Fewer activities, shorter programmes, and reduced agency fees are some of the knock-on effects impacting incentives as a result of continued constrained budgets, according to a recent survey from the Incentive Research Foundation (IRF). Photo Credit: Pexels/Leeloo The First
Fewer activities, shorter programmes, and reduced agency fees – these are just some of the knock-on effects impacting incentives as a result of continued constrained budgets.
A recent webinar from the Incentive Research Foundation (IRF) focused on how incentive professionals are delivering outstanding incentive travel programs despite budgetary constraints, with airfares and hotels taking up the majority of spend. An IRF survey showed that airfares account for 21% of incentive budgets, with hotel and food and beverage accounting for 27% and 18% respectively.
Chris Johnson, director – global travel, enterprise events & sports partnerships at Land O’Lakes said that while legacy incentive programme budgets remain largely flat at the agency and are not catching up or keeping pace with inflation, new programmes that the agency is building from scratch have more flexible budgets.
“We’re starting to use [luxury, all-inclusive] properties more because the food and beverage budget is more controllable.”
Chris Johnson, director – global travel, enterprise events & sports partnerships, Land O’Lakes
“To bring costs down, we are having to make different choices in terms of destinations and/or the time of year,” he said. “The luxury, all-inclusive category is also having a positive impact – we’re starting to use these properties more because the food and beverage budget is more controllable.”
Johnson also said costs in areas like AV and technology are also being reduced. Instead of having a stage build for five days of an incentive for example, programmes are being adjusted to ensure such costs only apply to two days.
Richelle Suver, chief revenue officer at performance company One10, which manages incentives and rewards, said budgets are being squeezed in the technology sector, as a result of tougher macroeconomic conditions in the industry. Companies in the high-performing sector that use incentives as a measure of incremental sales success and those in the automotive and the luxury sectors are displaying much stronger budgets when it comes to incentives.
She added that clients often have unrealistic expectations when it comes to airfares, allocating less budget to this than they should.
“Airfares are something we cannot control; if a client has an airfare cap per person, it poses challenges if you are not far enough out in the planning process.”
Richelle Suver, chief revenue officer, One10
“Airfares are something we cannot control; if a client has an airfare cap per person, it poses challenges if you are not far enough out in the planning process,” she says. “It’s also hard to predict when you don’t know where the incentive winners are coming from.”
Johnson suggested building an ‘escalator’ year over year when it comes to airfare budgets, particularly when building an incentive programme that will take place in two years’ time. He also recommended considering an air contingency fund, depending on the size of the incentive and the number of people taking part, which can help to better manage budgets if there are sudden increases in airfares.
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Incorporating more free time into an incentive programme is an obvious way to reduce costs but Johnson said it also offers planners the opportunity to get more creative with less. Rather than turning participants loose, he suggested curating a list of recommended activities that are low or no cost, privatising areas such as pools and creating a programme around this to foster networking.
“There are ways to dial back but it’s also important not to lose sight of the special nature of the incentive,” added Suver. “People love the ability to choose their own adventure but hone in on the unique thing they couldn’t do on their own. If you do something, make it special, make it brand worthy and make it instagrammable.”