2018 Incentive Travel Industry Outlook
Through the SITE Foundation, The Society for Incentive Travel Excellence (SITE) commissions research each year around the use of incentive travel as a performance improvement tool for global businesses. What emerges is a “state of the industry” report on incentives — which sectors are using them, how much is being invested per person for incentive programmes, whether overall budgets are up or down, where in the world are incentives travelling to, and so on.
Preliminary results from SITE Index 2018, released in October at IMEX America, makes for compelling reading, particularly for the finance and insurance sector which, at 22 percent, represented the single biggest category of corporate buyer respondents. The survey was conducted in July/August of 2017 and received just under 600 responses from 72 countries with around 150 of the respondents located in North America. Besides the strong global spread, other key features of the survey were the relative maturity and tenure of respondents whose ages across all categories averaged 49 years and nearly 20 years of industry experience.
Of the respondents, around one-third were buyers of incentive travel experiences, i.e. corporate planners or incentive agencies that create and deliver incentive travel experiences. The other two-thirds were suppliers such as destination management companies (DMCs), hotels, venues and service providers based in the destination where the incentive is being delivered. Of the corporate buyers, the largest number of respondents were from the finance and insurance sector, with science and technology, travel and tourism, pharma and direct selling also represented. Conspicuous by their absence were respondents from the automotive sector, traditionally a big user of incentive travel experiences.
So What Did We Learn?
Rumours of the demise of incentives are greatly exaggerated! A headline from this year’s Index was definitely the dramatic increase in per person investment for incentives, with overall average increases from $3,000 per person in 2016 to $4,000 per person in 2017. Drilling down into the responses, this figure is even more dramatic for the corporate sector, with a year-over-year increase of $1,900 per person.
Dramatically increasing per-person spend to create an unforgettable incentive travel experience, however, doesn’t mean you don’t seek to control and contain costs. The survey results clearly demonstrate that buyers, more than ever, are focused on cost containment and intent on extrapolating maximum value from every dollar invested.
For corporate buyers, this has led primarily to the selection of less expensive destinations as well as less expensive amenities, perhaps the most “peripheral” aspect of the overall incentive experience. At the same time, sellers of incentive travel services are attempting to add value through greater creativity/innovative event design.
Even with the more intense focus on budgets, the average length of stay increased both for programmes with any travel time and for programmes requiring more than three hours of travel time. This may indicate a trend toward more elite programmes with fewer qualifiers given even more extraordinary experiences in exchange for their exceptional performance.
While air transportation still comprises nearly a quarter of the budget, investments in technology are increasing in the development and deployment of programs — whether for communications, budgeting or operations, such as program apps, personalized digital communications, data tracking and measurement tools.
At the moment, optimism is high for incentive travel, despite world events such as natural disasters and terrorism that have rocked the industry this year. Although safety remains a top concern, it has decreased since 2016 and does not appear to be a deterrent to a strong incentive market.
Interestingly, despite rumblings in 2016 and 2017 that government regulations could massively impact incentives in the finance and insurance sector, corporate respondents are not seeing any need for radical change and remain bullish in relation to the future of incentives and their effectiveness.
Buyers of incentive programmes universally believe them to be strong motivators of performance, with increased company sales and profitability remaining the most important business objective, followed by improved employee engagement. There is also a slight increase in the measurement of incentive programs, driven by one-third of corporate users reporting they “almost always, or always” track return on investment (ROI) or return on objective (ROO) — up from 23 percent in 2016.
And, as many companies are embracing social responsibility and sustainability, that trend shows up as a significant one in the survey. Both buyers and sellers reported that sustainability and “being green” are having the most positive impact on incentive travel. This correlates to the finding that a large majority of incentive travel programmes now include at least one corporate social responsibility (CSR) activity.
Participant Appeal Tops Destination Selection
New to this year’s survey were questions about what influences destination selection. Survey respondents ranked seven criteria for selecting one destination over another for incentive travel programmes, and destination appeal topped the list. For corporate buyers, overall safety and destination infrastructure ranked second and third, whereas access from participants’ city or origin — a key criteria when selecting a destination for a meeting or conference — came in at fifth place. Clearly destinations seeking to grow their market share in the lucrative incentive sector must tell a convincing story around desirability and appeal.
The immense power and benefit of industry associations such as SITE, FICP, PCMA and MPI are proven by “recommendations from fellow members of trade associations” ranking first on what most influences destination choice. Clearly members of industry associations place immense trust in their fellow members to provide an honest steer around what destinations are likely to work.
When it comes to learning about a destination, a large majority of buyers said that familiarisation trips are most effective, followed by industry trade shows. And, when asked what is essential to a good destination experience, culture and sightseeing, followed by dining and teambuilding were ranked as most important.