(Tiểu luận) topic evaluating the factors impacting on the growth of mice in south korea

NATIONAL ECONOMICS UNIVERSITY FACULTY OF TOURISM AND HOSPITALITY INTERNATIONAL HOSPITALITY MANAGEMENT PROGRAM —————— ASSIGNMENT REPORT Subject: MICE Tourism Management Topic: Evaluating the factors impacting on the growth of MICE in South Korea Class: IHME 62 Group members: Nguyễn Bích Ngọc Lê Ngọc Quỳnh Phạm Thị Ánh Tuyết Ha Noi, September 2023 Table of Contents A INTRODUCTION B FACTORS AFFECTING SOUTH KOREA MICE I PESTEL ANALYSIS Political factor Economic factor 2.1 Economic growth 2.2 Interest rate & Inflation rates 2.2.1 South Korea Interest Rate 2.2.2 South Korea Inflation Rate 2.3 Disposable income 2.4 Employment rate & Wages Social factor 3.1 Population growth rate 3.2 Age distribution 3.3 Career attitude 3.4 Safety emphasis 3.5 Health consciousness 3.6 Lifestyle 3.7 Cultural Barriers Technological factor 4.1 Technology incentives 4.2 Level of innovation 4.3 R&D activities Environmental factor 5.1 Weather & Climate 5.2 Climate change 5.3 Environmental Policies Legal factor 6.1 Industry regulation 6.2 Consumer protection laws II 5-FORCES FRAMEWORK Threat of new entrants to the industry Threat of substitute products Power of buyers or customers Power of suppliers (to businesses in the industry) Rivalry among businesses in the industry 4 5 6 7 8 9 10 10 10 11 11 11 11 11 12 12 12 12 13 13 13 14 14 14 16 18 19 III MICE INDICATOR Number of meetings, events, conventions Number of attendees Revenue Number of MICE infrastructures C REFERENCES 20 20 21 22 22 22 A INTRODUCTION South Korea is one of the most spirited and colorful countries in the world It was established in 1948 The end of World War (1945) was the time when Korea was partitioned, during World War 2, Korea was under the rule of Japanese, rotating periods of autocratic and democratic rule was the prominent subsequent in the history of South Korea By the time of its establishment, South Korea is significant in the sectors like education, cultural and economical The Tourism Department of Korea is well developed and the main motivation of this development is the country's economic growth In South Korea, cultural tourism plays an important role in increasing the economic growth of the country In the short time following its dramatic and impressive development, it has managed to maintain the delicate balance between preserving its impressive history and tradition whilst embracing all the conveniences and technology of the modern world As a top convention destination, it offers world-class MICE infrastructure, a safe and sustainable meeting location, a variety of unique sights and experiences provided by Korea’s MICE cities, and much more Thanks to its modern development in infrastructure, excellent services and accessibility, Korean MICE destinations have become one of the best meetings and conferences tourism trends in the world B FACTORS AFFECTING SOUTH KOREA MICE I PESTEL ANALYSIS Political factor Industrial policies are aimed at both promoting industrial restructuring and developing specific industries Tax support for target industry is one such industrial policy instrument Stagnating growth in the manufacturing industry and economy-wide trend of servitization highlighted the importance of the service industry itself as well as manufacturing-service convergence As a result, policies that sought to foster growth in the service industry were established to promote the transition to a high value-added service economy The service sector eligible for income tax reductions and exemptions for SME employees10 have been extended to include industries faced with labor shortages and low wages For example, in the revision of February 2020, creative activities, arts, recreation and sports service sectors were added to the target industries To wrap up, we summarize the policies that extended tax support to the service sector in the table below: The Extension of the Service Industries Eligible for Tax Support Economic factor 2.1 Economic growth South Korea’s economy expanded 0.6% in the second quarter of 2023, accelerating from a 0.3% growth in the first quarter and exceeding market expectations for a 0.5% expansion, advance estimates showed On the expenditure side, private consumption fell by 0.1%, as expenditures on services (e.g., restaurants & accommodations) declined while expenditures on goods maintained the previous quarter’s level Government consumption also decreased by 1.9%, due to a decline in expenditures on social security benefits in kind Construction investment contracted by 0.3% as well, driven by a decrease in civil engineering Facilities investment fell by 0.2%, as investment in transportation equipment decreased, despite increased investment in machinery Exports decreased by 1.8%, owing to reduced exports of petroleum products and transportation services, although semiconductors and motor vehicles increased Imports dropped by 4.2%, mainly due to decreased imports of crude oil and natural gas South Korea GDP Growth Rate As Asia’s fourth-largest economy – and the world’s tenth – re-numerating this loss was vital accordingly Statistically, the MICE industry in Korea has created an output of around $80.6bn in terms of economic impact on the country Total expenditures by foreign delegates and convention hosts were estimated to be about US$130 million in 2000 This US$130 million created US$217 million of output, 13,702 full time equivalent jobs, and US$47.4 million of personal income to the residents These results mean that the convention industry can be a high- value-added area 2.2 Interest rate & Inflation rates 2.2.1 South Korea Interest Rate The Bank of Korea kept its base rate unchanged at 3.5% during its August meeting, as widely expected, maintaining rates for the fifth straight time as inflation continued to ease The board began its post-pandemic tightening campaign in August 2021 and lifted borrowing costs by a total of 300 bps until January 2023 Thursday's move also came amid concerns about surging household debt and signs of moderation in economic recovery due to slowing private consumption The committee kept the 2023 GDP growth projection at 1.4, unchanged from May's forecasts, but slashed next year's to 2.2% from 2.3% 2.2.2 South Korea Inflation Rate Meantime, headline inflation is expected to pick up from August and fluctuate around 3% until the end of the year The annual inflation rate in 2023 is expected to be consistent with earlier estimates of 3.5% The board added it will keep a restrictive policy stance for a considerable time, emphasizing price stability while making a judgment Document continues below Discover more from: trị khách Quản sạn quốc tế IHME62 Đại học Kinh tế… 12 documents Go to course List out tasks in the 11 management… Quản trị khách sạn… 100% (1) List of Question for Interviewing Mr.… Quản trị khách sạn… None Group-A -InterviewGM-Report Quản trị khách sạn… None APA Format Citation Guide Quản trị khách sạn… None regarding the need to raise rates further Group Assignment APA Format Citatio… Quản trị khách sạn… None High inflation and interest rates are significant factors affecting tourism demand and SOME Suggestions FOR THE Group… the MICE sector The inflationary consequences of tourism can arise in several different ways It can put MICE organizers into a struggling situation due to increased operational cost and chance of supply chain disruptions Quản trị khách sạn… None 2.3 Disposable income In 2021, South Korea's per capita disposable income amounted to around 21.77 million South Korean won, up from about 21.19 million South Korean won in the previous year Per capita net disposable income in South Korea has risen steadily in recent years 2.4 Employment rate & Wages Total employment in Korea has been on an upward path since the beginning of 2021, and surpassed its pre-crisis high in February 2020 The employment rate (aged 15-64) was 68.6% in July 2022, up percentage points from July 2020 and percentage points from July 2021, indicating a rapid recovery Yet, since May 2022, employment growth has been flat The unemployment rate only rose modestly during the crisis to 5.2% in January 2021, and it has since fallen below its pre-crisis level to 2.9% in July 2022 Unemployment rate in Korea Although the overall recovery in the Korean labor market has been rapid, there are differences by sector Employment growth in some service sectors (e.g sales, accommodation, food) and for daily workers is lagging behind In addition, there is increasing uncertainty about the sustainability of the labor market recovery because of greater inflationary pressures and external instability The gross salary range for people working in South Korea in Tourism, Gastronomy, Hotel Business is typically from 2,030,064 KRW (minimum salary) to 5,013,155 KRW (highest average, actual maximum salary is higher) This is the total monthly salary including bonuses Salaries can vary dramatically among different job positions Social factor 3.1 Population growth rate From 1960 to 2022 the population of South Korea increased from 25.01 million to 51.63 million people This is a growth of 106.4 percent in 62 years The highest increase in South Korea was recorded in 1961 with 3.01 percent The biggest decrease in 2022 with -0.23 percent In the same period, the total population of all countries worldwide increased by 162.2 percent The average age in South Korea rose by 4.35 years from 2012 to 2021 from 38.85 to 43.20 years (median value) Around 81 percent of the inhabitants live in the country's larger cities This trend of urbanization is declining, decreasing by -0.2 percent per year 3.2 Age distribution The median age in South Korea is 44.5 years (2023) 3.3 Career attitude The country has a reputation for working long hours and work-from-home arrangements are not commonplace Social hierarchy is also embedded within social and work life, which can make it difficult to express disagreement ● The amended Water Environment Conservation Act has expanded the scope of discharge facilities subject to the application of an eco-toxin management system to include all industries ● The amended Environmental Technology and Industry Support Act now requires listed companies with total assets worth KRW trillion or more to publicly disclose information on their environmental impact ● The amended Act on Registration and Evaluation of Chemicals requires registration for the use of one ton or more per year of existing chemicals, and the use of 0.1 ton or more per year of new chemicals Legal factor 6.1 Industry regulation South Korea has a civil law system, which has been historically influenced by Japanese and European laws and common law principles More recently, US law has become influential in South Korean commercial law South Korea is governed in large part by federal laws However, local governments also have certain degrees of autonomy and can enact self-governing ordinances with binding power 6.2 Consumer protection laws Businesses must comply with consumer protection laws A business means “those who manufacture (including processing or packing), import or sell goods, or furnish services” (Article 2(2), FAOC) Additionally, the “state and local governments” must comply with consumer protection laws, including the obligation to enact, amend, and abolish related laws and ordinances in order to realize the basic rights of consumers (Article 6) Article 10 of the FAOC stipulates that the nation must set labeling standards for product names, specifications, quality assurance periods, etc to ensure that consumers not select or use products incorrectly due to the labeling or packaging Moreover, 13 Articles 48 to 50 of the FAOC stipulate recommendations and orders for the removal and destruction of goods Additionally, according to Articles to of the TCA, provisions that are unreasonably disadvantageous to consumers and provisions that exclude or limit liability for quality assurances without significant reasons are invalid II 5-FORCES FRAMEWORK Threat of new entrants to the industry In general, the threat of new entrants to the MICE market is relatively low due to the fact that the MICE industry requires a significant amount of capital and resources to enter, such as investments in marketing, infrastructure, and technology Additionally, established firms have contacts with suppliers, vendors, and clients, making it difficult for newcomers to capture market share However, cutting-edge technology and novel business models can upend the sector and open doors for fresh competitors Threat of substitute products The threat of substitutes is relatively low, as the MICE market provides a unique experience that is difficult to replicate However, there are alternatives to in-person MICE events, such as virtual meetings and conferences, which can be a substitute for - 14 in-person events The competition from substitutes is affected by the ease of with which buyers can change over a substitute consisting of these factors: - Availability and Price attractiveness of substitutes: Typically, attending meetings and activities in person can be costly, especially if they are held somewhere else Virtual meetings, on the other hand, are far more affordable because attendees may convene from the convenience of their homes, saving businesses money on secondary venues, employees money on travel expenses, and employees money on refreshments - Compatibility of Substitutes (quality, performance, and other relevant attributes): It can be clearly seen that South Korea strives to maintain a delicate balance between preserving history and tradition while embracing the conveniences of the modern world a trait that makes this destination even more appealing to the MICE industry in general and in-person MICE in particular with easy navigation, impressive MICE infrastructure and high-speed IT infrastructure nationwide Overall, the level of threat from substitutes is very likely to depend on the effectiveness and acceptance of virtual events and the cost-benefit analysis of in-person versus virtual events Regarding the South Korean MICE industry, this nation acted just like it used to do; quick and trendy Instead of inviting foreign tourists, the South Korean government and local governments focused on digital marketing and producing content Several cities investing to become the South Korea’s best MICE city title are: ‘Virtual Seoul’ in Seoul is the metaverse convention platform where customers can open any kind of event for free It has virtual event venues that reflect Seoul’s most popular MICE spots such as COEX, City They are not only rendered to 3D graphics, but 15 Hall, and DDP (Dongdaemun also showing day-and-night time effects as the Digital Plaza) meetings proceed Incheon : SMART MICE The city was selected as the first ‘Smart Tourism City’ of South Korea, which builds smart infrastructure through the city for tourists and develops futuristic experiences based on smartphones such as AI tour guide or AR exhibition MICE in Incheon is also following the smart tourism development called ‘Smart MICE’ They provide data and analysis on the flow of tourists throughout Incheon for MICE events via more than 200 high-tech IOT (Internet of Things) collection sensors ‘One Stop Support’ in BUSAN , in short, every MICE event is taking place in Busan Convention Bureau in Busan Tourism Organization (BTO) cares for each step of the event as the holder is customized in; organizing, promotion, and hosting portation, accommodations, tours The One Stop Support can be actual help not only for those who are seeking an event venue, but also for those who are planning what to BTO Convention Bureau supports from hosting an event to transportations Power of buyers or customers The extent to which the buyers (customers) of a product exert power over a supplying organization depends upon a number of factors Broadly speaking, the more power 16 that buyers exert, the lower will be the transaction price This has obvious implications for the profitability of the supplier The factors that affect the relative power of buyers include: - The number of customers and the volume of their purchases: The buyers in the MICE market are generally large corporations, event planners, and travel agencies, which gives them significant bargaining power to negotiate prices and services The expenditure of MICE travelers is much higher than leisure travelers, with profitable customers coming from the world of IT, banking, pharmaceuticals, retail and hospitality Before Covid-19, the number of people visiting Korea for MICE events saw an increase In 2019 South Korea reached 399,000 visitors which was a 30% increase from the 2017 rate, about 187,000 visitors - The number of businesses supplying the product and their size: The global MICE market was valued at USD 876.42 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 7.5% from 2023 to 2030 The range of MICE events planned in South Korea in 2022 is as diverse as their organizing companies with approximately 30 – 32% of held events are considered ‘small’ events, about 28% are called ‘medium’ and 40% are ‘large’ events Market value of the meetings industry worldwide in 2019, with forecasts until 2030 (in billion U.S dollars) 17 In conclusion, It can be seen that the bargaining power of buyers in the MICE industry is relatively high as they are the ones who pay for the services and may discuss terms and conditions with the providers However, the degree of industry rivalry, the caliber of services, and the accessibility of substitute suppliers might affect the buyers' negotiating power Power of suppliers (to businesses in the industry) Due to the industry's need for a wide range of services, including lodging, transportation, food and drink, technology, and entertainment, providers have a limited amount of negotiating leverage The suppliers in the MICE Market are often big, established businesses with a lot of negotiating power, especially for specialized or in-demand services However, the customers' freedom to move to different suppliers might reduce the providers' leverage in negotiations In order to analyze the bargaining power of suppliers in South Korea, the major factors determining the strength of its suppliers including: - The uniqueness and scarcity of the resources that suppliers provide: Korea is indeed a land of opportunities for incentives It proposed a very strong MICE element, which would fulfill the nation's aspirations as a MICE destination The fusion of nature, adventure and tradition, from temples and palaces to massive ultra modern technological super-buildings, skyscrapers and shopping districts make endless options Cities like Seoul, Busan, Daegu and Goyang are a great fit for MICE, boasting large capacity and clean, refined facilities Regional attractions add to the colorful spectrum of Korea’s MICE Destinations with their unique charm Each locale has a specialized industry, making it even more appealing together with its beautiful convention centers equipped with modern facilities Organizers can choose the destination that best suits their needs and preferences 18 - The number and size of the resource suppliers: The Korea Tourism Organization has selected 52 Unique Venues with unique charm and regional characteristics The 52 Unique Venues selected through close review of attractive unique venues across the country, with honest recommendations from MICE-industry professionals and meticulous site inspections including virtual event venues in Seoul as well - How many other industries have a requirement for the resource: Today South Korea is very easily manageable from 186 locations worldwide The country is within a 3-hour flight radius from every Asian country and is very well connected to all the main European and American airports Rivalry among businesses in the industry There are several big and small firms fighting for market share in the fiercely competitive MICE sector Due to the industry's extreme fragmentation and the 19 abundance of businesses providing comparable services, there is fierce pricing rivalry To acquire a competitive advantage in the market, differentiation and innovation are essential The rate of industry expansion, the number of participants, the degree of differentiation, and the amount of price competitiveness all affect the level of competition It is not uncommon to see several significant competitors of South Korea related to MICE destinations mostly come from Asia: - Singapore: Singapore is a top level economic and technological center Its world class infrastructure, hotels and luxury convention centers, along with a safe and cosmopolitan environment make Singapore an ideal place for business meetings - Tokyo, Japan: The capital of Japan offers the perfect combination of tradition and modernity With a wide range of facilities for meetings and an efficient transport network, Tokyo is a popular choice for MICE events In addition, its luxury hotels, renowned restaurants and Japanese hospitality make this city an unbeatable option - Bangkok, Thailand: provides a fascinating mixture of tradition and modernity The city has a large number of hotels and quality convention centers, together with a vibrant restaurant scene and entertainment options - Shanghai, China: Being the most important financial and commercial center in China, Shanghai is a top level MICE destination The city offers modern facilities for meetings and conventions as well as a wide range of accommodation options and an exciting cultural scene III MICE INDICATOR Number of meetings, events, conventions According to ICCA (2016), Korea climbed 2nd place worldwide for the 891 global congress held in 2015 In 2017, Korea counted for 12.6% of the 10,786 total international meetings announced by UIA reflecting a 3.1% growth in the global market share from 2016 Moreover, the capital city Seoul ranked 3rd with 688 meetings, following Singapore (887 meetings) and Brussels (763 meetings) In 20 addition, Korea ranked 13th place on the latest International Congress and Convention Association (ICCA) world rankings with 279 meetings hosted in 2017 KINTEX is the biggest convention center, Gyeongggi prefecture in Korea and was opened in spring of 2003 KINTEX had 857 domestic and international events with 648 meetings, 97 exhibitions, 112 cultural functions in 2012 UIA International Meeting Associations reports Korea’s meeting count has grown from 891 in 2015 to 997 in 2016, reflecting an 11.89% increase On the other hand, Korea has maintained its rank in the 13th place on the latest ICCA country rankings, with 279 meetings hosted in 2017 surpassing other advanced countries such as Switzerland and Norway (Kongres,2018) Figure International Congress And Convention Association 2017 Source: The Association Magazine Number of attendees In 2016, 25,000 international visitors participated in the Rotary International Convention Korea recently announced several major global congresses between 2020 and 2024 The 28th International congress of translation society at Seoul COEX convention center in 2020 There were 5,000 participants and 4,500 oversea 21 participants And, 37th International Geological Congress at BEXCO Busan was held with 6,000 participants and 5,000 oversea participants In EXCO Daegu city, World Biomaterials Congress is planned with 3,500 participants and 3,000 oversea participants (ICCA, 2016) Revenue In 1995, tourism revenues amounted to 6.67 billion USD, or about 1.2 percent of the gross national product Within 26 years, the country’s dependence on tourism has increased noticeably Before the outbreak of the COVID-19 pandemic, sales were $25.46 billion, 1.5 percent of gross national product In 2020, tourist receipts plummeted due to COVID-19 pandemic Off the $25.46 billion (2019), only $11.78 billion remained This is a 54 percent decrease in South Korea Figure 2: Tourism revenue from 1995 to 2021 Number of MICE infrastructures With 14 world-class convention centers and 17 regional convention bureaus, South Korea is ready to welcome groups of all sizes Located in cities closely connected to eight international airports, each region’s meeting facilities provide cutting-edge technology and other amenities C REFERENCES Tourism in South Korea https://www.worlddata.info/asia/south-korea/tourism.php 22 10 reasons to choose Korea https://koreaconvention.org:8090/eng/info/reason.kc#p1 Dayton, L (2020) How South Korea made itself a global innovation leader https://www.nature.com/articles/d41586-020-01466-7 A global powerhouse in science and technology (2021) https://www.oecd.org/country/korea/thematic-focus/a-global-powerhouse-in-science-a nd-technology-61cbd1ad/ All You Need to Know about Staying Safe in Seoul https://english.visitseoul.net/safety Population growth in South Korea https://www.worlddata.info/asia/south-korea/populationgrowth.php South Korea Demographics https://www.worldometers.info/demographics/south-korea-demographics/ What it’s like to live and work in Seoul https://www.raconteur.net/global-business/what-its-like-to-live-and-work-in-seoul Jo, G K & Park, K C & Kurt B G & Lee, D (2023) Doing Business in South Korea: Overview https://uk.practicallaw.thomsonreuters.com/5-501-0628?transitionType=Default&cont extData=(sc.Default)&firstPage=true 10 Poitevien, J (2022) 10 Reasons to Meet in South Korea https://www.pcma.org/10-reasons-meet-south-korea/ 11 Allied Analytics LLP (2023) Outbound MICE Market (Porter's Five Forces Analysis) Size Exceed Out $1272.2 Billion by 2031 https://www.einnews.com/pr_news/625035903/out-bound-mice-market-porter-s-five-f orces-analysis-size-exceed-out-1272-2-billion-by-2031 12 MICE industry in South Korea – Best cities for your next event (2022) https://interestingkorea.com/mice-industry-in-south-korea-best-cities-for-your-next-ev ent/ 13 MICE Market Size, Share & Trends Analysis Report By Event Type (Meetings, Incentives, Conferences, Events), By Region (Asia Pacific, North America, Central & South America, Europe), And Segment Forecasts, 2023 - 2030 23 https://www.grandviewresearch.com/industry-analysis/mice-market-report 14 Market value of the meetings industry worldwide in 2019, with forecasts until 2030 https://www.statista.com/statistics/1261183/market-size-meetings-industry-worldwide / 15 Borak, A (2018) South Korea – The land of incentive opportunities https://kongres-magazine.eu/2018/10/south-korea-the-land-of-incentive-opportunities/ 16 Korean Convention https://koreaconvention.org:8090/eng/engmain.kc 17 The best MICE destinations in Asia (2023) https://grandluxormice.com/the-best-mice-destinations-in-asia/ 24 More from: Quản trị khách sạn quốc tế IHME62 Đại học Kinh tế… 12 documents Go to course 11 List out tasks in 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