1. Chapter 10
Financial Issue
for the Operation and management of MICE
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2. Objectives
1. outline the overall financial implications of conventions and
meetings to the MICE industry
2. design, produce, monitor and control a financial budget for a
convention or meeting covering both expenses and potential
income
3. outline the concept of yield management and explore its
application to convention and meetings
4. identify some of the legal liabilities associated with organising
conventions and meetings
5. establish a system of risk management and explore its application
to conventions and meetings
6. recognise the importance of ethical behaviour within the
convention and meeting industry
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3. Introductions
• This chapter covers a range of critical elements in convention
management.
• The topics introduce students to the nature of budgets and their
importance to the well being of a convention and meeting
organisation, whether a venue, a conference organiser or a firm of
PCOs.
• However, we have also included some vital factors that impact on
the operational and managerial aspects of conventions. These
include the issue of ethical business practices, certainly a topical
theme in today's cut-throat economic and commercial environment.
• The other major factor is that of risk management and its potential
consequences to convention organisers.
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4. Outlines
1. Financial Philosophy and Objectives
2. MICE Budget
3. The Negotiation Process
4. The Billing Process
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5. Financial Philosophy
and Objectives
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6. Corporate Organizations
• Generally, Mice Events have been seen as a cost to the business
• The main philosophy of MICE events is focusing on planning,
marketing, sales or production
• The purpose of the event will also determine how the budget is to
be spent and which outcomes would be its consequences
spent,
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7. Associations
• Expenses incurred in the provision of convention or meeting do not
exceed the income received.
• Purposes of meeting is for the purpose of continuing education and
networking opportunities for its members.
• Generate sufficient income from the event to support other member
activities throughout the year.
• To maximize, stimulate and increase membership growth, and the
financial goal in this instance might simply be to break even or
even to allow a small deficit.
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8. MICE Budget
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9. MICE Budget
• This budgeting process involves discussion between the conference
organizer or PCO and the client firm or organization to decide on
the overall budget figure and to identify and establish potential
areas of “income” and “expenditure”
income” expenditure”
• There is also a need to establish an efficient
and effective monitoring system to ensure
that event revenue is maximized and
expenditure is minimized.
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10. MICE Budget
• The tasks in this process would clearly involve:
involve:
1. Identifying sources of income
2. Identifying areas of expenditures
3. Other issues concerning the budget process
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11. Identifying sources of income
and expenditure
Income or revenue for MICE Events
1. delegate registration fees
2. exhibition fees
3. sponsorship
4. grants
5. merchandising
6. advertising
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12. Identifying sources of income
and expenditure
Areas of expenditures for MICE Events
• Venue
– Room hire
– Exhibition area hire
– Dinner venue hire
– Additional meeting rooms
• Speaker/ Entertainment
peaker/ Entertainment
– Speaker fees
– Performer fees
– Travel costs
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13. Identifying sources of income
and expenditure
Areas of expenditures for MICE Events
• Printed materials
– Stationary
– Promotional material
– Media releases
– Registration forms/brochures
– Invitations/ tickets
– Programs
– Name tags/ badges
– Conference proceedings
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14. Identifying sources of income
and expenditure
Areas of expenditures for MICE Events
• Food and beverage
– Opening function
– Gala dinner
– Lunches
– Morning / afternoon
– Themes events
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15. Identifying sources of income
and expenditure
Areas of expenditures for MICE Events
• Staging costs
– Audiovisual equipment
– PA system
– Lighting
– Operator/technical fees
– Signage
– Plants/ decorations
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16. Identifying sources of income
and expenditure
Areas of expenditures for MICE Events
• Administration costs
– Registration staff
– Office staff
– Photocopying
– Postage
– Fax/ telephone
– General stationary
– Transport
– Insurance
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17. MICE Budget
Other issues concerning MICE Budget
1. Especially for those international events, exchange rates
and currency fluctuations need to be taken into
consideration
2. Delegate registration fees for events held within the
host country should be paid in local currency
3. See more details on attached page about the outlines of
a section of pro-forma budget for a particular event
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18. A section of a pro-forma budget planner for a convention or meeting
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19. A section of a pro-forma budget planner for a convention or meeting
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21. Monitoring the Budget
• The conference organizer is responsible
for ensuring the viability of the budget
and financial plan for a convention or
meeting. In order to make sure that the
final outcome is satisfactory.
• The simplest way of monitoring financial
transaction is to use income and
expenditure statements and cash flow
forecasts.
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22. Monitoring the Budget
Areas for cost containment
• Providing speakers in writing as to what audiovisual equipment able
for presentations
• Reviewing the event’s master account produced by the venue,
including a daily check of items charged to the master account and
an agreement as to the final delegate numbers for each F&B
occasion
• Checking the number of delegates attending the event and, in
particular, the numbers of delegates who actually plan to attend
particular activities
• Providing guidelines on the reimbursement of travel expenses
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23. Negotiation Process
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24. The Conference Organizer
• The successful of a conference organizer’s negotiations
with a venue depends on a number of factors, including
the size of the group and the potential revenue that event
will generate for the venue.
1. Room rate charges for the meeting rooms
2. Exhibition areas
3. Parking
4. Deposits
5. Storage areas
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25. The Venue
1. The purpose of the convention
2. Dates
3. Capacity of the facilities
4. Budget available
5. Past problems
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26. Area for Negotiation
1. Room rates and the number and types of
rooms required
2. Complimentary and reduced rates for
rooms
3. Meeting space and public space
4. Exhibition space
5. Food and beverage requirements
6. Audiovisual equipment
7. Delegate arrival and departure patterns
8. The availability of complimentary
transport to and from the airport
9. The method of payment
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27. Calculating
Break-
Break-even Point
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28. Break-
Calculating Break-even Point
• Break-even analysis is a tool that assists in the
setting of price
• The basic concept is that at some level of sale
(revenue) there will be sufficient income to
cover the expenses of the convention or
meeting.
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29. Break-
Calculating Break-even Point
Cost ($)
120000 Break-
Break-even point
100000
80000
60000
Variab le costs
40000 Fixed Costs
20000 In come
0 50 100 150 200
Number of Delegates
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30. The Billing Process
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31. Billing Process
1. The setting up of the master account for the event and
how it is to be itemized
2. Charges for the various types of rooms (accommodation,
meeting, etc.)
3. Food and Beverage
4. The handling of delegate personal charges
5. The charges for special events e.g. tours, transport, etc.
6. AV and other electrical arrangements
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32. Billing Process
7. Security, housekeeping and other labour provided by
the venue
8. Deposit policy
9. Guest credit facilities, e.g. clarification of the accepted
credit cards, personal cheques, etc.
10. The numbers of staff from the event organizer or PCO
who are authorized to sign accounts prior to and
during the event
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33. How to handle with the payments
• Clearly identify areas of
master account would cover
and personal expenditures of
delegates
• Setting up the payment
requirements; e.g. deposits,
schedule of payment, etc.
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34. Question and Answer
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