Subvention is a very controversial topic in the event industry. Where one sees it as a poorly justified incentive, others see it as a necessity and a business enabler. Decades have passed since subventions were first introduced in the event industry and as our industry evolves, so do the practice and the attitudes around the subject. Besides that, it is not transparent nor clear who is offering what. Now with the digital revolution and new technologies permeating the event industry, it might be the time to change that.
Many associations are in need of financial aid and some take the lead in this by offering financial support in return for events. Conferli, a Dutch conference match-making platform, felt it was time to conduct a market study in order to reflect on the status of subvention. In this report, the situation with regard to subventions before the pandemic and the different types that are now offered are exposed in light of emerging trends in the MICE industry. Give the floor to Nienke van der Malen (pictured on the right), CEO and founder of Conferli:
1) As you wrote in your study's release note, subvention is a widely discussed topic in the events industry but with very little consensual acceptance among event destinations - it gives rise to various interpretations. In your opinion, how can destinations implement it to their advantage without giving up sales strategies?
As not a lot is written about this topic it seems to still be a taboo although the study shows that, pre-pandemic, 70% of the Convention Bureaus was offering subvention. I think we are missing a clear definition of the meaning of subvention, in our industry. When conducting the research we concluded that a lot of destinations link subvention to a direct cash payment, whereas others see all the support they offer as a type of subvention. A clear industry definition will be essential in order to all understand what is discussed. In my opinion we should define it as follows:
Subvention is the practice of governments providing direct financial incentives to event organisers, in order to attract them to a country/destination. In general two types of subventions can be identified:
1. Cash Subvention – a financial grant which is directly paid to event organisers;
2. In-kind Subvention – it can include various forms of indirect support such as discounts on venue or accommodation, sponsoring of civic receptions, contribution to marketing, city branding etc.
The study shows that in most cases (50%) a welcome reception is offered to an event organiser, which is of course also an investment. You already see that it is far more common to include this welcome reception in a sales pitch than to pitch a direct cash investment. In my opinion subvention is a “nice-to-have” but definitly not something that is always necessary, still the most important selection criteria for selecting a destination are the ease of access to a destination, the suitability of the venues, the value for money and the safety-health & hygiene measurements that are in place. If these selection criteria are not available in the destination, subvention will not help you to win the bid. On the other hand if the criteria are in place and you are competing against another destination it can be perceived as a advantage (and sometimes a must have) to offer subvention.
In general it is important to have a clear strategy for your destination. What is the focus, what is the scope of what you are willing to do to win the business, and whats is the long term vision. We see that in most destinations subvention is offered to organisers of events that fit the ecosystem of the destination, or that have a certain lenght of stay.
2) Upon examining the results of your survey, we noticed that funding aids for event allocation and organisational support widely vary in the pre- and post-pandemic periods. What are the reasons for this discrepancy and what are the post-pandemic trends this study reveals?
The two big differences that this study reveals are the shift from in-kind subvention to cash subvention, and the extension to also offer subventions to the corporate market (instead of only associations). What we discovered is that both have to do with the economic circumstances. In case of cash subvention, this will increase the financial health of the organisation and as far as subventions to the corporate market, this might increase the financial health of a destination/municipality.
The pandemic has had a big impact on the cash position of associations - the conference is most of the times there life line and main income stream and these were all cancelled. They will simply need extra support in order to be able to finance and organise their next conference. Shifting from in-kind support to direct cash support is a ‘gesture’ from the destination to help them organise their next event and become financial healthy again.
The extension to support the corporate market can be seen as an economic investment into the economic health of a destination. Attracting more events to a destination will leave direct money at restaurants, hotels, venues, transport companies, museums and so on. Which will result in a healthier economic climate of a municipality which is of great importance.
3) Considering all the elements, findings and stats of the study, do you find credible to conclude that destinations that are more open to the practice of subsidies and subventions, whether in terms of cash or in kind, show better overall results in hosting events?
There is no clear yes or no answer to this question. It will be a great topic for a next research though. In general the objective of offering subventions is to reduce barriers to organise a conference in a certain destination. After 20 months of cancellations, restrictions and postponing events, our industry has been hit hard. Subvention could be a resource that provides help to overcome barriers that are now holding back organisers. However, as stated in my previous answer, the destination must fit the selection criteria of an organisation. If that is not a match, then subvention will not help you to win the business.
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