13 March 2013

Subvention - the hot topic at Meetings Africa 2013

South Africa’s business events industry held a frank discussion about subvention and what it means for South Africa’s business events industry, at Meetings Africa 2013.

Subvention panel at Meetings Africa 2013 Discussing subvention - from left: Amanda Kotze-Nhlapo, Dirk Elzinga, Nonnie Kubeka, Bruce Redor, Julie-May Ellingson, and Linda Pereira

Subvention in South Africa needs to be guided by strict criteria and principles to ensure a fair playing field and that the objectives of the broader South African community are met – namely, economic development and job creation. - Amanda Kotze-Nhlapo, SANCB executive manager

Many do not like it. Others see it as a form of legal bribery. Nonetheless the use of subvention in the global business events industry is here to stay and is growing. This was the message delegates who attended a panel discussion on subvention at Meetings Africa 2013 took away with them.

The business events sector is well recognised for bringing the higher spending business event participant to a country. This not only benefits the country’s economy but can also bring non-financial benefits, such as knowledge transfer.

Today many destinations across the globe have dedicated bid support funds to enable aggressive bidding for business events. These funds are aimed at ensuring the destination attracts business events in a very competitive environment.

While subvention is not yet the norm in South Africa, business events stakeholders in the country are going to have to decide how to respond to this global phenomenon. Some countries and city destinations have subvention funds in the tens of millions of dollars, making competition fierce. For destinations like South Africa, which don’t have that level of financial resources at their disposal, creative ways need to be found of competing effectively. 

Among the questions raised at Meetings Africa 2013 was the extent to which countries should bow to the demands of association meeting planners for subvention or incentive money.

With the South African National Convention Bureau (SANCB) currently exploring the creation of its own subvention fund, such questions become vital to ensure that a fair set of rules and criteria is set down to govern how subvention money is spent in South Africa. 

Amanda Kotze-Nhlapo, executive manager of the SANCB, sees this subvention fund being used to provide assistance – financial or otherwise - to local associations that are bidding for or hosting events, rather than to entice international associations to hold their conventions and congresses in South Africa. 

‘Subvention in South Africa needs to be guided by strict criteria and principles to ensure a fair playing field and that the objectives of the broader South African community are met – namely, economic development and job creation,’ she commented. 

At this stage, it is also unclear how the subvention fund channeled through the SANCB will be regulated or governed within the context of an established regulatory framework for the use of public finances. 

Martin Sirk, CEO of the International Congress and Convention Association (ICCA), told delegates that some destinations were seriously trying to buy big conference business. ‘The smart ones, such as Singapore, are doing it because they want to attract the right sort business for their economic development. For example, when Singapore goes to pitch for a biotechnology conference, the guy that does the pitch has industry, government and money behind him. It is all to do with the strategic imperative of developing biotechnology in Singapore,’ he explained.

South Africa, commented Sirk, has the opportunity to take the same kind of strategic approach. ‘South Africa has an economic development strategy, key industries and areas where improvements are wanted that already have market strength. Those are the elements that need to be tapped to attract more of those types of conferences because they will bring in the venture capitalists and the thought leaders that will help knowledge transfer,’ he said. 

Portugal-based Linda Pereira, a founding partner and CEO of the L&I Communications Group, and executive director of CPL Events, led the panel discussion on subvention at Meetings Africa 2013. She said that research by her company had shown that subvention is not the deciding factor when it comes to associations choosing destinations to host their conventions. ‘It’s rather a business argument. Subvention only helps,’ she commented. 

Panelist Dirk Elzinga, managing director of Convention Industry Consultants, was not in favour of cash subventions: ‘Other sorts of subvention like support with a city reception or discounts in PCO fees are acceptable because that’s commercial practice. But cash for bidding for a conference is a dangerous game.’ He said he thought South Africa could find more creative ways to bring in business. 

Nonnie Kubeka, executive manager of the Gauteng Convention Bureau, pointed out that subvention takes different forms and is not just monetary. ‘Associations do not always recognise that, as they are keen to see hard cash. But bid support, convention planning, site inspections, event management, PCO recommendations, event promotion and online support are all forms of subvention provided by the authorities in a destination to assist an association in hosting a successful event ,’ she explained.  

Julie-May Ellingson, CEO of Durban International Convention Centre, warned that without clear criteria associations will be able to take advantage of the business events industry in South Africa. ‘As Africans and South Africans we must value the proposition we have. We are a fantastic destination, have amazing infrastructure and offer good service,’ she said. 

Ellingson feels that if South Africa is going to look at subvention funds, it is critical that those funds are linked to building the knowledge economy, giving young South African scientists and university students the opportunity to join associations. 

Bruce Redor, senior associate (Europe, Middle East & Africa) with GainingEdge - the consultancy that is working with the SANCB to put together a national business events strategy - pointed to Singapore as a good example of that.

‘It is a country that is investing in training some of its best and brightest scholars and professors so that they can rise through the ranks of associations to become board members. Once they get into those positions, they can help Singapore attract those association meetings,’ he explained. 

He added that it is important to make sure there is clarity on how the subvention fund is going to work in South Africa and how it is going to push the national objective.

‘South Africa’s business events industry needs to be very clear about what its priorities are, and what it wants to use the subvention fund to achieve. In countries GainingEdge works with, subvention funds are used almost exclusively for increasing the number of international events that come into those countries. The funds are generally used to promote an event to make sure it achieves maximum yield and attracts the maximum number of delegates possible,’ he said. 

Also important, said Redor, is to make sure there is a mutual understanding between the association and the destination on how the funds are going to be used and what the destination expects to get back from the association in terms of ROI.

‘Subvention funds should be used to promote events in sectors that are economic priorities for a country, and invested in bringing the kinds of events to a destination that are going to help the country achieve its economic development goals and macro-GDP development over the long term,’ he concluded.

Added Kubeka: ‘We need to make sure that the economic impact of a subvention fund is to the benefit South Africa and Africa as a whole.’