Incentive travel is making a comeback—of sorts. The demand is there but challenges persist.
Demand is strong for incentive business these days, with more organizations opting for international destinations and content-rich programs. But while the industry has bounced back from the doldrums of recession, incentive planners also say they are challenged by rising travel costs and more limited availability.
"I see more confidence among clients, in that they are going ahead with their plans and not cancelling as they once did," says Nola Conway, president of Global Destinations Marketing in Los Angeles.
"By the same token, budgets are pretty much staying the same, and hotel rates are soaring. Still, we’re expected to produce the same program we did last year."
The space race
Not only are travel costs rising, but availability is tighter, particularly at hotels in popular incentive destinations. Among the greatest challenges incentive planners are facing is convincing decision makers to commit further ahead in order to get their top choices for hotels, resorts and other components.
"Two years ago, the world was your oyster, but it’s not the same now," says Jenna Paseka (MPI Orange County Chapter), director of key accounts for JNR Inc. in Irvine, Calif. "We’re trying to get the word out about the need for early booking, that it’s not a buyer’s market anymore. But the window is usually still inside of 18 months or even within the same year. And procurement adds another set of handcuffs to getting the green light."
Rhonda Brewer, vice president of sales for Maritz Travel in Fenton, Mo., is counseling clients to book two or three successive programs at once, either at the same property or at properties managed by the same hotel company.
"It’s a way to lock in the space and rates you need," she says. "Hotel space is very tight now and both hotel and air costs are very high."
More International Sites
Brewer is seeing a stronger trend for companies to opt for international destinations, in some cases even exotic locales.
"Destinations all over are being considered—Europe, Dubai, Australia, New Zealand," she says. "Even companies who haven’t traveled internationally for a long while are now looking at overseas destinations, particularly Europe."
Amway is among the companies selecting more overseas sites these days, according to Sheryl Korn, CMP (MPI Michigan Chapter), a meeting and incentive planner for Amway Corp.’s Latin America division.
"We’re heading out to places that are on people’s bucket lists," she says. "We’ve recently been to Prague, the Czech Republic, and Munich, Germany, and are going to Dubai next week. China is being considered. Even though it means longer flights, we feel there’s value in motivating people to reach for success by offering these destinations."
Kelly MacDonald (MPI Atlantic Canada Chapter), manager of industry relations at Fraser & Hoyt Incentives in Halifax, Nova Scotia, is also finding that organizations are eager to try new destinations.
"We’re seeing a lot more interest in different places, particularly in the Caribbean," she says. "The Canadian dollar has been strong, so clients have been saying, ’Let’s go to Europe or the U.S. while we can.’ Our dollar is falling a bit now, so it will be interesting to see if this lasts."
At the same time, MacDonald says concerns over perception continue to influence site selection in some cases.
"We still have clients who don’t want to raise too many red flags about what they are doing," she says. "[These clients] won’t choose a destination such as Dubai for this reason."
Both MacDonald and Paseka note that all-inclusive resorts in Mexico and the Caribbean are growing in popularity for incentives, an option they find delivers good value for clients with mid-range budgets.
"The all-inclusive product has really gotten better—there are plenty of really nice hotels out there that are fewer than five years old," Paseka says. "The client can enjoy a nice, new property while not breaking the budget. I have some clients who only want this option."
Fresh Experiences
As younger qualifiers come onto the scene, incentive planners say they are looking at ways to design programs with venues, activities and gifts that appeal to a new generation.
"Reaching out to the under-35 age group is very much on our radar, so we’re restructuring events to appeal to that demographic," Korn says. "Even though that group is still small, we know it’s the future."
As a result, Amway is adding some activity choices with a high-adrenaline factor, which might take the form of a 5K run or, in the case of its Dubai program, an excursion in the desert in four-wheel-drive vehicles. In Cancun last year, one evening event was held at a lively nightclub popular with young visitors.
No matter what activities are planned, the overriding concern is that the incentive delivers a "wow" factor that attendees could not experience on their own, according to Korn.
"In Australia, we arranged for the group to go out to a ranch to participate in sheep shearing," she says. "When they turned the sheep around, they saw the word ’Amway’ on each one. You want to provide something totally unexpected."
The chance to engage with and learn about local culture is increasingly important during programs, according to Paseka.
"Clients will ask what is unique about the region, what they can see or learn about," she says. "It could be something to do with the arts or an activity such as wine blending that combines fun with learning."
While corporate social responsibility (CSR) and other team-building activities are a staple offering in some programs, Paseka has found they are not appropriate for all groups.
"If it’s a group of employees, then bonding experiences are great," she says. "However, if the company has invited its top dealers—people who compete with each other—then you are better off providing other kinds of experiences."
Partly due to rising costs and partly because many attendees ask for it, free time is becoming more prevalent during some programs, according to Paseka.
"We used to structure every minute of a trip, but with budgets not completely back to where they should be, it’s sometimes necessary to cut out a day of activities," she says. "It’s cheaper and allows attendees a chance to enjoy the resort or destination on their own."
In any event, providing an agenda that respects individual preferences is essential, says Jeff Broudy, executive vice president of United Incentives and a former chairman of the Incentive Research Foundation.
"It’s rare for the whole group to do the same thing these days," Broudy says. "It’s important to offer people a choice of activities, especially those that engage them and give them something to take away."
Non-travel Incentives
How popular are non-travel rewards versus travel incentives these days? For many companies, it’s not a question of one versus the other, but rather of using both types of rewards in their overall programs.
"A lot of our clients are using both," MacDonald says. "What they do is tier their programs, using travel for the top-tier qualifiers. That’s still the big carrot. However, rewards such as merchandise are great ways to motivate people throughout the company."
Brewer sees no signs of non-travel or even individual travel rewards replacing or overtaking the traditional group program.
"Travel with an experiential component is still the leader," she says. "Clients want to provide something that their people will talk about year after year. That always stays top of mind."
Korn agrees, adding that while Amway also offers cash awards, travel remains the primary incentive tool.
"We really feel that it’s travel that motivates," she says. "It’s about the togetherness, learning from each other, the recognition that it gives the qualifiers. You lose that with non-travel."
