Incentive's 17th Annual Industry Roundtable: Travel Spotlight

Every year, Incentive brings together a group of industry thought leaders from all segments of the incentive, engagement, motivation and recognition business to talk about the state of the industry. This year, 11 participants gathered at the Lotte New York Palace on Madison Avenue and 50th Street in Manhattan to discuss topics that ranged from the C-suite's growing focus on retaining and engaging top people to the difficulty of retaining Millennials to the importance of ROI, as well as what's happening in the merchandise, gift card and travel award categories. What follows is an extended version of the transcript of that conversation.

To view video interviews of each Roundtable participant, head here.

PARTICIPANTS

• Paul Gordon, Senior Vice President of Sales, Rymax Marketing Services
• Josh Lesnick, President & CEO, Associated Luxury Hotels
• Richard L. Low, CPIM, Vice President Special Markets, Citizen, Citizen Watch America; Past President, Incentive Marketing Association (IMA)
• Cindy Mielke, CPIM, Director, Marketing & Sales Operations, GC Incentives
• Bob Miller, President & CEO, One10
• Linda Nuss, Regional Manager, North America, German Convention Bureau
• Lynn Pavony, CIS, Director, Incentive Sales, Four Seasons Hotels and Resorts; Vice President, Fundraising and Events, SITE Foundation
• Mike Ryan, Senior Vice President, Client Strategy, Madison Performance Group
• Jennifer Scavina, Executive Vice President and Managing Partner, EGR International Inc./BlackLab Media
• Allan Schweyer, Chief Academic Advisor, Incentive Research Foundation (IRF)
• Hugo Slimbrouck, Director of Strategic Partnerships, Ovation Global DMC; Past President, Society for Incentive Travel Excellence (SITE)

 
The State of Incentive Travel

LYNN PAVONY: From a travel perspective, the industry is very vibrant. We're seeing that a lot of our customers who once did not know how to quantify the return on an incentive program have really figured out that the benefits are manifold. One is, if you structure a program in a way that it provides an experience that is something very different for a top performer, they really work harder in order to achieve the program the following year. The other thing that I see is that leadership has recognized that it's brought them an opportunity to bond with top performers, which results in retention and really brings a closer connection to the company culture.

HUGO SLIMBROUCK: Incentive travel, as a global tool, is different from region to region. It's a mature profession in North America. It's growing in Europe, but it needs a lot of support on the education side towards the C-suite. We haven't done that before. It's growing in Asia, as well, with very large groups connected to occasions. They like to have education mixed into it. And Latin America is catching up to the Brazilian market. Bragging rights are really the important thing for incentives there. They do not look at the corporate structure behind it.

JOSH LESNICK: We're seeing, particularly in the U.S., a lot of growth, a lot of interest. A lot of the stuff we're seeing is very personalized and customized and curated. A lot of the groups just don't want to go and have everybody do the same thing. They all want to do something unique. It might be a social responsibility thing in the community, or other types of things.

PAVONY: I would say "one size does not fit all" is really what we're seeing. When I talk to our sales team, they're saying that their clients are saying their budgets are flat, when in fact they're increasing their budgets, but not always increasing their per-person spend. So, their programs either are becoming a little bit longer or larger. Business is so robust that they actually have more winners and so the increase in budgets is to support more people, which is not necessarily keeping up with the increased cost of air and hotel room rates. So, we find that there tends to be a need for a lot of negotiation and our sales organization has become a lot more consultative in working within budgets and in trying to help them find a location or time of year in which the client can afford to stay with us.

SCHWEYER: Our research showed the same thing. The budgets are increasing, but not as quickly as the cost. Sixty percent said that.  

SLIMBROUCK: There's a lot of money going into the air. As for hotels, they stay in all the high-end brands, so there's no money being saved there. We see some savings in the program elements being cut because people want more free time while they're there.

PAVONY: There continues to be a real drive for unique experiences. It's actually been great for us because it has pushed our teams all over the world to a point where everyone is becoming a concierge and cultural ambassador of the destination. Now it's all about curated experiences, which really have been fun. As we consult with some of our clients who are, perhaps, running low in their budgets, some of these experiences are things that are very low cost and very high return, such as spending time with our culturalist in a certain destination and walking the grounds, or doing a morning run or stand-up paddleboard with our resort manager. 

The Hot Destinations

SLIMBROUCK: What we have seen out of the North American market, which is the prime market for our company, is that it's growing faster than we thought. We have put in a lot of effort in the market here and what we see is that companies start discovering new destinations. It's the second-tier destinations that are really catching up. Just in my mailbox this morning, I had RFPs for Greece, RFPs for Croatia, Iceland, Finland. In Asia, long-haul incentives are going to Bali, to the Philippines, to Taiwan. Colombia is really catching on, Peru is catching on. These were not the top destinations of the past. Out of the U.S., you would get the business into the Caribbean region, so the Dominican Republic, Mexico, Jamaica and so forth, and European capitals. European capitals [and major cities] are still hot — Barcelona, Madrid. And Lisbon especially is No. 1 this year. But now people have started discovering other destinations. We have a partner in Munich and she's doing fantastic on the incentive market, but Munich was never a prime destination. I think this audience is much more educated. They've seen the Parises, Amsterdams and Londons of the world and now are out to discover new destinations.

LESNICK: Secondary markets are very popular. We've also seen a lot of regional incentive trips that people can drive to, which is interesting, and a big shift.

MILLER: Some of the secondary markets — Austin, San Antonio, Charleston — are popular because they're cheaper to get to, and have great product.  

PAVONY: I would agree, domestically, about those secondary cities. I mean, try to find a room in Nashville. Internationally, I would say within our outbound U.S. travel we are seeing much more Europe than before, which is a really good sign. Portugal is really hot. It's interesting, it hit the cover of Travel + Leisure magazine in 2016 as destination of the year and that brought more individual travelers. And when you have more individual travelers, the group market tends to follow. When you look at Costa Rica, it was very much that way. Greece's economy has stabilized, and I think that has made organizations much more comfortable in bringing their groups there. Iceland is through the roof. I would not say it is hot yet, but the one to watch out for is Colombia. If anyone has a client that is really pushing them to provide an experience that is very different and new, Colombia would be the one to do.

LINDA NUSS: Germany is coming on the radar a little bit more when it comes to incentives. It's not the traditional incentive trip, but we're seeing a shift of more and more people looking for the smaller destinations. People are looking for that really special kind of experience, renting out a castle in the Alps, something like that. We're seeing very specific and focused high-luxury level incentive trips or these big ones from Asia where it's 2,000 people doing a trip through Germany.

SLIMBROUCK: The Chinese are everywhere. We have great incentives in Norway. Chinese are there. You go to Iceland, Chinese are there.  

NUSS: In Munich we do have an influx because of the shopping and the connections are very easy.

In these smaller destinations in Europe, you're going to have to do a one-stop or two-stop, and that sometimes is a factor that we hear — people don't really want to do that. What we're also seeing in Europe is a lot of combining of countries: doing a Frankfurt-Paris or Amsterdam-Hamburg combination.  

SLIMBROUCK: And Munich-Salzberg or Vienna-Prague. Always in combinations.  

MILLER: There is tremendous interest in the African Safaris.

PAVONY: It's back.

MILLER: Oddly enough, people are now asking, are there secondary sites in Africa we can go to, so we aren't repeating.  

SLIMBROUCK: I would call it southern Africa, not South Africa, because it's a combination of three different destinations: South Africa with Namibia and Victoria Falls. That's the triangle that works best. It's a combination of Cape Town with lodges and Victoria Falls, but now we're seeing demand as well to Mozambique and Botswana and other countries. It's really moving up very, very rapidly.

PAVONY: I find there's a lot of interest in Dubai, but the conversion is very poor.  

SCAVINA: Every year for the past six years, EGR has taken somebody there, and we're not pushing it, so there is still the allure. It's fascinating, even just pharma reps, how many of them are saying, "oh, yeah, I was there."

Corporate Social Responsibility

MILLER: It's in a lot of RFPs and you have to get a good score — they will score you on your CSR activities and your sustainability, and if you don't achieve certain scores as a tier-one provider, then you have to have a remediation plan. I think it's a very hot topic, and I think the hotel industry is stepping up to that, as well.  

LESNICK: It's table stakes.

SLIMBROUCK: You must have genuine activity. They have to really feel they have done something for themselves, for the community or for the world as large. I wouldn't say CSR as CSR, but more as sustainable elements. Sustainability in the hotel is important. The way you serve food which is locally produced and so forth, the activities, gifts that are produced locally instead of flying them in and paying all the air charges, but true locally produced gifts.

LESNICK: There's so much information available to your employees and around social media and what they can get access to. If you're using a certain provider or certain destination that's not environmentally friendly, socially responsible, I think you've got push back from your associates internally because they're digging in and looking at this information that's all readily available.

Marriott-Starwood Merger and Consolidation

LESNICK: It is less of a concern for independent hotels and more of a concern for the actual planners. I think they've lost buying power and they also don't feel that a lot of the sales teams matter.  It's so big they don't even know the product anymore —for a curated luxury trip, how could you actually know the product?

SCAVINA: I think the word on the street is, let's see how this plays out. They don't really know how this is going to affect us yet. And to your point, how could they possibly know all the information that I need them to know, because there's such a vast amount of it now? That might just be perception as opposed reality.

Security and Terrorism

RYAN: One thing we are behind the curve on is safety and security, and I think you'll see more and more RFPs coming in [demanding detailed information about security planning].

PAVONY: [Terrorism has] become much more commonplace. For Europeans, it's been a part of life for so many years, in varying degrees depending on which country you live in. In the U.S., we were so shielded from it for so long and the recovery from an incident took a long time. I feel that we as a country have become much more resilient and when a situation occurs, there may be a stop for a moment and then there's a reset and a move forward a lot faster than ever before.  

NUSS: I think anyone who travels generally travels with the thought anything could happen anywhere. You never know. Anyone that chooses to do a travel incentive has an idea that it might happen, but it probably won't. Like you said, people are more resilient to it.

GORDON: Las Vegas had never seen anything of that magnitude. It scared people off. I think New York is a little bit more resilient because we saw the ultimate terrorist attack and lived through it and things that are happening are a little different. But I think to your point, it can happen anywhere, and we've just sort of embraced that that's the way it is now.

SLIMBROUCK: What you need to do is just be ready. You must have a plan as a destination, as a DMC, as a hotelier: What if something happens? And the most important thing is communication. [After the coordinated bomb attacks in Brussels, where I live, on March 22, 2016] we reacted very quickly. The whole industry got together. The next day, we were around the meeting table with the officials, tourism boards and so forth. The first thing we did, because it was 10 days before IMEX Frankfurt, was get our story together: What's happening now? People who are in the city or coming to the city, what do we tell them? What is the situation, what is not happening? So, get all of those stories out of the way. This is what's happening. This is what we're doing. These are the contingency plans. This is what's happening in the future. Once you have a plan in place like that, you're much stronger. It was a lesson for everybody to re-look at your security protocols — every hotel, planner, agency.  

Golf and Spa

MILLER: People like golf, but they seem to like spa more. The spa activities are really huge, [especially] if they can be curated or specialized. There will always be a certain golf faction that wants to golf, but that seems like a smaller percentage.

PAVONY: Our number of golf participants have dramatically gone down when we talk about group incentive travel. Has anyone heard anything about reducing the length of the game? I was talking to someone in the golf industry who told me that there's discussion about changing the game to 12 holes. I think the big thing on a program that we see is that it's a time for a couple to be together, and golf usually separates them. What we see is golfers shooting nine holes and then come back, because they can still have the rest of the day together.

RYAN: I'm an avid golfer and even on local courses, I've long supported the idea that you should break the course fees up into six holes, because I think nine holes in some cases can be a little bit too long. Just in terms of the game of golf, if people wanted to tee off at six o'clock, which is an hour after work if you leave at five o'clock, it's even a struggle to finish nine, whereas, I think if you can think about playing at six, you can get more people out at twilight, it's less of a physical tax for some people who aren't in great shape. It gets you home by dinner. I can golf for six holes is not a bad idea. Twelve holes is not a bad idea. In many cases, 18 is an investment of time that a lot of people can't make.

MILLER: The hard part is you're usually somewhere where there's a beautiful golf course, the more you try to make it fun and more inclusive, the more you're going away from the purists.  

European GDPR Privacy Regulations

SLIMBROUCK: [The General Data Protection Regulation] is there, and any company related to Europe or that has people on the program from Europe is [responsible] to follow the regulations. It's on us [on the supplier side] to be completely compliant, which we have done. But for incentive companies in the U.S. doing business in Europe, be aware of who you're working with, because this can affect, this can ruin your client's program. There's no escape from it.

LESNICK: There are states now that have adopted a very aggressive privacy policy on privacy. I think you're going to see a lot of that coming to the U.S.  

SLIMBROUCK: Privacy policies like this existed in most European countries. Now they want to unify them all over Europe so that they're all the same. But on top of it, what didn't exist before is that there was no fine. Now, if you have a breach of a confidentiality it can cost you 10 percent of your gross profits in a year. You may think that they are facing Facebook and Amazon and so forth — the big ones — but some lawyers told me, don't expect them to take on the big ones. They will be looking for the low hanging fruit. The low hanging fruit are your corporate clients, so you want to be sure that you're working with suppliers — the DMCs, the transportation companies, whatever — that are GDPR compliant.  

MILLER: I can tell you we have teams of lawyers and data security experts looking at that, and to your point, you have to be compliant, so we have to find ways to do that. The trouble, I think, is being compliant is in contradiction to other agreements that are in place about data retention and things like that. So those are things that have to be worked out.  
SLIMBROUCK: We did an exercise where we looked at in what instances do you get data from your clients, be it corporate clients, association clients or third-party agencies, and we found 17 points where we get information. It's as simple as 10 people going for a dine-around tomorrow night at X restaurant. If there's a name attached to it, you have to be compliant, even with as small a list as 10 people. So, we have adapted our protocols after an event, about which documents will be deleted. For instance, a list of dine-arounds. After the program is gone, one week later we delete them. It's very thorough, but it's the only way.

Go back to part two, "Navigating Uncertainty and Measuring ROI," or continue on to part four, "Merchandise and Gift Card Spotlight"