can remain stable, potentially unaffected by post-pandemic investment, with competitiveness showing little relation to profitability ratios. A proposed multiplicative model reveals the relationship between the cost of services, employees, outsourcing investment, and the number of new services. The elasticity of service provision is low, suggesting that personnel costs and working capital might have minimal impact on post-pandemic competitiveness. Forecasts based on pre-pandemic data suggest that MICE service sales could increase significantly (by 61.6%) between 2020 and 2023. The analysis indicates the importance of maintaining a minimum return on investment (at least 12.9%) and managing value-added tax to ensure better performance and broader tourism service offerings. The 5P marketing model (Product, Price, Place, Promotion, People) and outsourcing practices are suggested as optimal strategies for enhancing competitiveness and ensuring survival for MICE companies.
Discussion
The findings highlight the significant and widespread disruption caused by COVID-19 on the global tourism industry, particularly the MICE sector. The severe decline in international travel and the closure of borders resulted in substantial economic losses and job reductions. The UAE MICE industry, despite its pre-pandemic strength, was particularly affected. The study’s proposed 5P marketing strategy and outsourcing approach provide a framework for enhancing competitiveness and resilience. The low elasticity of service provision with respect to personnel costs suggests a potential focus on other strategies to improve competitiveness, such as operational efficiency, innovative services, and effective marketing. The findings emphasize the need for MICE companies to adapt quickly, adopt cost-effective measures, and leverage external expertise through outsourcing to manage risks and maintain profitability in a challenging market environment. The study's use of pre-pandemic data limits its ability to fully capture the current market dynamics. However, the model provides a valuable starting point for planning and decision making in the post-pandemic world.
Conclusion
This study contributes to understanding the impact of COVID-19 on the MICE industry, specifically focusing on the UAE market. The 5P marketing model and outsourcing strategy offer a practical approach to enhance competitiveness and ensure survival. Future research should focus on collecting and analyzing post-pandemic data to validate the proposed model and refine the strategies for optimal recovery and growth. Further studies could investigate the specific impacts of various government support policies on MICE industry recovery.
Limitations
The study's primary limitation lies in its reliance on pre-pandemic data. The rapidly changing nature of the post-pandemic environment necessitates continuous data collection and analysis. The model's accuracy might be affected by unforeseen economic factors and global events. Further research is required to fully understand the long-term effects of the pandemic and the efficacy of suggested strategies under various economic conditions.
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