Without a 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 and destinations, every source used the 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 although incentive travel has, in fact, rebounded from the Great Recession of 2008, planners still have to be mindful of costs, planning, and the challenges of creating new, one-of-a-kind experiences for participants. Here's a closer look at the top 10 trends impacting incentive travel in 2015, followed by the top destinations.
1. Incentive travel is back. According to the IRF's "Fall 2014 Pulse Survey," there has been a 71-percent decrease in the number of organizations that believe economic conditions are having a negative impact on incentive travel programs. Additionally, statistics from the IRF show that properly designed and executed incentive travel programs can increase sales productivity by 18 percent and produce a return on investment (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 about the same, but trending up slightly. In the "Fall 2014 Pulse Survey," nearly 50 percent of planners say they will be increasing their budgets, and average per-person spending for incentive travel is up 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 will not be like it was in the past when they sky was the limit," he notes. "When people organize incentives, they need to really set goals and have a ROI in mind. There's more to think about now that's 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 programs 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 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, destination management companies (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 planned 12-24 months out, and small incentives are being planned an average of 12 months-plus out."
Paben also says most programs are running an average of four to five days in length, and March was the most popular month for events, 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. 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. 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.
Local and cultural authenticity, for one, is something a number of travelers desire. "We're living in an 'age of experience' where travelers seek opportunities to immerse themselves in the cultures they're 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. "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 she gives her groups 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 laidback, no-stress atmosphere." She says having a more relaxed itinerary and environment is becoming more popular.
In a successful incentive travel program, personalization goes beyond activity choices. Paben says it extends to gift choices, as well. On-site merchandise bars where participants can choose from a variety of different brands or items are a growing incentive travel trend. Examples include the Maui Jim Sunglass Experience and the Blue Jeans Bar to custom Nike shoes and the Bose Experience.
Even perennially popular destinations are trying to find new ways to deliver new and exciting experiences, says Paben. "Our clients are always looking to top the program from the prior year. We're finding that a lot of well-known incentive destinations are creating new ways to attract the experiential participant."
Adds Doyle, "It's critical to provide an experience unlike any the participants can replicate, as well as to ensure that the experience merits the effort taken to achieve a place on the trip."