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Indeed, apart from the Communist Party conferences and other social events that were held in the so-called ‘culture palaces,’ typical business events, such as corporate meetings, incentives, conferences and exhibitions, more commonly known as ‘MICE’ events, as used in the western business lexicon, were far and in between in the former Soviet Union, and this helps explain the virtual non-existence and/or the rather poor state of the MICE and related services market at the collapse of the Soviet empire in the early 1990s. 

Ironically, this collapse that brought down the Iron Curtains, and thus opened the post-communist Russia to the outside world, and particularly the global investment community, finally catalyzed the rapid development of modern business infrastructures, including top-quality facilities for conducting MICE events and catering for local and foreign businesspeople’s needs in the country. Usually, the MICE facilities are non-residential real-estate objects that are specifically designated for holding public events such as meetings, presentations of goods and services, and are usually leased to event organizers with the equipment and other gadgets needed for the smooth running of such events. It, therefore, goes without saying that most of the nation’s contemporary facilities for conducting out-office business related activities — local and international economic conferences, including teleconferences with company’s foreign headquarters or subsidiaries, seminars/trainings, press conferences, etc., were either recently built from scratch or are the ‘end products’ of radical refurbishment and upgrading of the Soviet-era facilities to global standard quality levels. 

The market today 

Kim Waddoup, CEO, Moscow International MICE Forum: "The Russia MICE industry has become an important area for international suppliers with large groups travelling to exotic destinations."

Indeed, the 1990s are largely viewed as the ‘birth period’ of the contemporary MICE services market in Russia as we know it today. Even now, at the height of the current global crisis, the market for MICE and obligatory complementary services, such as translations services, catering, transportation, security and others — as shown by the strong attendance of local and foreign CEOs and heads of states/governments at the St. Petersburg Economic Forum that ran from June 4-6 at the LenExpo Center, a major MICE facility — is one of the fastest growing industrial sectors both domestically and globally, and also one of the most frequent reasons for going on business trips and corporate-events-related travelling, both within and outside Russia. Therefore, the successful organization and outcomes of such business trips naturally require the services of different professionals from across almost all economic sectors, from hospitality, transportation, visa, real-estate to security and entertainment services providers, etc. 

The importance of catering for this class of travelers is highlighted by the fact that business travelers spend between three and 10 times higher than ordinary tourists and, as noted by the Association of Russian Hotels, account for up to 50% of most hotels’ annual revenues (see The annual budgets for MICE events). Understandably, most MICE services providers — hotels, translators, caterers, conference premises owners, event managers, etc — are factoring these trends into their standard service package offers to potential clients as they try to maximize the profit opportunities that come from the rising demand for MICE facilities and complementary services. 

The Russian MICE services industry via experts’ eyes

Explaining the growing demand for MICE services in Russia, Kim Waddoup, CEO of aiGroup that specializes in organizing highly targeted events, and also CEO of the Moscow International MICE Forum — an annual platform for international MICE suppliers to meet with all the leading players in the Russian MICE services industry — noted that the current market trends have indicated that the industry has a bright future, despite the current crisis. “Our March MICE Forum was the busiest yet, thus further proving that the Russian MICE industry has substantial potential, despite the economic crisis,” he said. “Naturally, reductions will occur, but the importance of incentives for staff and attending conferences is well understood in Russia.” Expanding this view further, Anastasia Makarova, the banquette services sales manager at Korston Hotel Moscow, noted the positive dynamism of the Russian MICE service market, which is further underscored by upbeat forecasts on its future. “This is because different business events are not only being used today as incentive programs for the employees, but also as ways of demonstrating company’s status to its business partners.”

Olga Rafikova, director of marketing, Turris Hotel Management Group: "Hotels are ideal venues for organizing and conducting business events as they can offer a full spectrum of required services that include not only accommodations, but also catering services, transfers and lease of special equipment to organizers of business events."

Other MICE experts also shared similar views. Olga Rafikova, head of marketing at the Turris Hotels Management Company, noted the rapid development of the MICE market in Russia in general, and particularly in Moscow and St. Petersburg. “In crisis conditions, the industry is displaying a slower growth rate, but it is still seen by experts as an ‘attractive’ market.” Also echoing similar view, Olga Shults, an assistant director of catering and conference services at Ritz-Carlton Moscow, who has experiences working on the U.S.- and United Arab Emirates MICE markets, said the Russian MICE industry is growing at ‘leaps and bounds’ in the right direction, with new MICE facilities opening in Moscow and other parts of the country. “The Russian market has already made itself well-known on the global MICE market, evident in the presence of the highest-quality-level hotels and other facilities that can serve as venues for high-profile local and international business conferences in Moscow and other parts of the country.” 

Similarly, Rushana Akhmodeeva, the banquette and conference hall services manager at Hilton Moscow Leningradskaya, also harbors the same view, noting that the huge and yet-to-be fully tapped potential of the Russian MICE services industry is further underscored by the active development of new business centers and conference halls over the country that have modern MICE facilities inbuilt as integral parts at their designing stages. “Besides, all new hotels being opened in Moscow and other parts of Russia now include MICE services in their marketing offers.”

Anastasia Makarova, banquette services sales manager, Korston Hotel Moscow: "Besides, as expenses on business events are high today, several organizers are now more conscious over the scale and number of invited guests, with some reducing these parameters two or even three times."

One of the characteristic features of the Russian MICE market, according to industry experts, is that it sits across economic sectors, such as the hotel and real-estate property lease industries, markets for visa support, safety, entertainments and translation services. Indeed, translation becomes mandatory in events involving foreigners. “The consumers, who really understand the importance of professional translations/interpretations, and how the quality of these services determine the outcomes of negotiations, etc, as a rule, know the real value of translator/interpreter’s jobs,” Mikhail Bulygin, CEO, Alpha & Omega translation bureau, said.

A similar view is also shared by Timur Kyazimov, the sales director at Martin translation services, one of the key players on the Russian professional translation services market. “We undertake translations practically from and to all the world’s major languages used in international business communications and also do all other things that necessary for client to always come back and work with us.” 

Another unique feature of this market, according to industry experts, is the stark absence of marked seasonal fluctuations. Indeed, it is almost an-all-year-round functioning industry, with a barely noticeable drop in the level of activities in December and January — for Christmas and New Year festivities — and also in summer, often seen as a relatively ‘inactive’ period in Russia’s corporate life as a result of the traditional massive exodus of top companies executives for vacations during this period. However, even in this relatively ‘dead’ period, the overall level of the MICE market activity is far higher than in other industrial segments and the whole economy in general, because some CEOs, knowing this ‘relative slack’ in demand for MICE services, usually hold their corporate and social events in these periods.  

Market size defies accurate compilation 

Elena Krivonosova, head of sales department, Turris Hotel Management Group: "In a word, all clients that order services in Turris Hotels can be sure of their quality, varieties, optimal prices and the employees’ professionalism."

There are no definite figures on the real size of this market, as it overlaps across several industries, a fact that makes accurate calculations almost impossible. However, it is possible to glean estimate figures by reviewing the data from these interrelated sectors. Thus, according to official and industry experts’ data, there are currently between 800-1,000 conferences meeting global quality standards in the country, which generate $600mln-$750mln per year. According to the MICE Forum and other experts’ data, the size of Russian MICE services market in 2008 ranged from $500mln to $800mln, and grew, prior to the crisis, at annual average rate of 20-25%. 

Also, the MICE industry can be calculated as a part of the hospitality services market, whose annual precrisis turnover averaged  $2bln-$3bln, with revenues from MICE and related services accounting for 10-30% of this sum. Similarly, the size of this industry can be gauged from the size of the catering services market, which is valued at $400mln-$500mln. This is an important indicator as MICE events held in non-hotel facilities are usually served by professional caterers. Similarly, MICE events also fall under business tourism, and therefore the overall tourism revenues can help estimate the size of the MICE industry. Thus, going by 2008 figures, the local tourism services market’s gross revenue stood at almost $2bln, with business tourism accounting for over 40%. 

Regionally, Moscow and St. Petersburg continue to control the lion’s share of the national market turnover. Thus, according to the Russian Union of Expo and Trade Fairs Organizers and other experts’ analytic data, about 40% of all high-profile exhibition and over 60% business conferences are held in Moscow, and the rest held in other regional cities, with St. Petersburg at the top. Using the above figures, the Moscow market segment can be estimated at $200mln-$250mln. And, according to the Moscow government’s General Development Plan, the number of hotels and other MICE facilities in the city will be doubled by 2010-12, a measure that will also boost the size of the market. St. Petersburg is the second largest MICE services provider in the country. Nationwide, the total area of exhibition centers, according to experts, is expected to increase from 500,000sqm in 2006 to 750,000sqm by end of 2009 and then double by 2012. 

Though these indices do indicate a bright future and buoyant market dynamics, they, however, pale conspicuously, compared to the more developed foreign MICE markets or regions. Thus, the annual size of UK’s MICE industry, the largest in Europe, thanks in part to London’s global financial center status, is estimated at about $10bln, while the whole continental market is estimated at $25bln per year. Asked to compare the Russian MICE services industry with foreign MICE markets, Akhmodeeva, noted that the results of such comparison are definitely not in favor of the former. “First and foremost, there is a stark deficit of top-quality MICE facilities and professional personnel to man the Russian industry.” 

Market segmentation 

Timur Kyazimov, sales director at Martin Translation Services: "Clients primarily consider the image and experience of the company, which provides interpreters as well as the warranty the company can give on the quality of its services. The price is also an important factor." 

All market players offering MICE services in Russia can be roughly sub-grouped into three key categories. The exact class category of premises is determined by its location, cost and quality of its services, level of equipment, spaciousness and other factors such as the interior decor or other non-standard features. The first, labeled, ‘business-oriented’ category, includes companies and hotels with several modern, top-quality-level conference halls and other facilities, where MICE and related services account for the lion’s share of gross annual revenues. These facilities are mainly used by rich local and international corporations and government agencies that require large halls and high quality level of services, and of course, other entities that can bankroll the relative high costs of these services. 

In the second category, labeled, ‘boutique facilities,’ the number of facilities is seriously limited, as are also their overall contributions to such companies’ annual gross revenues. These facilities are mainly used by well-to-do individuals, SME companies and larger corporations, which are very mindful of their expenditures, including those budgeted for MICE and other related corporate events. The third category, labeled ‘low-quality facilities,’ mainly represented by Soviet-era and low-star-category hotels, usually offers the most minimal set of services and are primarily used by companies, which for obvious reasons, first and foremost, financial constraints, cannot afford the first two categories.

According to the results of survey of MICE events organizers, the choice of premises is determined by such different factors as location, service’s price-quality ratio, etc. “One of clients’ most important requirements,” according to Hilton Moscow Leningradskaya’s Akhmodeeva, “is the quality level of services, availability of in-house banquette services, location, different types of MICE and related services from a single provider, and of course, the reputation of the company offering these services.”   

The key advantage of hotels and suburban recreational facilities over other premises is the possibility of accommodating MICE participants ‘in-situ’ during the events, thus saving the organizers and participants the expenses they would have incurred from going to and returning from venues located outside the hotel facilities. Also, it is easier to organize extra-curricular cultural events/programs for the event organizers and participants in the evening hours. Indeed, according to industry figures, over 80% of all corporate events now include recreational and cultural events to enable participants relax in non-business hours between the rigorous conference sessions. 

Another key player on this market is news agencies such as Interfax, Itar-Tass, RIA Novosti etc, which have well-equipped premises for conducting business conferences and other related corporate events. Their main advantage is that all the necessary services — media invitation, preparation of press releases, translations, etc. are offered ‘in-situ.’ Besides, press coverage of MICE events is very crucial, and therefore, some companies also employ the services of PR companies to help provide the level of professional press coverage. Another key player on the market is  business centers, which, apart from having top-quality in-situ catering services, also have all the necessary facilities — premises, equipment, parking slots, etc. — for conducting MICE events.   

Mikhail Bulygin, CEO, Alpha & Omega translation bureau: "To a certain degree, the level of activities on the translation services market is a barometer that indicates that things are changing for the better."

Types of services

Different MICE services providers use different approaches in their marketing strategies, but the overall underlying principles are basically the same, and that is making all the necessary services, technical gadgets, specially trained personnel, etc. available at competitive rates to clients. This is very important, because inattention to details or other deficiencies in planning could undermine the success of MICE, and as these are most often PR- and business promotion events for the organizers, such ‘flaws’ could make indelible dent on companies’ corporate reputations/images. Also, equally important is the choice of premises, including the use of ‘non-standard places’ as venues, because the outcome of the whole events depends on picking the right premises. Thus, according to industry experts, the premises chosen for such event — buildings and their closest surroundings — should appropriately match the ‘status and thematic’ of the MICE events, be spacious enough not only to accommodate all the invited guests, but also to allow for the provision of snack space during coffee breaks between event sessions.

Besides, the standard service packages could be modified, depending on clients’ specific requirements and budgets, for instance, a three-course meal could be added, or some of the multimedia gadgets or other items deemed not absolutely necessary, could be omitted. Other additional optional services include the provisions of computers and laptops, internet access, WiFi, couriers, florists and even car-parking services. The latter is of particular importance when hosting conferences or other related corporate events in premises located in city centers, where due to acute shortages of parking spaces, conference participants, delegates, guests and event visitors would find it extremely difficult to park their vehicles in proximity to the event venues. Some business centers also offer professional secretarial services, in addition to translators and office business equipment, to ensure the smooth running of MICE events on their premises. 

Key players on the local MICE market are companies that are capable of organizing business events for clients at the required level. Specifically, most hotels offer standard services packages, which apart from the provision of multi-use and ‘transformable’ venues for conferences, usually include a collection of complementary services such as flipcharts, tripod screens, multimedia presentation devices such as projectors, video/audio systems, microphones, the services of bi-/multilingual interpreters, electronic automatic translation devices, notepads and pencils/pens for taking notes, and eateries such as mineral water, snacks, tea and coffee, etc. 

Experts say hospitality facilities such as hotels, suburban recreational camps, etc., which, by definition, and in accordance with their core business profile, are the most active actors in this industry, are more capable of providing a broader spectrum of quality services. “This is why when choosing venues for MICE events, the most and obvious ideal choice should be hotels as they do not only provide facilities for the events, but also other services such as accommodation, feeding, excursions, etc.,” Elena Krivonosova, head of sales department, Turris Hotels Group Management Company, said. “In this case, event organizers work with only one company, which does not only simplify the task, but also guarantee high level of professionalism.” 

Stepan Grabovsky, CEO, Fonetix Translation: "Poor translation may give rise to awkward situations at business events that could irreparably damage a company's reputation."

Airing a similar view, Korston Hotel Moscow’s Makarova attributed the rising role of hotels on the MICE services market to the recent changes related to globalization of companies’ operations, increasing international trade and business ties, etc. “Previously, hotels were seen exclusively as places for accommodation only, but today’s business travelers no longer want to spend time meeting partners in offices, but right in hotel premises where they are lodging,” she added. This trend is being fueled by availability of top quality conference halls, business centers, catering services, in short, all the facilities that are found in modern hotels.” Similarly, Vladimir Ivanov, director of F&B services at Holiday Inn Sokolniki Moscow, noted the significant roles of hotels that are affiliated with local and international brands in the provision of top-quality, comprehensive MICE services packages to large corporate clients, who usually trust the brand names that they are used to. “However, a major problem in this industry is the need to order these well in advance due to the acute shortage of quality MICE facilities in the country, which makes these services very expensive and rather difficult to obtain.” 

However, according to key market and industry operators, incomes from organization of conferences and other business-related events account for 30%-70% for MICE facilities’ revenues. However, the larger part of these revenues is not generated through leasing premises, but via provision of complementary services — catering, equipment, translations, professional entertainers and others, such as the accommodation of MICE delegates/guests, if such facilities are hotels — which are necessary to make the events successful and leave remarkable memory for their participants and guests. 

At times, the execution of such tasks require the services of professional event managers, and this is why some large/rich companies usually outsource these tasks to outside firms on agent commission basis, chargeable at 5-15% of the event’s aggregated budget, deepening on the company and its financial status. Thus, outsourcing serves two purposes — it frees companies the need to commit its in-house staff to the organization of such events, thus making them available for their routine office work, and secondly, event management companies are more professional in these jobs, and this usually leads to a reduction in the event’s overall cost, while ensuring it meets the required quality level that is commensurate with the event’s status and organizers’ expectations.

Regional MICE services market

Olga Shults, asst. Director, catering and conference services, The Ritz-Carlton, Moscow: "In my view, the most acute problem is the absence of reliable partners, instability and unpredictability among some suppliers of MICE services, which some clients, wishing to organize business events, usually encounter in the industry." 

The term ‘regional MICE markets,’ as used in this report, refers to the MICE markets located outside Moscow and St. Petersburg, where MICE services are offered either by regional MICE-firms or by Moscow- and St.-Petersburg-based companies either via their regional subsidiaries or by outsourcing all or parts of the event organization procedures to local companies in cities, where the MICE events will be held.

According to industry experts, such cities as Kazan, Sochi, Rostov-on-Don, Krasnodar, Krasnoyarsk, Chelyabinsk, Nizhny Novgorod, Yekaterinburg, Khabarovsk, Novosibirsk, Khanty-Mansyisk, Samara, Vladivostok, etc. have long become major MICE centers in Russia. For instance, the last EU-Russia Summit was held in Khabarovsk in May 2009, the BRIC Summit, attended by Brazilian, Russian, Indian and Chinese political leaders, was held in Yekaterinburg in June 2009, while the ASEAN Summit is slated for Vladivostok in 2012. These high-profile, major international conferences, along with other less important local and foreign MICE events, which are increasingly held outside Moscow and St. Petersburg in other major Russian cities, are unmistakable indications of the rising importance of key Russian regional cities, especially those that serve as seats for regional administrations, on the Russian MICE and related services market. 

Commenting on Russia’s regional MICE markets future, Ritz-Carlton Moscow’s Shults noted the positive developments in the regions that underscore the encouraging perspectives of the regional markets. “Talking about the MICE markets outside Moscow and St. Petersburg, I would like to note the serious attention being paid to the development of MICE facilities in Russian regions, which has started to yield positive results,” she added. “Of course, some regions still have poor MICE infrastructures and related facilities and services, but the overall picture of the Russian regional MICE services market is very positive and promising.”

In general, most experts believe that the future of the entire Russian MICE market is bright. Conceding that the current global financial crisis and its associated negative impacts on both the national and global economies have sort of reduced the ‘steam’ in the previously robust demand for MICE services in the precrisis period, these experts, however, strongly believe that the market will regain its once vigorous growth that will gain more acceleration as the national and global economies return to normalcy, and thus opening more business opportunities for all in the industry.