The incentive travel industry is recovering at a healthy pace. And luxury travel is at the forefront, according to multiple sources.
The 2022 Incentive Travel Index — published by the Incentive Research Foundation (IRF) in conjunction with Financial & Insurance Conference Professionals and the Foundation of the Society for Incentive Travel Excellence — is among the recent studies documenting the rebound. And IRF president Stephanie Harris confirms that the luxury segment is especially strong.
“The demand for luxury incentive travel has accelerated,” she said. “We see luxury properties and experiences at the top of the list for program attendees, with 80 percent of program earners surveyed indicating a stay at a five-star property is the most appealing feature of a trip.”
Stan Hershenow, account executive at Brightspot Incentives and Events, also reports exceptional growth in the luxury segment. “The incentive travel segment, in general, has been very solid post-pandemic, and luxury or higher-budgeted trips have led the way,” he said.
What’s Driving Growth
Pent-up demand is one of the factors fueling increased demand for luxury incentive travel, according to Harris.
“The return to travel — whether leisure or incentive — has been strong, and there is a sense [that people are] less willing to compromise on the experiences they have when they travel,” she said. “Furthermore, organizations that want to retain top performers are increasingly stepping up their incentives to ensure those individuals feel truly rewarded for their hard work.”
Cruises and experiential travel are among the most popular types of luxury incentives today, according to several industry experts.
“Travel remains the #1 incentive, with small cruise ships claiming a large part of the incentive travel market,” said Susan Stafford, president of The Event Architects. “Every cruise line has released new ships or is in the building stages, and there truly is a ship/destination/theme for literally everyone.”
Harris agrees that cruising has made an especially strong comeback. “It’s been exciting to see the cruise market rebound, along with some incredible new luxury offerings in that space,” she said. “From river cruise lines built just for groups to hotel brand extensions, there are new cruise options to consider. We’re also seeing very strong demand for authentic local experiences. It is more important than ever to bring to life the culture and unique aspects of a destination including local food, music and customs.”
Walt J. Leger III, president and CEO of New Orleans & Company, the Big Easy’s convention and visitors bureau, has also seen a rise in demand for authentic local experiences. “In addition to our iconic experiences, which remain popular, such as live music and award-winning cuisine, we have found an increase in groups requesting bespoke excursions that blend cultural richness with outdoor adventures and high-end amenities,” he said.
“We also offer groups the opportunity to give back together and support local sustainability and coastal restoration by getting involved in our native planting projects, as well as contributing to oyster shell recycling efforts, which have been particularly popular with our local restaurant community and have already constructed more than 8,000 feet of new oyster shell reef,” Leger added.
Hershenow also reports a surge in demand for cruising and immersive cultural experiences, as well as changes in the concept of gifting. “Gone are the days that everyone receives the same gift upon arrival,” he said. “Playing to the desire for personalization, gifting has become an experience in itself, with pop-up boutiques that offer a wide variety of both local and top name brands. When the gifting is personal and relevant to the locale, it carries more intrinsic value and lasting memory.”
Challenges and Opportunities
While rising prices may be a concern for incentive planners, a Northstar Meetings Group/Cvent Meetings Industry Pulse Survey released in August 2023 found that 44 percent of respondents expect their event budgets to increase next year, with nearly 60 percent of them saying they’ll increase by over 10 percent. That means at least some planners will be better equipped to handle rising costs.
Still, the price of luxury can be a problem, according to Harris. “Inflation coupled with demand have created a challenge for program owners,” she said. “In the Incentive Travel Index, a partnership between IRF and SITE Foundation, we saw 76 percent of planners indicate rising costs are the biggest challenge facing the industry. Programs may either reduce attendees or reduce program length in the next couple of years as program budget increases struggle to keep up with cost increases. History has shown us that eventually costs will come down, but for now we’re living in a strong seller’s market.”
“Rising costs and the impact on the budget and trip experience is the top concern among event planners, and this certainly applies to the luxury incentive travel segment — in some ways, maybe more so,” said Hershenow. “You’ve built a reputation for designing a trip-of-a-lifetime experience each year and you need to maintain that level of experience. So you are tasked with making changes in the program elements to offset the rising costs, but without having a negative impact on the experience.”
Inflated prices have kept some incentive groups from visiting North America, according to Valerie Bihet of the VIBE Agency. “Traveling from Europe to the U.S. is too expensive for many these days,” she said. “U.K. companies have more budget than France, for instance, but they still aren’t spending it to come to the U.S. They are staying closer to home in Europe or going to North Africa so they can still provide the experience without the cost [it would be] to come to the U.S. right now.”
The fact that inflation has forced some individuals to curtail their own personal travel plans can increase the appeal of an upscale incentive trip, according to Stafford. “Inflation is hurting everyone,” she said. “This is making the luxury incentive market more competitive than ever. Those who are being incentivized are even more likely to make the effort to receive the reward, as it is likely some ‘thing’ — or some trip — they would not otherwise be able to purchase.”
The Concept of Service
Assuring service levels that are appropriate for a luxury incentive trip can be another challenge, according to Stafford. “Lack of skilled service industry workers is one of the biggest hurdles to growth in the luxury incentive market,” she said. “Luxury incentives are typically trips, experiences or goods and are all directly tied to skilled service professionals. Much of this industry was furloughed during the pandemic and were re-employed in other industries. The service industry is still struggling to rebuild the pre-pandemic workforce, but we are starting to see workers returning to the industry.”
Harris is already seeing progress. “Service levels are improving, and we’re seeing them improve faster in the luxury market,” she said. “The focus on reestablishing service levels has been critical in luxury, as program owners have been clear that they are no longer willing to pay premium prices for properties without receiving premium service.”
Expert Advice
To help ensure success with luxury incentive travel, Hershenow recommends that planners stay on top of industry research and also understand what participants and stakeholders really need from the experience. “We are big believers in the voice of your participants,” he said. “Like most organizations, we conduct surveys following every trip. Ask about the destination and overall program design: what did you like? What would you like to see changed? What destinations would be most motivating to you in the future? Use that feedback to guide future destination choices and program design.”
Stafford also suggests that planners keep their eyes open for new opportunities. “Pay attention to new venues that are opening, new cruise ships that are coming on line and more established venues that are refurbishing,” she said. “Venues often offer very competitive pricing when they are first coming on line as a new option or after a refurbishment. Incentive recipients love to be the first to experience a venue or location, so this timing is a win-win for all involved.”
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