No doubt, incentive travel is back. According to statistics from the Incentive Federation and Incentive Research Foundation (IRF), 46 percent of U.S. businesses use incentive travel, spending some $22.5 billion annually on those programs.
In putting together our annual roundup of the top incentive travel trends, every source used the exact same word to describe the state of the incentive travel industry: "strong." As strong as the incentive travel industry is, however, it's important to note that although incentive travel has, in fact, rebounded from the AIG Effect and Great Recession of 2008, incentive travel planners still have to be mindful of costs, planning, and the challenge of creating new, one-of-a-kind experiences for participants.
Here's a closer look at the top 10 trends that have been impacting incentive travel in 2015.
1. Incentive travel is back. According to the IRF's "Fall 2014 Pulse Survey," there has been a 71 percent decrease since March 2009 in the number of organizations that believe economic conditions are having a negative impact on incentive travel programs. Additionally, statistics from the IRF survey show that properly designed and executed incentive travel programs are, on average, increasing sales productivity by 18 percent and produce an ROI of 112 percent.
At Minneapolis-based Aimia, Kurt Paben, president of channel and employee loyalty, says they are seeing more requests for proposals than in the past. "The industry is doing very well," he says. "A lot of corporations have reverted back to award travel to increase engagement with their channel partners and employees."
2. Budgets are remaining about the same, but trending up slightly. In the "Fall 2014 Pulse Survey," nearly 50 percent of planners said they would be increasing their budgets, and average per-person spending for incentive travel was up significantly to $3,440. "As the market continues to improve, travel budgets are growing again as well," says Tony Wagner, Minneapolis-based vice president of CWT Meetings & Events Americas.
However, "Cost will always be a factor, even in the best of times," notes Marty Doyle, senior director of travel experiences for New Brunswick, NJ-based Dittman Incentive Marketing. "Some industries, such as banking, still feel the pressure to not be perceived as extravagant."
Doyle also points out that, regardless of budget, incentive planners have to keep a close eye on expenses and value. "Other industries, particularly distributors, feel the pinch in the form of squeezed margins in their own marketplaces, resulting in tightly managed costs when it comes to employee recognition and incentives," he says.
Joost de Meyer, CIS, CITE, CMM, ACC, and chairman and CEO of Orlando-based First Incentive Travel, says his clients are asking him to "do more but with the same budget. ... It won't be like it was in the past when the sky was the limit," de Meyer notes. "When people organize incentives, they need to really set goals and have a return on investment [ROI] in mind. There's more to think about now that is related to procurement."
Alison Taylor, senior vice president of Starwood Hotels & Resorts' Sales Organization, also notes, "Price continues to drive decisions and cost remains an important, if not the most important, factor for most incentives. While we are seeing increased budgets, these increases aren't keeping up with increases in hotel, air, and other ancillary components of a program."
3. Planning ahead is crucial. The demand for hotels globally is high, but accommodations aren't growing at the same rate to meet demand, making it harder for planners to book the programs they want on the dates they need.
"Client forecasting has not caught up to the realities of the marketplace, and many organizations are still working under the assumption that it's a buyer's market," says Doyle. "In fact, it is very much a seller's market, and we must work closely with our clients to be sure they understand this dramatic change and can adjust their plans accordingly."
Doyle says that because some of his clients are still working with shorter lead times and increased participant numbers, they are often opting for mega resorts, even for smaller programs, because of the need for value, service, and accessibility.
Paben says that a survey of Aimia's supplier board of hoteliers, DMCs, and airlines shows "space is getting harder to secure." He says, "The booking cycle for large incentive programs is, on average, two to three years out. Medium-size incentive programs are 12 to 24 months out, and small incentives are being planned an average of 12 months-plus out."
Paben also says most incentive travel programs are running an average of four to five days in length, and March is the most popular month of the year for delivering the trip, with April coming in a close second.
4. Get those passports ready. International incentive travel programs are growing. According to the IRF, last year was the first time since the recession that more planners considered international destinations over domestic ones, with the Caribbean at the top of the list as the most popular region. "We'll see more clients continue to look toward international destinations," says Wagner. "This is really the first time since the recession that international destinations outside of Mexico are back on the radar for many planners." He adds, "In regard to our programs, incentives continue to move to international locations from domestic as the economic growth continues." The strength of the U.S. dollar, in particular, is also making it easier - and more affordable - for groups to travel abroad, especially in Europe, Canada, and Asia.
5. Experience is everything. Today's incentive travel participant, regardless of age, isn't content with the same experiences as before. Instead, they seek new, unique experiences that connect them to a destination, and they crave personalization and choices when it comes to their travel experiences.
Local and cultural authenticity, for one, is something a number of travelers desire. "We're living in an 'age of experience' where travelers are seeking opportunities to immerse themselves in the cultures they are visiting," says Wagner.
Adds Taylor, "Many people want to have a closer connection to the community they are visiting. They are craving more indigenous and cultural experiences, as opposed to the normal tourism or shopping highlights."
De Meyer says, increasingly, more Millennial participants care less about the hotel room and more about the destination and the people they encounter on the trip. "Rooms are nice, but it's not the most important thing anymore," he says. "Participants don't need a big resort. They want to go out to restaurants that are in the neighborhood and they want more boutique-style hotels."
When it comes to delivering the type of experience that incentive winners desire, it often boils down to freedom of choice, says Marilyn Murphy, CEO of Woodland Hills, CA-based CTP Group. "The right way is to give people choices," she says. "Give participants free time, whether that's free and open, or just a little bit of unstructured time to relax or go for a walk. Some itineraries are just too crammed with activities for people to really enjoy the experience." Murphy says for her groups she often offers a variety of activities from which to choose.
"For activities, there's a push to more personalized, customized experiences," adds Taylor. "Planners are often tasked with designing a program that appeals to the varying interests of the multigenerational guests who attend." She notes that interest in golf seems to be down, while leisure time or "time on one's own" is growing in popularity among incentive programs held at Starwood properties. "Attendees want to experience the destination their way, but at the company's expense, so we are continuing to see cash allowance gain popularity."
Similarly, Kate Rice, senior travel buyer for Emeryville, CA-based The Performance Group, in the Bay Area, says her clients are "sort of getting away from those big formal dinners or activities and looking for a more laid-back, no-stress atmosphere." She says having a more relaxed itinerary and environment is becoming more popular.
Personalization is also a key element for a successful incentive travel program, and goes beyond activity choices. On-site merchandise bars where participants can choose from a variety of different brands or items are a growing incentive travel trend. Examples run from the Maui Jim Sunglass Experience and the Blue Jeans Bar to custom Nike shoes and Bose Experiences.
Even perennially popular incentive travel destinations are trying to find new ways to deliver experiences, says Paben. "Our clients are always looking to top the program from the prior year. A lot of well-known incentive destinations are creating new ways to attract the experiential participant."
Adds Doyle, "It's critical for planners to provide an experience the participants can't replicate, as well as to ensure that the experience merits the effort taken to achieve a place on the trip."