You are on page 1of 41

ANALYSIS OF THE MEETING INDUSTRY IN BAKU AND OPPORTUNITIES FOR ITS FURTHER DEVELOPEMENT

BACHELOR THESIS I
Submitted at the

IMC University of Applied Sciences Krems

Bachelor Programme

Tourism and Leisure Management

by

FARIDA BABAYEVA

Specialisation Subject: Meeting Industry Management Supervisor: Irfan Arikan

Date of submission: 07/02/2011

STATUTORY DECLARATION
I declare in lieu of an oath that I have written this bachelor thesis myself and that I have not used any sources or resources other than stated for its preparation. I further declare that I have clearly indicated all direct and indirect quotations. This bachelor thesis has not been submitted elsewhere for examination purposes.

Date

Signature

February 7, 2011

Farida Babayeva

FARIDA BABAYEVA

TABLE OF CONTENTS
STATUTORY DECLARATION ..........................................................................2 LIST OF FIGURES AND TABLES..................................................................... 4 LIST OF ABBREVIATIONS .............................................................................. 4 ABSTRACT 5 1. INTRODUCTION ...6 1.1 Research Aim and research questions...............................................6 1.2 Importance of the study...6 1.3 Research method. 7 2. DEFINITION...... 8 2.1 Business tourism.......9 2.2 Meeting industry and its structure...10 2.2.1 History and development...12 2.2.2 Baku as MICE destination..13 2.2.3 Buyers...14 2.2.4 Suppliers...16 2.2.5 Agencies and Intermediaries..17 3. Empirical Research .19 3.1 Description of the method ..19 3.2 Research Design20 3.3 Primary data 20 3.3.1 Industry expert interviews21 3.3.2 Questionnaire21 3.4 Secondary Data22 3.4.1. Statistics on Business Tourism in Azerbaijan.22 4. Results and Analysis...25 4.1 Theoretical Framework..25 4.2 The phases of tourism experience.25 4.2.1. Anticipation and Planning..26 4.2.2. Travel to and Return Back... 27 4.2.3. Participation....28 4.2.3.1 Accommodation 28 4.2.3.2. Conference Venues29 4.2.3.2Catering Services..31 4.2.4. Recollection31 5. SWOT Analysis..33 5.1 Strengths ...33 5.2 Weaknesses..33 5.3 Opportunities.34 5.4 Threats35 6. CONCLUSION....36 LIST OF REFERENCES....38 APPENDIX...39

FARIDA BABAYEVA

LIST OF FIGURES AND TABLES


Table 1 Types of corporate meetings Table 2 Hotels accommodating meeting attendants

Figure 1 Travelers by Countries of Residence. Figure 2 Dynamics of number persons arranged by purpose of trip Figure 3 Structure of tourists arranged by duration of stay in 2010 Figure 4 The six travel experiences Figure 5 Sources of Information about Azerbaijan Figure 6 Convenience of convention centers Figure 7 Image of Azerbaijan ..

List of Abbreviations
CVB DMO ICCA MICE PCO (Convention and Visitors Bureau) (Destination Management Organization) (International Congress &Convention Association) (Meetings, Incentives, Conventions and Exhibitions) (Professional Conference Organizer)

FARIDA BABAYEVA

ABSTRACT
The meeting industry is a newly born segment of business tourism, which has become very common in Baku recently. Since the industry is very young in Baku, there is a shortage of statistics as a separate element of business tourism. Consequently, to identify the situation of the industry and to understand its strengths and weaknesses, the industry needs to be investigated appropriately. This thesis is aimed at exploration of current situation of the meeting industry, to be more precise the level of industry related services and opportunities for its further development. The proper review of literature helped to identify what the meetings industry is, what its major components are and the structure of the industry was understood more clearly. Furthermore, the history of development of this field globally was confronted with historical growth in Baku. The interviews with industry experts were a great contribution to the development of the research. Similarly, the questionnaires designed to reveal the opinions of meetings and exhibitions attendants played a significant role to formulate suggestions for the further development of this segment. Additionally, the findings of this study can be a great contribution to the industry since it shows the weaknesses and strengths and demonstrates the opportunities from which the meetings industry can benefit.

FARIDA BABAYEVA

1. INTRODUCTION
1.1 Research aim and research questions
As a newly born segment of the tourism industry in Baku and lacking proper information and data, the meeting industry is in need of the appropriate research in this area. Furthermore, there is a lack of the statistics on the meetings industry as a separate element of the business travel. The research aim of this bachelor thesis is to analyze the situation of the meeting industry in Baku, to find out the quality of conferences including delivered services in this sphere and to identify the future development opportunities as well. The research questions are as followings: 1. What is the quality of the meetings and conferences which are organized in Baku? 2. What might be the possibilities for further development of the meeting industry in Baku? The first research question allows further examination of the satisfaction of visitors coming to Baku. Once the quality of conference organization has been revealed, the second research question can be explored in more detail. To answer these questions it is important to analyze to which factors visitors pay attention more when choosing a destination, which needs and demands should be met and satisfied and what service level is expected by business travelers visiting Baku.

1.2 Importance of the study


The international tourism industry is an industry which is flourishing and growing continuously all over the world. Being a very dynamic sector, tourism industry is always in a state of flux, ever changing through years. It generates millions of job opportunities for people every year, improves relationships with neighboring countries and establishes newer networks across the globe. Apart from these facts, one of the most important advantages of this industry is its contribution to

FARIDA BABAYEVA

the economy of a host country. It is assumed that, the contribution towards the GDP by the World Tourism Industry will be approximately 11 % by 2011. Furthermore, the development of tourism creates a multiplier effect, which is mainly because of impacts on related industries such as transportation, entertainment and catering services. As the fastest growing sector, tourism continues to recover from the decline of 4.2% suffered last year under the impact of the economic crisis as per results through 2010. In the first eight months of this year, the number of international tourist arrivals exceeded the record achieved during the same period of the precrisis year 2008. According to the latest issue of the World Tourism Organization (hereinafter referred as UNWTO) Tourism Barometer, worldwide arrivals between January and August 2010 totaled 642 million, some 40 million more than during the same months of 2009. Based on current trends, the number of international tourist arrivals is projected to increase in the range of 5%-6% over the full year. In 2011, growth is expected to continue at a more moderate pace, at around the long-term average of 4%. (UNWTO press release). Thus, one of the leading and most dynamically developing segments of tourism is business tourism, because a successful business is impossible without contacts, exchange of technologies and information, exhibitions, congresses, and business trips. After having restored its independence, tourism in Azerbaijan started to develop and beginning from 2000s the establishment of Ministry of Tourism and Culture of Azerbaijan was one of successful attempts to develop it systematically. Although there is quite enough information on tourism potential of the country, including the statistics and many relevant data, still there exists a shortage of information on MICE tourism. This research will provide an overview about the situation of meeting industry in Baku, as the opinions of experts from the Ministry of Tourism of Azerbaijan and hotels will be taken into consideration. The study will contribute to the

improvement of delivered services in this area by revealing insufficiencies so that they can be eliminated in the nearest future and thus the level of service towards the guests can be improved.

FARIDA BABAYEVA

1.3 Research Method


This thesis is based on empirical research method involving collection and analysis of primary data which is obtained through quantitative and qualitative research methods. As per qualitative data face to face interviews with industry professionals, to be more precise with employees of ministry of tourism and culture, hotel conference organizing staff was conducted. Furthermore, for

quantitative method questionnaire containing 10 questions were distributed to business travelers via e-mail. Additionally, as the secondary data the use of already existing data has been applied.

FARIDA BABAYEVA

2. DEFINITIONS
Tourism is the worlds largest industry, responsible for more than one in ten jobs globally (International Trade Centre web page). This trillion-dollar industry is booming around the world even in times of recession, military conflicts, natural disasters, and energy problems (Nickerson, 1996, 2). Tourism can be considered to be a complex industry combining a set of interdependent businesses because it focuses on travelers away from home and on all the services they utilize, including the means of transport, food and lodging services, travel expediters such as travel agents, tour operators, and reception services (Lundberg and Lundberg, 1993, v) Over time, more and more destinations have opened up and invested in tourism development, turning modern tourism into a key driver for socioeconomic progress. For many developing countries, it is one of the main income sources and the number one export category, creating much needed employment and opportunities for development. (UNWTO publication) A business traveler coming to attend conventions or exhibitions spends money to stay at a hotel and this money creates job in the hotel as well as transfers to suppliers who procures this hotel with products and other goods. Additionally, when this tourist buys a souvenir or other related commodities, the demand for such type of local products become higher and higher. Such circulation of money in the economy of a country is called a multiplier effect in tourism. This expansion of money supply caused by tourist expenditure continues to circulate until the money leaks out of the country.

One of advantages of tourism is exchange of cultures, which undoubtedly serves for improvement of the relationships between countries and contributes to economic growth and prosperity. Furthermore, it allows countries to share and know their cultures, language and even business.

FARIDA BABAYEVA

2.1Business Tourism
Business tourism is the category of the travel and tourism industry concerned with travel for business purposes, rather than travel for leisure purposes (leisure tourism). Business tourism includes travel for meetings, exhibitions, trade fairs, conferences, conventions and incentive travel (Yonell, 1996, 33). Business travel accounts for approximately 9% of all international travel. Business tourism is defined as leisure activities in conjunction with business travel. Business tourists are less cost-sensitive than leisure tourists, spending on average twice as much per day. Their purchase decisions are influenced primarily by their ability to use time efficiently within business travel schedules. As two-thirds of business travelers extend their business trips for pleasure when they can, there is enormous potential in this market. Business tourism is expected to be one of the hottest growth markets for travel industry providers in the years ahead. Developing and transition economies interested in expanding revenues from business tourism need to focus on both the individual business traveler and the meetings and conventions market. (International trade center/UNWTO) As the speed of international tourism accelerates, MICE tourism (meetings, incentives, conventions and exhibitions) gets more and more popular, attracting business tourists from different parts of the world. As a result of increasing numbers of tourists travelling for business purposes, countries start making investment in the infrastructure to enhance the attractiveness and convenience of the destinations being visited. International trade shows and conferences attract hundreds to thousands of delegates, often from many countries. Tourism and convention planners often include tourism add-ons for delegates. These events may include city tours, golf and sightseeing as a regular part of their programs. (International trade center/UNWTO).

FARIDA BABAYEVA

10

2.2Meeting Industry and its structure


MICE is an English abbreviation standing for Meetings, Incentives, Conventions and Exhibitions. MICE - the new form of business tourism is the fastest growing section of the International tourism market. It caters to various forms of business meetings, International conferences and conventions, events and exhibitions and is slowly but steadily capturing every big hotelier's attention. MICE tourism is the new buzzword in the international tourist market and relates to various business groups and individual travelers. (India Travel web page) The potential of the global MICE (Meetings, Incentives, Conventions, Exhibitions) industry is evident. Statistics indicate a total of 400,000 conferences and exhibitions are organized worldwide every year, with a total outlay of US$280 billion. [Source: International Congress &Convention Association (ICCA) ICCA gives definitions for meeting as having minimum of 50 participants, be held regularly and involving at least 3 different countries. This definition was approved by UNWTO during data collection for its Tourism Market Trends. Another definition provided by the UIA (Union of International Associations) highlights following important criteria for international meetings: A minimum 300 participants Lasting at least for 3 days and With the representative of minimum 5 different countries.

Meeting industry has three main components, which are meetings and conferences, incentives and exhibitions. Among above mentioned components, meetings and conferences are being researched and studied more in comparison with incentives and exhibitions. This is explained by the fact that, the organization of meetings is more developed than the other ones. Although meetings industry has been researched by different authors, it is a fact that definitional problems still continue existing. There are different definitions provided by several meeting associations and organizations. According to Rodgers, the structure of the meetings industry is comprised of buyers, suppliers and intermediaries.

FARIDA BABAYEVA

11

Suppliers include conference venues and destinations, accommodation providers and transport companies, agencies and specialist contractors. Both buyers and suppliers are welded together and supported by national bodies and associations, trade media and educational institutions, each contributing to the overall structure of this fast developing, global industry. (Rodgers, T. Conferences and Conventions)

2.2.1 History and development The phrase conference industry is of very recent origin, and is certainly not one that would have been heard until the second half of the twentieth century. Yet peoples need to congregate and confer is one of the things that defines our humanity and, for a multitude of different reasons, meetings and gatherings of people have taken place since the early days of civilization. (Rodgers, T. p 2) One of the highest profile events in the past couple of hundred years, perhaps almost a launch event for our contemporary conference industry, was the Congress of Vienna held from September 1814 to June 1815. The Congress was called to reestablish the territorial divisions of Europe at the end of the Napoleonic Wars and representatives included all of the major world powers of the day (with the exception of Turkey). It is tempting to imagine what the delegate spend must have been like, with delegates such as Alexander I, Emperor of Russia, Prince Karl August von Hardenberg from Prussia, and Viscount Castlereagh and the Duke of Wellington as the principal British representatives. Each representative would have been accompanied by a substantial delegation of support staff and partners, requiring accommodation, social programs, lavish corporate entertainment, ground handling, not to mention state-of-the-art conference facilities. The Vienna Convention Bureau no doubt celebrated long and hard its success in attracting such a high profile, high-spend event to the city!

FARIDA BABAYEVA

12

As the nineteenth century progressed, universities increasingly provided facilities for the dissemination of information within academic circles, while the boom in spa towns and, in the UK, Victorian resorts with assembly rooms began to make available larger public spaces for entertainment and meetings. At the same time, the development of the railway network was accompanied by the construction of railway hotels alongside major stations. Many of these hotels had substantial function rooms available for hire. (Rodgers, T. p 4) The situation was somewhat different in North America during the latter half of the nineteenth century, particularly across the eastern seaboard of the USA where various trade and professional associations, as well as religious groups, were being formed and, as they became more established, beginning to hold conventions for their memberships. (Rodgers, T. p 5) As towns became more and more aware of the value the organization of meetings had for them, a group of businessmen decided in Detroit, Michigan, for the first time in history, to employ a salesman to invite meetings to be held in their town. In this way, the first convention bureau was established, and so 1896 was the year when the industry officially came into being. (Business Travel& Meetings Magazine) In Azerbaijan, the roots of business tourism are connected with Great Silk Way, being as a stopover on this trade route for its geographical location. In addition, the trade caravans passed across the territory of Azerbaijan through Silk Way connecting East Asia with the West.

2.2.2 Baku as Meeting Destination

Rapid growth of business contacts with foreign partners is typical of Azerbaijan which is undoubtedly due to the development of other industries such as oil, construction, telecommunication and etc. That being the case, the meetings industry a sub segment of business tourism became popular in Azerbaijan in the last decade. Today Azerbaijan is a dynamically developing country that holds a solid position in the world. Very favorable conditions have been crated lately for doing business as

FARIDA BABAYEVA

13

per the government policy paying a great attention to the development of non oil spheres of economy. Dozen of hotels and business centers, and a lot of cultural and tourist facilities have been built recently. All the above mentioned positive changes have led to the fact that Azerbaijan is an attractive arena for business tourism as well. It is also promoted through various types of economic forums, exhibitions and conferences being held on diverse subjects on a regular basis. Both governmental and private organizations take part in the realization of these events. Nowadays all conditions are created for the comfortable arrival of businessmen as well as their involvement in doing business. If business meetings were mainly held in Baku in the past, today the majority of the regions of the country are capable of hosting business meetings at the highest level. 2.2.3 Buyers In the meeting industry buyers can be classified as corporate, association, public sector and entrepreneurial buyers. The buyers are conference organizers and meeting planners who buy or, more accurately, hire conference venues and related services in order to stage their events. [...] The term corporate is used to describe conference organizers often called meeting planners who work for corporate organizations. These are companies established primarily to generate a profit and thus provide a financial return for their owners. They can be manufacturing or service companies which may be found in oil and gas, pharmaceutical, IT and communications, financial services and travel industries. (Rogers, 2008, p. 28) a) Corporate buyers Decisions about the conference or meeting (choice of venue, budget, size of event, visiting speakers, programme content, and so forth) are taken by the corporate conference organizer or a line manager or the managing director, or by a group of such people in consultation. The decision-making process is relatively

FARIDA BABAYEVA

14

straightforward and more-or-less immediate. (Rogers, 2008, p. 36) . Corporate events can be of different types and sizes as shown in the below table. Annual General Meeting (AGM) Board Meeting Corporate hospitality/entertainment Exhibition/exposition Incentive travel Roadshow Product Launch Sales Conference Training course/seminar Technical conference Team building events Symposium

Table 1. Types of corporate meetings (Rogers, T) b) Association The term association organizer or buyer covers those representing a wide range of organizations, including trade associations (whose members share the same profession), voluntary associations and societies (whose members join for the same interest), charities, religious organizations, political parties and etc. There are also certain organizations which are not work related and therefore referred to as SMERF groups (social, military, educational, military, religious and fraternal). ( Rogers, 2008, p. 61) Association conferences are large scale meetings with longer periodicity often involving hundreds of attendants. The decision regarding destination and venue is made by a committee after conference organizer presents a relevant list of destinations to be chosen. c) Public Sector The public sector, sometimes referred to as government includes organizations such as municipalities, local executive bodies, and educational bodies. These are nonprofit organizations and therefore the delegates attending such conferences are expected to cover their own expenses.

FARIDA BABAYEVA

15

d) Entrepreneurs According to Rogers T (2008, p 53), this fourth type of the buyer has quite important role for the meeting industry. He defines entrepreneurial buyer as someone who identifies hot topics in the business or academic world and debated by high profile speakers and experts. then plans and

produces a conference at which the topics can be presented, discussed and

2.2.4

Suppliers

The suppliers are those who make available for external hire the venues, destinations and many other specialist services without which todays conferences could not take place. The supply side of the conference industry is divided into three categories which are venues, destinations and other service providers. a) Venues As per Rodgers (2008, p 56) any type of the building could be promoted as conference venue. This is due to the fact that, there has not been established any classification and grading system for venues yet. However, over half of all conference venues are located within hotels being particularly important for corporate market sector. These can be city center hotels or hotels close to airport, highway and motorway. That being the case hotels benefit when important and large scale association meetings come to town. Aside supplying conference with venues, hotels become accommodation provider for conference attendants. Additionally, it is often observed that, associations choose the hotel as headquarters during their stay and thus it produces public relations benefits for the hotel (such as being featured in national and international media coverage). Besides hotels, there are other venues, which are purpose built venues designed for hosting both large scale and smaller events

FARIDA BABAYEVA

16

university and other academic venues are used for different kinds of meetings during vacations civic venues for instance council chambers or town halls functioning as venue unusual venues unique venues which add special charm the event and making it memorable.

b) Destination The destination is very important criterion in decision making process regarding the event to be staged. Therefore, conference organizers pay great attention to the location, i.e. destination. To attract meeting business, each destination must have venues, attraction, and well developed infrastructure. c) Other Alongside above stated suppliers, there are also others such as audio visual contractors, telecommunication companies, transport companies, floral

contractors, and interpreters. (Rogers, 2008, p 60)

2.2.5 Agencies and Intermediaries Meetings or similar events can both be organized and run by employees of the buying organization, or by intermediaries or agencies hired by an organization to plan and run their events on behalf of them (Davidson & Cope, 2003, p. 113). Rogers also claim that, intermediaries act as buyers on behalf of their clients and at the same time deals with organization and planning of the event. These are PCO (Professional Conference Organizers), Venue Finding Agencies, Conference Production Companies, Incentive travel houses, DMC (Destination Management Companies), corporate event companies, exhibition organizers, and etc.

a) Professional Conference Organizers A PCO is an event management firm that is employed to assist companies in conference organization. Its responsibilities include researching and

recommending a suitable venue, helping to plan the conference programme including the social programme, marketing the conference and handling delegate registrations, booking accommodation/housing for delegates, planning an

FARIDA BABAYEVA

17

exhibition to run concurrently with the conference, producing a budget and handling all of the conference finances. (Rogers, 2008, p. 61). b) Venue Finding Agencies In comparison with PCO, the role of venue finding agencies is limited to researching and recommending a suitable venue for a meeting. Additionally, their responsibility is finding and presenting at least three potential venues to the conference organizers. Venue finding agencies may also get involved in booking accommodation for delegates, and again would expect to charge commission to the hotels and other accommodation providers. (Rogers, 2008, p. 61).

c) Conference Production Companies These are companies specialized in technical organization of meeting, i.e. dealing with set up, lighting, sound system, installing audio visual equipments and etc. Such type of companies assists in the organization of high profile events, including presentations, press conferences and product launches which necessitate advanced technology and equipment. d) Incentive Travel House Incentive Travel is a motivating tool used by companies to reward or stimulate the employees of the organization. Incentive Travel is a global management tool that uses an exceptional travel experience to motivate and/or recognize participants for increased levels of performance in support of organizational goals (SITE, 2006). The specialized nature of the incentive sector has led to the growth of Incentive Travel houses, as these agencies are generally known. (Rogers 2008, p 70) These organizations create special incentive programs for companies to accomplish their mission and motivate their employees.

e) Destination Management Companies SITE defines a DMC as a local service organization that provides consulting services, creative events and exemplary management of logistics based on an in-

FARIDA BABAYEVA

18

depth knowledge of the destination and the needs of the incentive and motivation market. DMCs have detailed knowledge and expertise of a specific destination, be this city, an island or other discrete region, and sometimes even a whole country (Rogers 2008, p 71). Their role include locating venues, providing delegates with accommodation, arrange transportation and organize pre or post conference programs, as well social programs for spouses.

FARIDA BABAYEVA

19

EMPIRICAL RESEARCH

3.1 Description of the method


This thesis is based on empirical research method involving collection and analysis of primary data which is obtained through quantitative and qualitative research methods. As per qualitative data face to face interviews with industry professionals, to be more precise with employees of ministry of tourism and culture, hotel conference organizing staff was conducted. Furthermore, for

quantitative method questionnaire containing 10 questions were distributed to business travelers via e-mail. Additionally, as the secondary data the use of already existing data has been applied. Inductive reasoning is applied to this study in order to formulate broader and general theories on the current situation of MICE industry in Baku. In inductive reasoning, we begin with specific observations and measures, begin to detect patterns and regularities, and finally end up developing some general conclusions or theories. (social research methods)

3. 2 Research Design
As the thesis progresses, the following questions will be examined and answered step by step. What is the quality of the meetings and conferences which are organized in Baku? What might be the possibilities for further development of the meeting industry in Baku? To measure the quality of the meetings which are held in Baku, a questionnaire was designed on the grounds of qualitative research method. On the other hand, to find out the possibilities for further improvement of MICE industry in Baku, a number of face to face and in depth interviews were conducted. To assure the accurate and unbiased data being collected, an experimental survey was conducted and distributed among the first targeted respondent group. After having completed pilot survey, the final questionnaire design has been approved

FARIDA BABAYEVA

20

and put into the force. This helped to find out that questions are accurately formulated and dont have a concealed meaning behind. The addressed population was chosen to be business travelers who have been to Baku at least once. Therefore the vast majority of questionnaires were sent to the business travelers via e-mail and the answers were analyzed with help of special computerized statistics program. Secondly, as previously collected data the statistical reports were used so as to contribute to the development of the research. Furthermore, information taken from media articles and relevant websites was quoted throughout the study. Due to the low season and delimitations, sampling size for survey was 100 people and most of them were distributed online.

3.3 Primary Data


3.3.1 Interviews with Professionals of the Industry In depth interview is a way of asking questions which allows the interviewee to have more control of the interview. Here the aim is to explore the interviewees feelings about the issue being explored. (Social research methods) To find out the current situation and the relevant up to date information, 3 industry professionals have been requested to participate in the interviews. Among them, there were representatives of Ministry of Tourism, C&B Managers of popular chain and local hotels, who answered the questions with a great enthusiasm. It should be noted that, the list of interviewees could be enlarged, however it occurred to be a problematic issue due to the time pressure. Since the interviewed people are experts of their field, the information they provided was a great contribution to the progress of the research. It should be mentioned that, the average duration of conducted interviews was about 30 minutes and the responses to the questions were captured through note taking.

FARIDA BABAYEVA

21

3.3.2 Questionnaire A particular questionnaire was designed to distribute among respondents. To assure the validity of the collected data the pilot survey was conducted in order to ascertain the selection of right questions and the fact that they dont imply any hidden meaning. The content of questionnaire is designed so as to find out the main research questions. Nonetheless, not all the issues were covered, but all necessary questions were included to the list. The main questions were regarding the planning phase to visit Azerbaijan, the evaluation of onsite experience and the questions which are meant to find out the post travel imagination of the tourist. Moreover, some questions were asked to be answered on 5 scale evaluation, which can be a good method to avoid neutral evaluation. The section where respondents were asked to provide their suggestions to improve the quality of delivered services in tourism field was also included to the survey. 3.4 Secondary Data As the secondary data, the statistical report of the incoming tourists was taken from the State Statistical Committee of Azerbaijan (AzStat), since it is the major source of data relating to the overall business travelers including the conference and meeting attendants. It will be a great contribution to find out what are the top countries that business tourist come from, what the length of their stay is, which type of the accommodation and transportation they use and etc. Furthermore, brochures and promotional materials published by the Ministry of Tourism and Culture were used throughout the study. It has also be mentioned that, the previously conducted research with the purpose of exploration the attitude of foreign travelers to the tourism in Azerbaijan was analyzed and added to the list of the secondary data.

FARIDA BABAYEVA

22

All the secondary data are of high reliability, since they belong to the 2010 year and also were collected by experts of this field. 3.4.1 Statistics on Business Tourism in Azerbaijan Before passing examining the existing data, it is worth to note that, there is not any specified statistics particularly on MICE tourism. That being the case, the only source to depict the data on meeting industry, is to consider it as a sub segment of business tourism. The following data were collected from State Statistical Committee of Azerbaijan to undertake this research. Visitors origin Length of stay Accommodation Usage of transport

The yearbook Tourism in Azerbaijan which consists of data on numb er of enterprises such as hotels, number of foreign citizens traveling to Azerbaijan by countries, as well as number of nights spent in hotels and etc. According to the yearbook, it can be seen that, there is a significant increase in the number of tourists coming to Azerbaijan. This can be explained by the fact that, availability of tourism information has been increased throughout these years. There are certain countries from which people travel to Azerbaijan with different tourism purposes. As indicated in below chart (chart 2), the regions which generate the majority of tourist inflow to Azerbaijan are the neighboring countries Russian Federation and Georgia. This is due to the economical, social and cultural interrelations between the countries. The next countries are Iran, Turkey and

others. The others, which constitute minor percentage, include United Kingdom, Kazakhstan, USA, Germany, Uzbekistan, Turkmenistan and etc Travelers by Countries of Residence

FARIDA BABAYEVA

23

Russia 17% Others 57%

Ukrain Turkey e 4% 1%

Georgi a Iran 14% 7%

Figure 1. Travelers by Countries of Residence Source: AzStat, Tourism Yearbook 2010 Correspondingly, these data proportions have not changed during the last 4 years from 2007 to 2010. This leads to an implication that, there is a specific percentage of people coming from particular regions each year. From this chart, it can be observed that, even more than 50 % of travelers are from miscellaneous countries and their proportion even doesnt reach 1 % as a separate tourist generating region. The purpose of the travelers visiting Baku varies from visitor to a visitor. From the general observation, one can come to the point that, the most represented type of inbound tourism is business tourism, which directly contributes to the economy of the country. (see chart 3) Dynamics of number persons arranged by purpose of trip

Figure 2, Dynamics of number persons arranged by purpose of trip Source: AzStat, Tourism Yearbook 2010

FARIDA BABAYEVA

24

As a consequence of purpose of the trip, there exists a trend that, business tourists, particularly, conference and meetings attendants stay less than leisure travelers. The MICE tourists are business people who are short on time and travel specifically to make business deal in a timely manner. That being the case, the average duration of their stay is around 1 3 days. (Chart 4) Structure of tourists arranged by duration of stay in 2010, per cent

Figure 3, Source: AzStat, Tourism Yearbook 2011

Results and Analysis

4.1 Theoretical Framework


To measure the satisfaction of the guests travelling to Azerbaijan, the phases of tourism experience are analyzed separately. Different authors define the tourism experience cycle in a different way. Killion (1992 after Clawson 1963) defines the tourism experience as four stage tourism cycle, which are planning, travel to, return travel and recollection. On the other hand, Nickersons model of travel phases is comprised of five steps, which are indicated in below table:

FARIDA BABAYEVA

25

Anticipation

Recollection

Planning

Travel back
Participati on

Travel to

Figure 4, The six travel experiences. Norma Nickerson (1996)

4.2 The Travel Experience


The travel experience is formed while a tourist passes through all elements of the above illustrated travel phases cycle. After all these phases are passed, a certain image of a country is formulated. Therefore, to obtain a positive image is very important for a destination. Thus, destination managing organizations put very much effort to sustain the positive image and keep the reputation of the country in a very high level. Once a person comes back home satisfied with overall travel experience, he or she becomes a live promotion for the destination, i.e. gives a positive feedback, recommend friends or colleagues and etc. This is the point where word of mouth becomes a very effective marketing tool for a destination. Correspondingly, to make the travel experience successful, memorable and profitable for tourists visiting destination, the quality of delivered services should be assured and maintained in a high level.

FARIDA BABAYEVA

26

4.2.1. Anticipation and Planning The first phase of travel experience is anticipating a trip, in which imagination and enthusiasm develop. The trip may never actually occur, but still contributes to ones happiness through anticipation. A study of maps, brochures o r travel related articles help to build the anticipation. The second phase is planning the trip. Actual preparation for the event includes gathering supplies and equipment, obtaining airline ticket, hotel reservations and finalizing passports and packing. The planning phase is one of excitement and anticipation for would be traveler. (Tourist Distribution: Managing the Travel Intermediary, Berendien Lubbe) According to the results of conducted questionnaire, the majority of travelers coming Baku have obtained information from internet, as illustrated in below chart. It should be highlighted that, also the quite large population of respondents have heard about of Azerbaijan via word of mouth, i.e. their friends were the prime source of information. Azerbaijan beforehand. Very small group didnt have any information about

Sources of Information

Didn't know
Friends or Media Exhibition Internet
0 10 20 30 40 50

Figure 5, Sources of Information about Azerbaijan It is stated that, the image of the country is one of factors moderating the travelers decision in the anticipation and planning phase. It is very important factor, and when it is set properly, a tourist comes back to that country again. Therefore, it is necessary to build and remain the proper image for a country, especially those who are aiming to develop tourism field.

FARIDA BABAYEVA

27

In general, respondents have a very positive opinion about the image of Azerbaijan. The majority of travelers added that, they enjoyed their trip to Baku. This argument is also backed up by the chart 9.

4.2.2 Travel to place and back These phases of travel are closely connected with transportation. According to the results of the survey, 92 % of the travelers reach Baku via plane. In comparison with this, the other means of transportation are less preferred by survey participants. The international carriers which provide flights to Baku are the followings: No frills carrier Air Baltic Turkish Airlines via Istanbul (more expensive) Austrian Airlines via Vienna Aeroflot via Moscow Emirates via Dubai British Airways nonstop connection (from England)

The general results obtained from questionnaire, demonstrate that, the meeting attendants travel use organized (coached) tours when being in Baku. The survey results show that, the respondents were not satisfied with the level of transportation of services within Baku, when it comes to the availability of information and possibility to find a destination place. Correspondingly, on the scale of evaluation from 1 to 5, the current situation of transportation services was evaluated as 2.5 points.

FARIDA BABAYEVA

28

4.2.3 Participation This part of travel is the core phase of travel cycle in which attitudes and opinions about the destination are formed, as a traveler experiences all the activities that have been foreseen in the anticipation and planning phases. The other reason why this phase is so important is that, after a tourist undergoes all phases, he or she will have a certain impression and thoughts about the destination. It is the phase that, that has a great impact on the travelers decision whether to come back or not. Therefore quality of delivered services and all other related things concerning the comfort of a MICE tourist becomes the priority. That being the case, this part will be analyzed in detail compared to the other stages of travel experience. Therefore, the issues such as accommodation, conference venues, catering and other related services will be considered in this section. Additionally, travelling habits of the meeting attendants (for ex: with whom they travel) will be examined, since they may moderate other interrelated components of the participation phase, such as accommodation options or accessibility of pre or post conference tours and etc. According to the results of expert interviews, the business travelers mostly travel alone, because the events which they attend are scheduled for the whole duration of the occasion. This fact is also backed up by the answers of the respondents, saying the majority of them travel to meetings on their own. However, the second large population of survey participants stated that they travel with groups.
4.2.3.1 Accommodation

Most of the time, the choice of accommodation is made in the planning phase of travel. Usually the extent of the event is the main influencing factor when it comes to accommodation preferences. According to the representative of the Ministry of the Tourism and Culture, the reservation procedures are undertaken by employees of the ministry, when a large scale event is organized. However, in some small scale events, the participants are required to make selection of the hotels on the basis of offers sent by the ministry. Furthermore, the payment obligations also influence the choice of accommodation, according to the results of

FARIDA BABAYEVA

29

conducted interviews. When the accommodation expenses of event attendants are covered by the government, the choice is usually made by employees of the ministry. Another principle for the selection of accommodation is the location, i.e. the proximity of the conference venue to the hotel. Below, are mentioned five Baku hotels which are mostly preferred by conference organizers.

Hotel Name
Airport Hotel Baku Qafqaz Point Hotel Hyatt Regency Baku Park Inn Baku The Landmark Hotel Baku

Location
Baku Airport Yasamal region, K.Kazimzade 118 Izmir street Azadlig Avenue Nizami str, 90 A

# of Rooms
207 93 182 248 100 231 120 230 372 100

# of Beds

Chart 2, Hotels accommodating meeting attendants.


4.2.3.2 Conference Venues

In general, there are not so many conference and exhibitions centers throughout Baku. The majority of them are located in the city center. However, with regard to the development of tourism, namely the business tourism, many efforts are put to meet the requirements of high level and demanding business clientele. Therefore a number of conference and business centers supplied with modern and up to date technology are being built. In order to promote Baku as the center of MICE industry in the region, a specialized exhibition complex, Baku Expo Center was constructed on the way to Baku Airport. It is the second biggest exhibition center in CIS region, after the one built in Moscow. The main purpose of its construction was to attract the attention of foreign companies from all over the world to Baku. Furthermore, with its construction, it was planned to highlight the historical significance of Azerbaijan

FARIDA BABAYEVA

30

and the whole Caspian region as a trade and commercial center throughout the centuries. The most exemplary as well as the biggest hall to hold official events is the Gulustan Palace. After the Contract of the Century was signed in the Gulustan Palace in 1994, it gained a public status: all important state events are conducted here. Inauguration of the President of the Republic of Azerbaijan was held namely in Gulustan Palace. International summits, conferences, award ceremonies as well as various cultural events are regularly hosted in the hall. The fact of hosting events gives a special significance and scale to the Gulustan Palace. Another multipurpose venue is sports and concert complex named after Haydar Aliyev. This complex enjoys all necessary conditions to hold large scale international events. Additionally, Baku Business Center is also in the list of the most convenient and up to date conference and exhibition centers of the capital. This three storey building hosts several types of events beginning from small conferences to large scale cocktail receptions. It has to be added that, all these convention venues are located in close proximity with the leading hotels of the city. The respondents were asked to evaluate the convenience of conference and exhibition centers, so as to find the answer to the main research question, i.e. identify the level of service quality of conference venues in Baku. Convenience of Convention Centers

Excelle nt Very good

Figure 6, Convenience of convention centers

FARIDA BABAYEVA

31

4.2.3.3 Catering Services

To find out the level and quality of service in the restaurants and cafes of the city, the survey participants were asked to evaluate the level of service and quality of food. It was found out that although the majority of respondents were satisfied with the quality of food served in restaurants and cafes, they are unhappy with the level of delivered service. Moreover, there were complaints about the language knowledge of restaurant staff. Correspondingly, the overall assessment of restaurant service throughout the capital was 3, on the scale of evaluation from 1 to five. 4.2.4 Recollection The final element of travel cycle is the recollection phase. If the overall experience is successful, it is probable that a MICE delegate could become a future tourist for the country. Once the expectations of a traveler are met, he or she recommends that destination to friends or colleagues. The survey results explain that, meeting attendants have a positive image about Azerbaijan, namely Baku, as proved by the chart 10. Image of Azerbaijan

60 50 40 30 20 10 0

Figure 7, Image of Azerbaijan. The majority of respondents stated that they will come back to Baku again with great pleasure.

FARIDA BABAYEVA

32

SWOT ANALYSIS

5.1 Strengths
According to the results of interviews conducted with industry experts, the location of Azerbaijan can be considered as the main strength of the meeting industry in Baku. Being historically located on the conjunction of Great Silk Way, Azerbaijan attracts the interest of foreign companies as a strategically important spot in the Caspian region. As the second strength, the modern and up to date convention and meeting facilities can be given as an example. The second biggest expo center was built in Baku, on the way to Baku Airport. Furthermore, a number of international chain hotels such as Marriott, Hilton, Fairmont, Kempinsky and etc. are being built at the moment, which will serve to meet both accommodation and conference needs of businessmen. Additionally, the renovated infrastructure is also of great achievement to be considered as strength of meeting industry in Baku. The rich cultural heritage is also the fact to be presented as one of strengths, since it increases the availability pre or post conference tours, which are organized to the historical and cultural sites of the city. It has to be mentioned that, Azerbaijan became a member of UNWTO from 2002 year and its standards and regulations are being followed in the country. This in its turn contributes to the positive image development of the country.

5.2 Weaknesses
As the weakness of meeting industry, and generally business tourism, high prices were mentioned during the interviews. It is not surprising that, Baku has become the 20th ranking in the list of most expensive cities of the world. In addition, one of the most significant weaknesses of the industry is that, there is not CVB (Convention Bureau), which could promote the country as meeting destination and provide the relevant information in a certain country. Their responsibilities include realizing bidding operations in order to draw large scale conventions to a country.

FARIDA BABAYEVA

33

Likewise, there is also lack of PCOs (Professional Conference Organizers) and conference organizing companies specialized in the arrangement of meetings. Therefore, some insufficiencies come out in the process conference organization. The survey results show that, there are complaints about the availability of tourist information throughout the city. These include lack of maps, signs and transportation information in Baku. One of outspoken issues as the weakness is complicated visa procedures for the travelers from western countries. Before, the visa was issued on arrival, and now it is not the case for every tourist stepping borders of Azerbaijan. Travelers from non CIS countries have to get a LOI (Letter of Invitation) from the Ministry of International Affairs, which is time consuming procedure. However, the travelers from countries which are close to Azerbaijan, as Turkey dont face these difficulties.

5.3 Opportunities
The great opportunity for Baku to become one of the leading meeting destinations is the increase of promotion. If promoted well, the possibility to reach this level is very high, based on the strengths mentioned above. Likewise, there is an opportunity to open a Convention and Visitors Bureau, which will be responsible for increasing product awareness of potential visitors and deal with the promotion of the meeting industry in Baku. Another opportunity is to enhance the number of direct flights to Baku and decrease ticket fares. Thus, the efficiency of transportation services can be raised and more and more tourists will be attracted to Baku. Subsequently, more information about tourism can be placed in different channels, so as to take away the insufficiencies regarding the tourist information availability. The next opportunity is to decrease the level of prices and promote PCOs, to assure the attention to detail of conference organization. After that, aside with Baku, other cities of Azerbaijan should also be developed as a meetings and convention center such as Ganja (the 2nd biggest city after

FARIDA BABAYEVA

34

Baku), Nakhchivan and etc. Consequently, new hotels and offices are constructed in these cities. Moreover, the level of education in this sphere should be increased, by opening the event management faculty at Azerbaijan Tourism Institute. This will directly contribute to the quality of service in the meetings industry, as there will be educated specialists in this field.

5.4 Threats
As said by industry professional, the development of teleconferencing can be a potential threat for the meeting industry not only in Baku, but also globally. Thus, virtual meetings become popular with the advancement of technology. The professionals explain that, the teleconferencing is used to replace face to face meetings and hence the aim is to reduce costs. In conference and meetings industry, there is a probability of having non repeating customers, since most of conference attendants dont make choice of the destination on their own. This process is done by the conference organizers and therefore to grab their attention the uniqueness of Baku as meeting destination should be marketed worldwide. Another threat can be political instability, in terms of relations with the neighboring country. This might have a negative influence on the image of the country as a tourist destination and eventually the attention and interest of foreign investors can be distracted from the country.

FARIDA BABAYEVA

35

7. CONCLUSION
The meeting industry is very young in Azerbaijan, namely in Baku. It started to develop in after Azerbaijan has regained its independence and with the establishment of Ministry of Tourism and Culture, a new phase of development has been launched in this industry. To identify the current situation of the industry, 2 main research questions have been formulated. Initially, the study aimed to find out the answer to the following question: 1. What is the quality of the meetings and conferences which are organized in Baku? The survey results show that majority of meeting and conference attendants are not satisfied with the level of transportation services when it comes to the availability of information and possibility to find a destination place. In contrast to this, the vast majority of survey participants were quite satisfied with the condition of conference venues as well as the level of its technical organization. Similarly, their attitude and opinions towards the image of Baku as a meeting destination were positive, which is of great importance for the development of this newly born segment of tourism. Correspondingly, the mainstream of respondents stated that they would welcome an opportunity to visit Azerbaijan again. The next question studied in this thesis is the following: 2. What might be the possibilities for further development of the meeting industry in Baku? According to the results of the conducted research and SWOT analysis, it is clear that there are tremendous opportunities to develop meeting industry not only in Baku, but also in other regions such as Ganja, Nakhchivan and etc. In

accordance with the State Program on Social-Economic Development of Regions, a number of business centers and convention venues are being built in the different regions of Azerbaijan. Consequently, the great amount of conferences and exhibitions can be attracted to Azerbaijan.

FARIDA BABAYEVA

36

Furthermore, the number of carriers which provide direct flights to Baku should be increased in order to improve the level of transportation services to Baku. Additionally, the industry would benefit, if the government gave consideration to the visa policy for EU citizens. Also, the establishment of Convention and Visitors Bureau will be advantageous promotional strategy, as more information will be available about Baku as meeting destination.

FARIDA BABAYEVA

37

LIST OF REFERENCES 1. Berendien Lubbe , Tourist Distribution: Managing the Travel Intermediary 2. Bilalov, B The business tourism in Azerbaijan Republic (2005) , Rebirth XXI century 3. Deborah Peters and Barry Jones, Size and Impact of Meetings Industry, 1996 4. Gayle Jennings, Norma Polovitz Nickerson 2006, Quality tourism experiences 5. Rodgers, T, Convention and Conferences, second edition. 6. State Statistical Committee of Azerbaijan, Tourism Yearbook 2010 7. The Travel & Tourism Competitiveness Report 2008 2008 World Economic Forum 8. UNWTO, Tourism Highlights 2008 edition 9. William M..K.. Trochim,, Research Methods Knowledge Base 10. http://www.seebtm.com/en/the-history-and-development-ofmeetings-industry/ 11. www.themeetingsindustry.org

FARIDA BABAYEVA

38

Questionnaire to Meeting/Exhibition Attendants in Baku


This research is conducted by the student of ATI (Azerbaijan Tourism Institute) in order to evaluate current situation of meeting industry in Baku. Your contribution to the study is highly important, as your attitude will allow investigating correctly the situation of the industry in Baku and will contribute to its development. If you would like to obtain a copy of the study, please indicate your e-mail address below: ________________________________________________________________________ ________________________________________________________________________ Please, choose one or multiple answers by marking a box, in questions where options are given. There are questions have an evaluation scale with points from 1 to 5, where you may either circle or cross the chosen number. 1. ____________________________________________________________ 2. Personal Information Sex Male Female Age_____________________________________________________________ 3. Who you travel with alone with spouse with children with group with friends 4. Where you have collected information about Azerbaijan from internet exhibition media friends or colleagues did not know anything 5. How did you reach Azerbaijan? by plane bus car train ship 6. During your trip you travel by own car public transport car rental taxi coach (organized tour)

FARIDA BABAYEVA

39

7. Please, evaluate from 1 to 5:


Transportation to Azerbaijan: Agenda The level of service Transportation within Baku: opportunity to find a place Information about transport Accommodation Availability of tourist information Knowledge of foreign languages Level of service in restaurants/cafes Quality of food in restaurants/cafes

Very bad 1 2 3

5 Very good

7. How many conferences have you attended in Azerbaijan? 0 1 2 3 8. For you the image of Azerbaijan is? Very positive positive good satisfactory 9. Would you like to visit Azerbaijan yet again?

4 fair

or more

yes yes

no no

10. Will you recommend Baku as a good meeting destination to your friends/colleagues?

Which country are you from? ______________________________________________________________________________________ _____________________________________________________________________________________ Your opinion or/and suggestions concerning tourism in Azerbaijan are highly appreciated ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________
THANK YOU FOR COOPERATION!

FARIDA BABAYEVA

40

41