International Journal of Business and Management Studies,

CD-ROM. ISSN: 2158-1479 :: 06(01):163–170 (2017)

DEVELOPMENT OPPORTUNITIES OF MICE TOURISM IN

DEVELOPING COUNTRIES: CASE OF GEORGIA

Nana Katsitadze and Ia Natsvlishvili

Ivane Javakhishvili Tbilisi State University, Georgia

The article identifies potential markets of MICE tourism for Georgia. It presents the arguments in
support of social and economic gains of this tourism direction for the developing countries by
discussing the case of Georgia.

Keywords: Georgia, MICE tourism, Business tourism, Congress tourism, Tourism market.

Introduction

Worldwide practice shows that every fourth individual out of tens of millions people goes abroad on a
business trip once in a while. Growth of this particular segment has made relevant the development of a
specific field called MICE (Meetings, Incentives, Congresses, Exhibitions) tourism. According to
statistics by International Congress and Convention Association (ICCA) 400 000 conferences and
exhibitions are held annually. Largest exhibitions, such as IMEX (The Worldwide Exhibition for
Incentive, Travel, Meetings and Events), based in Frankfurt, and EIBTM (European Incentive and
Business Travel and Meetings Exhibition), based in Barcelona, host over 3000 participants from over 100
countries annually.
Demand for this specific travel product is confirmed by a growth rate of 5% of business travel
(Global Business Travel Spend Topped Record-Breaking $1.2 Trillion USD in 2015[GBTA]), which is
greater than that of the entire tourist sector, which has been fluctuating from 3 to 4% growth per year
over the last decade[1].
According to the World Tourism Council (WTC), approximately 60% of tourism industry is taken up
by business tourism, while business tourists themselves comprise only 25% of the total international
tourist flows which indicates high solvency of this segment. This situation makes MICE tourism market
more attractive.
Since 1980 statistical inquiries into tourism portray MICE tourism as an independent research
object. Despite the fact that this field of tourism became popular only in 1970-80s of 20th century ,
MICE and especially business tourism are not a modern phenomena. Since ancient times people travel for
business-related purposes. Among them the first business travelers were merchants. In the Middle Ages
the emergence of trade fairs (including in Georgia) even in that period promoted development of first
types of modern tourism services. Travelers were offered full range of first types of modern tourism
industry – accommodation, catering, guidance and transportation (using horses and camels) services.
At the end of 19th and in the beginning of 20th centuries, large-scale conventions of trade and
scientific unions as well as political parties in North America and Europe have given root to the
emergence and development of MICE industry and convention tourism in the USA and Europe[2].


163
164 Development Opportunities of MICE Tourism in Developing Countries: Case of Georgia

In scientific and popular literature the term “MICE Tourism” is often used instead of terms
“business tourism” and “business travel” because of term “MICE Tourism” most precisely reflects the
purposes of this segment and the structure of this direction of tourism. It includes: M-meetings (councils,
negotiations, presentations), I-incentives (rewarding travel, motivation programs, stimulation of partners
and stimulation of loyalty of employees), C-congresses (conferences, forums, conventions) and E-
exhibitions ( participation in cultural, musical, sports and corporate events/exhibitions). The terms
“business tourism” and “business travel” are considered synonyms and in dictionaries of tourism
terminology is largely interpreted as travel for commercial, state or educational purposes [2;3;4], while
MICE is a business-orientated tourism segment involving obligatory (or non-discretionary) travel [3].
MICE tourism is being actively developed and promoted by over 115 countries worldwide. In 2013
size of word MICE tourism market comprised 1.1 trillion USD, while in 2014 it was 1.17 trillion USD,
and further in 2015 it grew to 1,234 trillion USD [1].
The countries’ interest in this direction of tourism is mainly caused by the potential benefits it can
bring. The worldwide practices have already shown positive effects of MICE tourism such as:
x Direct Contribution -Direct Revenue (The MICE industry, business tourism, is known to generate
higher spending per capita as compared to leisure tourism. It also affects seasonality control and
employment. Direct Contribution - The MICE industry generally reduces seasonality within the
overall travel and tourism industry, as most MICE volume occurs during the off-peak seasons[5].
x Indirect Contribution - This includes Foreign Direct Investment (FDI). Hosting an exhibition is
one medium that can channel products and services to potential buyers on a regional and global
scale; attending conventions can also expand the partnership pool for delegates who usually come
from the same industry. There’s also spurring of technology and innovation, as countries
attempting to promote the MICE industry must strive to develop or at least encourage necessary
development to keep national technological offerings on par with global standards. There are new
ideas, knowledge and insight, as MICE events have proven to be very useful in terms of bringing
them to countries, service providers and attendees. The MICE industry has become a channel that
allows information and knowledge to spread wider and faster especially in this era of
globalization. It can also influence the climate of local businesses, which, in turn, can directly
influence the strategic direction of certain industries. Moreover, growth in the industry can also
help improve local businesses’ procurement and manufacturing standards [5].
Aside from the abovementioned, Global Report of the Meetings Industry 2014 by United Nations’
World Tourism Organization (UNWTO) evaluates the MICE tourism as “clean” industry stating that it
promotes environmental quality. As it is stated in the report “meetings promote and support other
business sectors, meetings create and spread knowledge worldwide, meetings build the community
profile, meetings promote global understanding and cooperation“ [6]. Such circumstances makes this
field of tourism particularly attractive for developing countries that aim for rapid development of the
tourism and receive maximum revenues from it as soon as possible. This is particularly important for
countries that have less experience in this direction and therefore higher risk creates different problems,
among them problems related to sustainable development where the undesirable outcomes are usually
irreversible.
According to widely accepted definitions of MICE tourism and business tourism, their main purpose
of this segment of travel is business. However leisure, cultural sightseeing, recreation and others are
considered as secondary. Recent practices show that the general tendency of demand in international
tourism market to receive more benefits (leisure, sightseeing, etc.) from travel is actively experienced
by MICE tourists as well. As specialists claim it could act as primary and not secondary factor that
affects the choice of destination. This allows countries capable to gain additional benefits from this
segment to use the chance of becoming competitive also in MICE tourism market.
The recent tendency of demand of modern tourists to see something new and exotic should also be
taken into consideration. Existence of such tendencies increases the chances of developing countries
 Nana Katsitadze and Ia Natsvlishvili 165

becoming successful in this field even further because virgin, untouched natural landscapes and unseen
novelties to the tourists are still reserved mostly in these countries.
For many years, USA represented the largest market for MICE tourism. At $291 billion, China
surpassed the United States as the largest business travel market in the world in 2015. India and Indonesia
are also showing double-digit growth rate. In 2015, with 11% growth of business tourism, India ended up
in the world’s top ten, its market comprising $29, 6 billion. Other countries in South-East Asia also
display significant MICE growth rate, especially Taiwan, Singapore and Hong Kong, which make very
effective use of the tourist market’s tendencies and adapt them to country’s opportunities making use of
innovations (see Table 1).

Table 1. Total Busines Travel Spending: Top 15 Markets (2015)

Total BTS Annual countries Total BTS Annual

countries
Billion $ Growth % Billion $ Growth %
1 China 191,276 11% 9 Brasil 30,521 -4,1%

2 USA 189,837 2,2% 10 India 29,629 11,0%

3 Germany 63,534 9,8% 11 Canada 23,134 2,7%
4 Japan 62,101 10% 12 Australia 21,767 6,4%

5 United Kingdom 47,138 8,3% 13 Spain 19,593 7,8%

6 France 37,103 3,0% 14 Niderlands 18,160 2,0%

7 South Korea 32,598 1,5% 15 Russia 17,241 -18,2%
8 Italy 31,621 2,2% Global total 1,236,848 5%
Source : http://www.gbta.org/foundation/pressreleases/Pages/rls_0711162.aspx

With regard of forecast, According the GBTA (Global Business Travel Association) in India and
Indonesia high growth rate of business traveling (around 12%) will remain in 2016. China will continue
to keep high growth rate around 8% and still will be one of the largest market in the world. Another
largest market will be the USA with the same growth rate around 2%. Conditions that were created by
crisis in Russian business tourism market will be improved. In 2015 Russian business tourism was -18,2%
and it will be equal to +4%-4,5%. According forecast by abovementioned research the growth rate of
business tourism in European countries evidently is decreasing. The improvement of positions of new
players in the market is observed. These are countries in East and South-East Asia (see diagram 1).
Despite the above mentioned facts, Western Europe holds the largest share (40%) of the MICE
tourism world market. These countries use their rich experience having highly qualified personnel and
good infrastructure. In ratings China and the U.S. are followed by Germany ($63,5 billion), Japan
($62,1 billion), the UK ($47,1 billion) and France ($37 billion). According to the Global Report on the
Meetings Industry, compiled by the experts from UNWTO, ICCA and MPI (Meeting Professionals
International), reduction of MICE tourism rates in experienced regions and countries are explained by
outdated strategies employed in MICE management as well as by general slowdown of the global
economy (see Table 1).
With regard of Georgia, it does not appear in abovementioned researches conducted by GBTA
because Georgia was not a member of any conventional organizations until 2016. Our discussion about
development of business tourism in Georgia is based on the research data pro Administration vided by
UNWTO and of Georgian National Tourism Administration.
166 Development Opportunities of MICE Tourism in Developing Countries: Case of Georgia

Diagram 1. Expected Growth in Business Travel Spend

Source : http://www.gbta.org/foundation/pressreleases/Pages/rls_0711162.aspx

Relevance of MICE Tourism for Developing Countries (Example of Georgia)

Georgia is a Post-Soviet country that was considered that giant state’s prime location for recreational and
health tourism. It was visited by up to 7 million tourists from the republics of USSR and Eastern
European countries annually. After dissolution of the Soviet Union, Georgia regained its independence
but lost its markets, including that of tourism. The country was then confronted with a new challenge of
carving out a niche for itself at the international tourist market.
Over the last 10-12 years, Georgia has been actively and rather successfully developing its touristic
capacity. Growth of international visitors to the country reached 7% in 2015, with income from tourism
growing by 8% which being acknowledged, according to the UNWTO World Tourism Barometer, as the
largest in Europe [ 7].
MICE tourism, being a tool of activating trade-economic relations and instrument of development
and involvement into external economic relations, is hence extremely important for countries that are
only now setting foot in the door of the international market. It is also noteworthy that persons attending
MICE events are, as a rule, leaders in their respective fields, which gives the destination country an
opportunity for knowledge exchange and increasing of cooperation at the global level.
MICE tourism has all chances to become an efficient tool for increasing awareness of Georgia as a
tourist destination improving its image; it might also have a boomerang effect, instigating development of
other fields of tourism and business in general, which in turn would result in growth of foreign
investment.
Georgia is a country of resorts with strongly expressed seasonality. Its seaside resorts experience the
largest inflow of tourists and vacation-makers in July and August, while December and January are the
“hottest” months for mountainside and skiing resorts. Such distribution of inflows of tourists causes
frequent overloads of local hotels, food joints, transportation systems and other facilities, while resulting
in prolonged outage in non-seasonal periods. MICE tourism is less dependent on seasonality and
holidays, hence combining it with ordinary tourism might allow better management of the tourist flows
throughout the year as well as throughout the weekends and weekdays. Turn-based activation of certain
tourist destinations in different periods of the year allows creation of synergy, allowing growth in the
quality of service and reducing environmental problems. MICE tourism is therefore not only a cure for
seasonal problems, but also an opportunity for further development of tourism.
 Nana Katsitadze and Ia Natsvlishvili 167

Georgia aims to increase its income from tourism and therefore stimulates the growth of tourist
inflow. It must be noted in this regard that the number of tourists has approached the 6 million in 2015,
which is almost twice the country’s population (7). Said fact places necessity of sustainable development
of tourism at the top of the agenda. Practice has shown several times that incorrect development of
tourism can cause serious losses to countries instead of bringing them benefits. Such consumerist
approach has resulted in destruction and disappearance of factors that made those countries attractive to
tourists and represented cornerstones for further development.
Therefore, the aim of increasing income from tourism should rest not only on the strategy of blindly
increasing the annual number of tourists, but also on making the country more attractive to new markets
and developing strategies of high-income types of tourism. MICE tourism, unlike other segments of
tourism, boasts much higher spending. Its participants also demand products and services of much higher
quality – while also consuming other tourist products (MICE tourism products + vacation/MICE tourism
products + sightseeing and etc.). This fact is easily proven by simple observation of rate of tourists
number at the international market (25%) and their spending (60%).
That far, MICE tourism provides effective mechanisms to support tourism development in the
country in the points of socio-economic and ecological views.

Table 2. Business Travel Spending

Relative terms Relative terms

In which countries was % of In which countries will spending % of
spending on business travel total on business travel (relative total
(relative terms) highest in GDP terms) be highest in 2026? GDP
2015?
1 Seychelles 5.5 1 Seychelles 5,5

2 Lesotho 5.2 2 Tonga 5,0

3 Mauritius 4,7 3 Mauritius 4,7
4 Tonga 4,2 4 Lesotho 4,2

5 Gambia 4,0 5 Gambia 4,0

6 Mali 3,4 6 Mali 3,3

7 Senegal 3,2 7 Georgia 3,2
8 Kiribati 2,8 8 Grenada 3,0
9 Georgia 2,7 9 Honduras 2,9
10 Honduras 2,6 10 Kiribati 2,6

Source: WTTC Travel & Tourism League Table Summary 2016 http://www.wttc.org/-/media/files/reports/
economic-impact-research/2016-documents/newleaguetablesummary156.pdf

Peculiarities of MICE Tourism Development in Georgia

Today MICE tourism in Georgia doesn’t represent priority in the process of tourism development.
Despite this fact in 2015 its share in GDP was 2.7%, which is more than one third of tourism’s share
(6.7%) in GDP [9]. In this period MICE tourism growth constituted 17.4% and with this index country
appeared on 6th place in the first ten countries in the world. According to the predictions of UNWTO’s
experts, in the nearest ten years the role of MICE tourism in the country’s economy may increase even
further and probably will constitute 3.2% of the GDP (see Table 2).
168 Development Opportunities of MICE Tourism in Developing Countries: Case of Georgia

Georgia is situated on a big Silk Road and was involved in Eurasian trade relations from the middle
centuries. Today it is more easily accessible for tourists from European and Asian countries (on average
2-3 hours flight from European countries and 5-6 hours flight from Asian distant countries) (see table 3)].
This factor is important as 70% of MICE tourists choose destination based on a flight time. Three
international airports in Tbilisi (capital city, Eastern Georgia), Batumi (country’s southwestern part, Black
Sea resort) and Kutaisi (center of Western Georgia) make Georgia more easily accessible. All of these
airports serve as international as well as domestic flights [9].
Good starting positions for MICE tourism development in the country were created by existence of
high class hotels in the capital and regions (Radisson, Marriott, Sheraton, Holiday Inn, Citadine, Cron
Palace, Best Western, Mercure, Hotels and Preference Hualing, Hilton) possessing conference
infrastructure of respective standards. in 2015 average number of accommodations In Georgia was 1,474
and the number of beds - 51404. Tbilisi is a leader with respect to both of these indices - 13,128 (25.7%),
followed by Adjara – 11.293 (22%). Small scale conferences can also be held outside of Tbilisi in the
regions, particularly in Gudauri and Bakuriani (mountain ski resorts), Borjomi (spa and balneological
resort), Chakvi (sea resort), which was one of the pioneers on local market in hosting conferences. Hence,
reduced scales of meetings, combining business visits with leisure and other trends on international
markets contributed to popularization of new tourism destinations and increase as in business tourism as
well as in other tourism products on domestic and international markets.
Despite the abovementioned, neighboring countries still account the biggest share in the number of
international tourists incoming in Georgia - 87.8% or 5,180010. Among these countries Armenia holds
the first place with 24.9% share (1,468,888), followed by Azerbaijan – 23,6%, Turkey – 23,6%, Russia –
15,7%, Ukraine – 2,4% and others 9,8% [9]. The main motivations for the visitors from these regions are
as follows: leisure-recreation, visiting interesting places, transit. Most of the visitors from neighboring
countries (85.3%) come to Georgia by land and only 13% of tourists come by plane.

Table 3. Distance to Target Markets

Distance Distance Approximate

Origin duration of flight
(km) (mile)
Istanbul, Turkey 1 324 823 2 hours
Athens, Greece 1 844 1 463 3 hours
Warsaw, Poland 2 140 1330 3 hours
Dubai, UAE 2 067 1 284 3 hours
Vienna, Austria 2 340 1 454 3 hours
Munich, Germany 2 693 1 674 4 hours
Amsterdam,
Netherlands 3 203 1 990 5 hours

London, UK 3 545 2 203 5 hours

http://gnta.ge/wp-content/uploads/2015/01/MeetingsEvents-Eng-June-2015.pdf
GEORGIAN NATIONAL TOURISM ADMINISTRATION

Special attention has to be given to the growth in flow of tourists from Russia that constituted
14.1(%) related to the previous year. It is impossible to say how much the number of MICE tourists from
Russia was because of absence of relevant data but their growing trend in Turkey was observed before
2015. Hence, possibility is created for diversification of Georgia’s MICE products on Russian market.
This opinion is supported by following trends in Russian MICE tourists: preference to warm countries;
growing number of young businessmen who are ready to flight in economy class and combine business
 Nana Katsitadze and Ia Natsvlishvili 169

trip and leisure together with the family and friends; high awareness about Georgia and interest in it.
Besides this, combining MICE products with wine and culinary tours that represent subjects of growing
interest in foreign tourists in recent years can be considered as effective way for attracting visitors from
Russia.
In the dynamics of Georgia’s international tourism market development there emerged such new
long-term and attractive markets as Gulf countries (Saudi Arabia, Bahrein, United Arab Emirates,
Kuwait, Oman and Qatar). These countries account 18% of business visitors in international tourism and
represent attractive markets for MICE tourism countries. According to the data for 2014, number of
tourists in Georgia from Gulf countries increased by 54% from which Saudi Arabia accounted 45%,
Kuwait – 61%, United Arab Emirates – 65%. In 2015 678% growth in number of travelers from United
Arab Emirates was shown. These countries represent attractive markets because of their spending.
According to UNWTO data of 2014 Saudi Arabia is on 11th place with its spending on outgoing tourism,
United Arab Emirates hold 21st and Kuwait 27th places. Tourists from these countries travel for a long
time that is on average 13 nights and usually this segment choose to travel together with family. Such
behaviors provide possibilities to sell other tourism products along with the MICE tourism package and
create higher profit from each tourist for receiver country [9]. It is worth to note that increase in tourist
inflows from these countries was supported by direct flights that isn’t a case regarding Western European
directions from where tourists inflows are still low [7].
As experts’ say lower number of visitors from Western Europe is conditioned by lower awareness
about Georgia as a country to visit for tourism, not enough direct flights, uncomfortable flight time and
nonexistence of direct flights to some countries. Two large air companies came into Georgian market with
government’s contribution and started direct flights from Kutaisi airport to Western Europe and back with
lowest tariffs that leaves hope that the problem will be solved at least partially. 4.5% growth in flights
(mainly due to the new directions and entering low fare air companies) induced 12.6% growth in number
of passengers. Hence, the picture is clear. Number of visitors in Georgia from neighboring countries is
mainly determined not by choices of tourists but instead, by technical problems in accessing the country
and fares of flights.
International practice of MICE tourism development showed the necessity of existence of main
coordinating and supportive organization for development that will serve as a link between international
and local tourism organizations. With this regard conventional bureaus were established in Tbilisi and
Batumi in 2016 and also country became a member of Association for International Congresses and
Convention [10]. Despite UNWTO’s exerts’ opinions that in last period conference and visitors bureaus
hinder development in some aspects because of their bureaucratic structure, we consider that in the
beginning of business tourism development in Georgia their role will be important in forming
international relations and coordination.

Conclusions

Thus, based on the analysis of international practice in MICE tourism development and its potential
benefits for Georgia it can be said that the development of MICE tourism in Georgia is not only desirable,
but also needful. It can contribute to the solving of many important problems particularly in making
Georgia four season tourism country and contribute to sustainable tourism development.
Study of Georgia’s tourism potential revealed factors that contributed to MICE tourism emergence in
Georgia and affect its further development. These factors include: a) Geographical and geopolitical
location; b) Changes on MICE tourism market; c) Resources for creating additional products; d)
Infrastructure (based on the existence of high class brand hotels in the capital and regions).
Geographical and geopolitical location. Conditions such as: situation at crossroad of Europe and
Asia, between world’s biggest markets – Russia and Turkey, location in the center of South Caucasus,
reputation of democratic and safe country creates very favorable conditions for Georgia to become
regional center for international conferences, congresses and meetings.
170 Development Opportunities of MICE Tourism in Developing Countries: Case of Georgia

Analysis of international tourists’ inflows and behavior of MICE tourists revealed important impact
that country’s awareness and geographical location have on potential markets. The biggest share among
potential and target markets of Georgia’s MICE tourism comes on countries from Commonwealth of
Independent States. Growth of Russia’s market is also observable. Gulf countries with high level of
spending and incomers’ sharp growth are also very interesting and have high potential.
MICE tourism development strategy must include internal market that played huge role in
stimulating MICE tourism infrastructure, especially in resort zones and created experience. Today internal
market in Georgia still represents important segment of country’s MICE tourism market.
Changes in MICE tourism market demands (refusing standard MICE products, more interaction).
Possibilities of using demand changes on MICE tourism market highly increase MICE product
competitiveness of the country. In case of Georgia it implies existence of tourist-recreational resources
that considers offering MICE tourists more than MICE products (MICE + wellness products + leisure +
recreation or entertainment). This gives advantage to Georgia related to the countries which don’t have
such resources and rest upon only standard MICE products or very high comfort associated with it that in
overall makes tour very expensive.
New trends in tourists’ demands creates possibilities for many countries to be competitive on
international market, for that each of them choose main characteristics by which they will be promoted on
target market.

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