Introduction
Essentially, the conference and banqueting services involve putting together events, which may include business conferences and meetings as well as social get-togethers like family events, weddings, celebrations, and birthday parties, among others. This is a global and popular industry, especially considering the many events that are hosted across the world every year. The conference and banqueting (C&B) industry is one of United Kingdom’s (UK) leading industries. Indeed, the UK invites an enormous number of business travelers who attend conferences and meetings as well as other events. Social travelers may travel for weddings and other types of social events that require conference and banqueting facilities and services. The sector, therefore, contributes significantly to the economy. For instance, in 2011, the conference industry alone contributed a total of £58.4 billion and £20.6 billion to UK’s total Gross Domestic Product (GDP) and Gross Value Added respectively (See Figure 1 and 2). The sector has also contributed significantly to employment in the UK (Bowdin et al. 2013).
Moreover, in recent years, and even despite the global financial crisis and the subsequent recession from which it (like much of Europe) still struggles to leave behind, the UK has experienced significant growth in its C&B sector over the past few years. This paper examines this industry. First, the paper focuses on the scope of and trends in the industry. However, the paper mostly focuses on the impact of macro-economic factors on the industry: political, economic, social, technological, legal, and environmental (PESTLE) factors.
The Size and Scope of UK’s Conference and Banqueting Industry
In about the last two decades, UK’s C&B industry has experienced substantial growth in terms of scope, size and strength, giving it a significant competitive advantage on the global C&B arena. In terms of scope, the definition of the industry has evolved to have it have more far-reaching impacts on national economies and the people. Traditionally, the industry aims to provide food and beverages to relatively big groups of people eating together. However, the sector has come to have more far-reaching impacts beyond the tourism industry and to cover financial growth as well as create substantial employment opportunities (Bowdin et al. 2013).
This expanded scope has grown at the same time as the sector’s size. As already shown in the introduction, the sector is worth £58.4 billion and £20.6 billion to UK’s total Gross Domestic Product (GDP) and Gross Value Added respectively (See Figure 1 and 2) (Bowdin et al. 2013).
Figure 1: Contribution to GDP
Source: Adapted from Bowdin et al. (2013)
Figure 2: Contribution of Different Industries to the GVA (a Section of the Table)
Source: Adapted from Bowdin et al. (2013)
This growth in value has resulted from the growth of the number of meetings/conferences and events. For instance, in 2009, the UK’s C&B industry is reported to have hosted about 94 million guests (Jones 2009). Moreover, in 2011 alone, the UK hosted an estimated 1,301,600 meetings, with varying attendances across the UK member-countries. For instance, England accounted for 86 percent of these meetings; Scotland hosted 6.6 percent; Wales hosted 5.8 percent; and Northern Ireland hosted 1.6 percent (Bowdin et al. 2013) (See Figures 3).
Figure 3: Summary of Attendances
Source: Adapted from Bowdin et al. (2013)
These country numbers can also be broken down further to regions. For instance, Greater London hosted the majority of these meetings (362,500), followed by the South East (163,349) and the West Midlands hosting 143,210 (Bowdin et al. 2013). These trends are important for not just the potential customers, but also investors. Most of these events (61 percent) are hosted in hotels. These hotels work in collaboration with at least 6,650 C&B venues (Jones 2009).
Globally, the UK was estimated to host about 8.8 percent of all meetings worldwide, which placed the UK at number 8 among the top destinations with the largest market share in the industry.
Moreover, the sector has contributed too significantly to the job market. For instance, in 2011, meeting activities created 423,445 direct jobs. Other indirect impacts on jobs are also evident across other tourism-related industries, accommodation services and meeting venues, etc. (Bowdin et al. 2013).
Analysis of the Different Influences That Have Shaped the Industry: PESTLE Analysis
PESTLE is an acronym for political, economic, social, technological, legal and environmental factors that impact on business. Like all other industries, the C&B sector has also been subject to these factors. It may be important to mention that the impacts of these factors on UK’s C&B sector can be similar to their impacts in other countries, perhaps as a result of global trends that affect nearly all regions more-or-less the same). However, these impacts are also largely unique to contextual elements.
- Political Factors
The C&B sector is within the tourism industry, including what has come to be known as business tourism. Therefore, the industry is subject to the same political factors that impact on the tourism industry at large.
Political stability can play an important role towards promoting the C&B industry. For example, the political situation in Northern Ireland may deter many from visiting the country (Sonmez 2001). For example, in 2011, England faced a series of riots that led to looting and destructions. This had significant impact on the tourism impact. For instance, in the week after the riots, the European Tour Operators Association (EOTA) reported a total of 330 cancelations, which at the time was equivalent to about 0.2 percent of all bookings in the UK (Padmanabhan 2011). Of course, the figures do not specify how many of these were for C&B services. However, a logical assumption would be that these cancelations were C&B-related. Acts of terrorism may also play a major role (Sonmez 2001).
Other political impacts may be related to global political issues. For example, Russia’s interference on the internal affairs of Ukraine may lead to sanctions against Russia, which may affect the number of Russian guests and/or tourists visiting some EU countries more than others do.
Another factor has to do with membership to the European Union (EU). Generally, with the EU acting as the umbrella body for countries across Europe, the movement of both people and goods between the EU member-countries has been relatively easy. This is directly attributable to the removal of cross-border restrictions between these counties to facilitate trade. However, in recent years, the UK has been showing signs of wanting out of the EU. This now seems more likely today. Although this may not mean that the previous cross-border restrictions between the UK and her neighbors and other EU countries may be reinserted, the move is most likely to have the UK lose some of the privileges it has enjoyed as a member of the EU and which may impact on tourism sector either directly or indirectly.
- Economic Factors
Economic factors that may impact on UK’s C&B sector include: macroeconomic situation; the extent of economic growth; the rate of inflation. The 2007/2008 financial crisis and the global recession are a good example of how economic factors can impact on the C&B sector. The recession hurt consumer confidence and will to spend. An important factor here is how the recession exposed the weaknesses of the EU as an economic framework. While many regions and countries have recovered from the effects of the recession, many parts of the EU remain lagging behind, with the euro zone being the most affected. In fact, there remains a pending fear that the recession may recur, this time starting in the crisis-hit euro zone and spreading globally. For many, these vulnerabilities of the EU as an economic bloc are part of what is pushing the UK to pull out. This is an example the indirect impact of economic factors on the industry. For instance, by extension, the recession has speeded up the UK’s exit from the EU, whose potential impact has been discussed above (Weber 2010; Euromonitor International 2012).
- Social Factors
Social trends have impacted on the tourism sector globally. These social trends include demographic changes, changes in family patterns, changing values in society, and increasing roles of social media. For example, since the new millennium, the number of young people from emerging countries (like India and China, etc.) who travel abroad has increased. Changing family patterns as well as associated values include the rising number of single people, families without children and gay marriages, among others. These have the potential to affect travel habits. These have in turn impacted on tourism (Grimm et al. 2009).
The social media has also changed how people interact and meet. Social media, coupled with the growing popularity and use of smart phones can have significant marketing impact, such as promote places as good spots for conferences or fun. Moreover, social media have become platforms for the establishment of cliques of people who may then choose to meet (Brown & Chalmers 2005; Stratmann 2011).
- Technological Factors
The catering industry has experienced technological breakthroughs that may impact on costs and quality of services and, therefore, play a significant role in winning tourists. For example, the use of green technology that ensures energy efficiency may have lowered catering costs. Price plays an important role in consumer’s purchase decisions.
The increased use of the internet has also played an important role in this regard. For example, today there are many online booking platforms. When using these technologies, consumers are won over by more efficiency; i.e. booking platforms that are easier to use. Complex booking processes may discourage consumers.
On the same note, the use of social media by tourism destination countries and trip advisors can play can significantly encourage or discourage consumers to visit some destinations more than others. For instance, a survey by the World Travel Market (cited in Stratmann 2011) found that about 40 percent of holiday makers use the social media to choose holiday destinations. Moreover, 33 percent of holiday makers changed their choices for hotel after consulting the social media, 10 percent changed resorts after visiting social media (World Travel Market, cited in Stratmann 2011).
- Legal Factors
The legal factors that may impact on UK’s C&B sector include: changes in rules and regulations relating to catering industry; rules and regulations governing consumer protection; and immigration rules and regulations. For example, the procedures followed in getting UK visas can impact on the number of visits recorded. Most importantly, visa restrictions in the tourist-source countries (such as the USA, Australia, etc.) can also impact on the number of visits to UK (Belton 2008).
- Environmental Factors
These include issues of climate and weather, and other related impacts. For example, changes in weather conditions across regions may impact on the number of visits to the UK- and even in the member-countries- during certain times of the year.
Most importantly, in recent years, the focus on environmental sustainability has impacted on how countries operate and how organizations build brand image, considering consumer attention to the details. The efforts toward environmental sustainability have impacted on operation costs for tourist organizations, which then impact on the costs for tourists.
Conclusion
This paper explored the macro-environmental factors that impact on the UK’s conference and banqueting (C&B) industry: political, economic, social, technological, legal and environmental factors. The paper shows that these impacts of these factors on the C&B sector are mostly associative; that is, by virtue of the C&B sector falling under the wider tourism industry. This paper shows how political instability, economic recession, changing demographics, the internet and social media, rules and regulations governing consumer protection and pursuit for environmental sustainability, among others, influence the tourism sector in general.
Bibliography
Belton, G 2008, Consumer protection from unfair trading regulations. Hampshire
Trading Standards Service
Bowdin, G, Heslington, E, Jones, S, Mulligan, J, Tara-Lunga, M, Tauxe, C, Thomas, R, &
Wu, P 2013, The economic impact of the UK meeting & event industry. MPI Foundation
Brown, B & Chalmers, M 2005, Tourism and mobile technology. Proceedings of the
8th European Conference on Computer Supported Cooperative Work, Helsinki, Finland, 14-18 Sept.
Euromonitor International 2012, The eurozone crisis and its impact on
tourism. http://blog.euromonitor.com/2012/06/the-eurozone-crisis-and-its-impact-on-tourism.html (Accessed 13 May 2015)
Grimm, B, Lohmann, M, Heinsohn, K, Richter, C & Metzler, D 2009, The impact
of demographic change on tourism and conclusions for tourism policy. A Study Commissioned by the Federal Ministry of Economics and Technology
Jones, C, Munday, M, & Beynon, M 2009, “The embeddedness of tourism-related activity:
a regional analysis of sectoral linkages,” Urban Studies, vol.3.
Padmanabhan, J 2011, The impact of the riots on UK tourism, Euromonitor International,
22 Aug. http://blog.euromonitor.com/2011/08/impact-of-the-riots-on-uk-tourism.html (Accessed 13 May 2015)
Sonmez, S 2001 “Tourism, terrorism and political instability”, Annals of Tourism
Research, vol.25, no.2: pp.416-448
Stratmann, J 2011, New stats: the impact of social media on holiday choices. Fresh
Minds, 21 Nov. http://www.freshminds.net/2011/11/new-stats-the-impact-of-social-media-on-holiday-choices/ (Accessed 13 May 2015)
Weber, D, Buccellato, T, & White, S 2010, “The global recession and its impact on
tourists’ spending in the UK”, Economic & Labour Market Review, vol.4, no.8: pp.65-73