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Inspiration / 5.18.17

The View from Here: Geopolitical Impacts

By SITE

From turbulence comes opportunity, according to SITE members.

Travel Ban. Brexit. Terrorism. Inflation.

Scan the front pages of just about any newspaper in the world, and you’re met with stories of volatility and uncertainty. And, while these are large-scale geopolitical issues, they do trickle down to impact local markets and the business events industry.

Much has happened since the release of the SITE Index 2017 last autumn.

When the survey was conducted in mid- 2016, Brexit had just occurred and U.S. elections were still underway. At that time, safety and security and tightening of borders were at the top of a list of concerns that could potentially impact incentive travel.

We recently spoke with two SITE leaders in Latin America and the United Kingdom for some surprising insights into how the evolving geopolitical climate and the stories of the day are influencing incentive travel in their regions.

 

Latin America – Welcoming Opportunity

Eduardo ChailloMaritz Global Events, Global General Manager LATAM Eduardo Chaillo is excited about the future of incentives in Latin America – but he wants to get one thing straight.

“Latin America” is not a single place.

“Some people think that we are small and homogenous,” he explains. "The truth is that the area is huge and comprises a number of unique destinations, each with its own culture. If there is one thing critical element that each shares, it’s that countries in Central and South America are glad to accept groups from around the world.

“Some of the programs we work with are not very happy to go to certain countries where they feel they are not welcome,” he says. “We are a very welcoming community throughout the region. They pamper you, they make you feel good and treat you well.”

Some programs are not very happy to go to certain countries where they feel they are not welcome. We are a very welcoming community throughout the region.

As proof, Eduardo describes some of the most popular destinations and why organizations are increasingly choosing them for their programs:

  • “The country has grown tremendously in the incentive field – cities like Cartagena are very beautiful and very complete.” Global brands like Four Seasons and Park Hyatt are confidently setting up shop in the country.
  • “After hosting SITE last year, Panama has really started positioning itself as a natural hub and connector between the Americas."
  • Machu Pichu and Lima are sought after destinations. “Lima is showing gastronomy as its main asset. They are very proud of their chefs – everybody is a creator.
  • "Bariloche and Mendoza are increasingly popular with groups, while Uruguay and Brazil continue to be standout destinations."

The reason for Latin America’s rise isn’t specifically tied to the rise in exclusionary policies around the world. In fact, the development of countries in the region are inspired by a number of factors – including a significant youth movement. “The demographics throughout the region are very young,” offers Eduardo. And with such a youth movement has come investment in nature, local traditions and CSR – which, in turn can drive engagement.

 

United Kingdom – Short Term Gain, Long Term Uncertainty

Martin LewisAt first glance, things seem to be going pretty well for the UK’s travel and incentive industries – but clouds are forming on the horizon.

Last year’s Brexit vote had an immediate impact on the British Pound, driving its value down by 15% over the course of the year. As a result, occupancy in cities like London is up, according to SITE Foundation Trustee Martin Lewis, Managing Director at CAT Publications. “London is almost affordable these days.”

Meanwhile, policies that amount to travel bans for some countries and limit the use of electronics for some from global destinations makes non-American destinations more attractive for some groups.

“What’s really weird about the whole thing is that we forget that the U.S. President is a hotelier,” says Martin. “He’s in the hospitality business. You’d think he would want his hotels to be full.”

Of course, this may be short-term gain for long-term pain in the UK.

Martin points to the tricky problem of Ireland and Northern Ireland as an example. Groups today often fly into Dublin as an operating city, in part because Dublin does not require a visa or fee. From there, tour groups can drive to Northern Ireland to visit popular destinations, such as the Titanic Museum. Because it’s part of the EU, no further passport or visa is required.

But that changes with Brexit.

In all, it's really choppy waters.

“DMCs aren’t going to put people on a bus and take them across the border,” says Martin. Because Northern Ireland is no longer in the EU, it means the need for visas and passports, adding cost and complexity. It also makes the entire Irish experience less attractive. Today, the island is marketed as a joint venture. Tomorrow, that might be impossible.

Martin cites two other impending issues that could negatively impact the UK as an incentive destination. One is labor. “We rely heavily on foreign workers,” says Martin. Closing borders means that workers from across Europe – particularly Eastern Europe – would return home. "That leaves a gap for operational positions in restaurants and hotels. Wages would have to increase to attract local employees – and that affects the UK’s ability to compete on cost.”

The other fear is inflation. The day before the interview with Martin, the governor of the Bank of England described much slower growth and increased inflation as salaries began to rise in response to currency devaluation.  

“In all, it’s really choppy waters.”

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