Subvention – business enabler, or bribery?

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Subvention – business enabler, or bribery?

What are governments around the world doing to harness the economic power of the MICE industry – and is it all legal? Stuart Wood reports.

 

The meetings industry is an increasingly competitive market.

As the number of viable venues and destinations goes up, so too does the need to stand out from the crowd. Many governments around the world are beginning to recognise the power of MICE as an economic catalyst, bringing key industries and people together. But what are politicians and policy makers doing to help harness this power, and attract international meetings business?

In this article, CMW takes a look at two very different methods. Firstly, we break down the United Kingdom’s recently announced Tourism Sector Deal, which proposes to maintain the country’s position as a top business tourism destination through a widespread overhaul of venues and infrastructure.

Then, we examine the controversial practice of subvention – in which governments provide direct financial incentives to organisers to bring their events to a destination. Some call it bribery, while others say it is a legitimate sales tool that enables business. There is surely much in between.

 

Kind of a big deal

The UK’s Tourism Sector Deal was announced by former Prime Minister Theresa May in June, shortly before she resigned and was replaced by Boris Johnson.

The Deal outlines a long-term plan to make the UK more attractive to international business, with a three-pronged course of action. Firstly, it will add an additional 130,000 hotel rooms across the UK by 2025, in order to meet rising demands. Secondly, it will support the creation of 10,000 tourism and hospitality apprenticeships, in order to ensure these facilities can be staffed. And lastly, it outlines the creation of a new Tourism Data Hub, which will allow venues and businesses to pool their digital resources, in order to better target overseas visitors.

The UK Government also announced a competition for venues to apply for £250,000 of funding, in order to improve their broadband infrastructure. On top of this, VisitBritain’s Business Events Growth Programme received funding for another year. The Programme provides funding of up to £20,000 to organisers and venues in the UK, to help them support and bid for international business events.

The UK’s first ever Tourism Sector Deal, Mrs May said, was designed to ensure that the UK continues to innovate, boost connectivity and economic productivity, and expand career pathways.

“This deal recognises the important role tourism plays, and will continue to play, in showcasing what our great country has to offer,” the former PM noted.

 

Subvention – business enabler, or bribery?

The aim of the Tourism Sector Deal is to make conference facilities across the UK, and not just in London, more attractive to international organisers. It operates on a philosophy of ‘if you build it, they will come’ – which is very much the opposite of subvention.

Subvention is the practice of governments providing direct financial incentives to international event organisers, in order to attract them to a country. It can come in many forms, such as venue hire discounts, contributions toward event costs, or the provision of things such as dinners or receptions.

Some take issue and call subvention funding bribery, while others say it is just another tool to attract and develop business. Emma Nolan, an associate lecturer at the University of Chichester, is currently researching a PhD on the subject. She explains: “Subvention is widely used, but isn’t widely talked about.

“Subvention has a bit of a bad reputation. It has been compared to bribery by some industry professionals.”

“That’s partly because destinations don’t want to give away their sales strategy, but more than that, I think it has a bit of a bad reputation. It has been compared to bribery by some industry professionals, and there is a distaste for it in places.

“I don’t think that’s necessarily true – there’s a very good business case for using subvention. The amount that is usually offered is tiny when compared to the economic benefits of hosting an association conference.”

Nolan says that associations are usually the beneficiaries of subvention funding – organisations that are often not run for profit, and struggle to meet the large up-front costs of hosting an international event. Subvention, she says, can break down some of those initial barriers to entry, and allow all involved to reap the mutual economic benefits. It can also break down barriers to entry for those smaller or less established destinations, which need to provide a USP when bidding for an event.

Is subvention levelling the playing field in an increasingly crowded market, or is it normalising bribery inside a moral grey area?

We’d love to hear your thoughts on the topic – you can get in touch at swood@mashmedia.net

Stuart Wood is a news reporter across the Mash Media editorial portfolio. He writes for CMW alongside sister publications Conference News, Exhibition News, Access All Areas and Exhibition World.