Incentive Travel Is Back

"Incentive travel” is no longer a forbidden phrase. Recovering from the one-two punch of the down economy and negative public perception, businesses have started rewarding top performers with travel again. In fact, a recent Society of Incentive and Travel Executives survey found that 84 percent of respondents expected to increase motivational travel use in the next one to three years.

But it’s not the same old fun-in-the-sun incentive trip. These days, CFOs are demanding more accountability and, in many cases, are even getting involved in planning to ensure that dollars are appropriately spent.

“The approach has become a bit more serious, from the decision to hold an incentive all the way through to the execution of the particular program, in terms of the details, the activities, and how it will be promoted,” says Mark Sergot, vice president of global sales for Fairmont Hotels & Resorts. “From the starting gates, organizations are taking significantly more time identifying the purpose behind having an incentive, why somebody would qualify. What does it mean in terms of financial contribution?”

1. Lingering “AIG Effect”

The party came to a crashing halt two years ago with the recession and the so-called AIG Effect, brought on when the insurance giant, on the heels of being granted billions in government bailout money, dropped nearly half a million dollars on a sales incentive event. After that, even businesses that hadn’t taken any government loans dropped incentive programs for fear of public and shareholder outrage—cancellations at top-tier properties were rampant, and corporations shied away from destinations that had a perception of glamour.

“We’re seeing a reversal of the past two years, when people were fleeing from incentive travel,” says Steve O’Malley, senior vice president and general manager of Maxvantage, the Maritz and American Express strategic meetings management alliance, and president-elect of the SITE International Foundation Board of Trustees. “We’re finally seeing people come out of the dark and say this is a very solid set of business tools that we need to employ as a part of our overall value proposition to our employees and as a way to improve bottom-line results.”

But it’s not all warm fuzzies—these days, proposals for incentive travel must provide hard data about the value of the program. When times were good, companies might have become lax about the business rationale, holding onto incentives because of a general feeling that it was the right thing to do, explains Scott Siewert, vice president of sales for USMotivation, a full-service incentive management company in Atlanta. “Now, it’s in the CFO’s office to make sure that the program makes economic sense.”

2. Justify your program

Fay Beauchine, president of engagement and events for Minneapolis-based Carlson Marketing, agrees that incentive program decisions have moved much higher up the food chain. “When it was a much more robust economy, a lot of midlevel planners had full autonomy over budgets and just repeated it year after year,” she says. “Today, it’s zero-based. You’ve got to go back every year and justify why your company needs an incentive program.”

To that end, determining the program’s goals and objectives has become critically important, as evidenced by who sits at the table from the start. Whereas only the incentive planner used to get involved at the beginning stages, now it’s not unusual to find the company president or CFO in attendance at early planning meetings. Taking that time up front is crucial if companies want to measure intended outcomes, notes Maxvantage’s O’Malley. “Trying to get down to some complicated algorithm to talk about bottom-line effect would be difficult,” he explains. “What’s easier is to state objectives then measure before and after.”

Whether you define ROI as “return on incentive” or “return on objective,” measuring intended outcomes has become a requirement nearly across the board, and that’s unlikely to change. A SITE survey found that 73 percent of respondents see a growing need to provide those types of results to meeting stakeholders. “I think we’re going to continue to see pressure to prove the value of this investment and the return on providing incentive travel as a reward,” O’Malley says.

3. A side of business with your golf?

Another way companies seek to ensure they get their money’s worth is by adding a light business meeting to the program. “If I’m going to fly all my top producers to a destination, why not have them get together, at least for a couple hours? I’ve got all this brainpower here,” says USMotivation’s Siewert, adding that his company now plans to include a business component in incentive travel. “We are seeing more and more high-level strategy sessions during incentives. Thus this is a real trend—not a fad.”

Another change that appears to be making the transition from fad to trend is the incorporation of authentic experiences that put participants in touch with the destination in a unique way. “Corporate planners are seeking relevancy,” says Carlson’s Beauchine. “Their participants want to feel that the brand is meaningful.”

4. Participants give back

One of the best ways to connect with that sense of meaning is through corporate social responsibility (CSR) projects—an idea that has gone from just a trickle of companies participating five years ago to more than half now looking to give back to the communities they visit. Carlson includes CSR options in every proposal it sends out, and Fairmont Hotels is rolling out a menu of suggestions for charitable activities at each of its properties. The chain also extended its popular Meetings That Matter program, which allows groups to donate 10 percent of the room revenue generated by a meeting booked at a Fairmont property to the charity of their choice, through 2011.

All these changes will ultimately lead to stronger, more rigorous programs—and that’s not a bad thing, experts agree. As Fairmont’s Sergot says, “Companies are identifying within their own organizations and cultures how passionately they feel about offering incentives…but rather than just speaking to it, they are putting specific numbers to it that justify the investment.”