While today’s incentive managers know they must retain the “wow” factor to keep high achievers happy, many are under the gun to pack in more meeting sessions, opportunities for networking and other interactive business components into programs.
It’s all about the increasing quest to wring more ROI out of incentive spend, say planners. They report an uncertain economic climate and time poverty among reasons for the trend. There are also concerns about government tax and oversight ramifications driving sponsors to include a business segment within even the most lavish of reward programs.
“Almost every incentive, regardless of the market or industry, will do some sort of meeting to motivate attendees for next year, or introduce top performers to a new product,” says Nance Trevithick, director of group and incentive sales for The Resort at Pelican Hill, an Italian-style luxury enclave that opens in January on 504 acres between Newport Beach and Laguna Beach. “Meetings are a great way to get the sponsor’s message across during an incentive program where you have all the heavy hitters together at one time.”
Pelican Hill, she adds, is garnering groups who still are looking for a deluxe destination along with opportunities for business productivity.
A more serious emphasis on meetings content is just one trend in today’s incentive market. Some planners report golf is giving way to spa and that multiple choice customizations for activities are de rigueur when several generations are represented in the same group of participants. The increasing cost of airline transport and the weakening value of the U.S. dollar abroad are also having a significant impact on incentive planning.
Time Poverty
Craig Howard, national sales director for Corporate Incentive Travel in Alexandria, Va., notes that a stronger emphasis on business sessions during incentive programs makes a lot of sense in these days of time poverty and strained budgets for many companies.
“We are doing a lot of business meetings, not for tax reasons, but for content enrichment,” he says. “It’s an opportunity for the sales force to be educated and return to their jobs more productive. Typically, it would be the morning on the first full day of a program. We might bring in a motivational speaker and include the spouses. Or we might split up the group, with employees going one way and spouses doing something interesting like a cooking class with the chef.”
Getting top producers together in one place is very tempting to management, according to Lynn Randall, strategic meetings consultant with Maritz Travel in St. Louis, so content is key.
“There can be significant value in capturing the attention of one particular group of people,” she says. “One of our telecom clients offers exclusive content in the meeting segment—such as a look at the back of the house operation. One of our groups listened to a housekeeping woman talk about how the way she folds towels affects the guest experience. The key is putting irresistible content out there in the business component.”
She adds that incentive programs provide valuable time for management and participants to learn from each other.
“We used to feel incentive participants wanted to have face time with senior executives,” she says. “Now, it’s the seniors who want to know what’s on the minds of their superstars. So we must create a unique environment for them to do this, like roundtables, pilot programs to test ideas. It’s all about capitalizing on the time you have with those in hand. This can require some coaching for the executives.”
Craig observes that there is also a trend for companies to split qualifiers into two groups for an annual incentive.
“So they don’t have as many people away from the office at one time,” he says. “If you have 150 couples, you take 75 out in January and the other half in July.”
Adjusting programs to start on Sunday rather than on Monday or another weekday is another way incentive sponsors are juggling time issues.
“This is so they will have more time in the office,” says Cindy Shtur, CMP, account manager with Concepts Worldwide, a meeting and incentive planning firm in Carlsbad, Calif. “This is partly the economy and partly time constraints. Sponsors don’t want their sales force out of the office the whole week. Where we used to see programs run an entire week, they now are being shortened to four or five days.”
Economic Pressures
Trumping almost everything else these days are economic considerations, say several incentive planners. According to Shtur, clients are making it harder for their people to qualify as profits flatten.
“They are setting the qualifier bar higher,” she says. “This is a way to tighten up the budget without sacrificing the program, because they don’t want to sacrifice a truly good incentive. So they decrease the room count but not the experience.”
Trevithick sees similar patterns.
“Companies have pulled back on incentives because profits are flat, but they aren’t doing away with them,” she says. “They have fewer people qualifying because profits are down, but they don’t want to lose the allocated budget monies, so they take the really top people and introduce them to something great. They know they must incentivize people so they will continue to produce even in tough economic times. It’s also about recognition and time with senior executives.”
Randall believes incentive buyers want more than ever to know what they are getting.
“The wise corporation looks at incentive programs as the short-term management tools that they are,” she says. “What we are seeing is a greater push for creative measurements about what incentive programs bring in, the ROI and less tangible things like retention and loyalty, because one thing incentives are supposed to do is keep good people.”
Destination Trends
Budget and time concerns are also affecting choice of destination, say the experts.
“People are staying closer to home,” Howard says. “Nassau, Mexico and the Grand Caymans are real big for us right now. Los Cabos has become very popular for our groups, as has Cancun. Atlantis in the Bahamas is a great off-shore choice, too, because they’ve won awards for food presentations with a lot of flair, and that’s an important incentive wow.
“I don’t think these choices are based so much on air costs as they are on people knowing that if there is something going on like the mortgage banking crisis, they can get home faster,” he continues. “This trend first came up as the result of the 9/11 events. Then it went away, but now it’s back.”
Air fare costs and the U.S. dollar’s weakening status against other currencies are other trends affecting client choices of destinations for incentives, notes Bill Boyd, CMM, president and CEO of Sunbelt Motivation and Travel in Dallas.
“We’ve seen several airlines cease operation since the beginning of this year,” he says, “and even some private air charter companies are closing. Fuel costs and fuel surcharges are affecting incentive planning. Everyone has to recoup, so prices must go up. Every penny of price increase in oil translates into $30 million per year for American Airlines alone.”
Incentive industry consultant Bruce Tepper, vice president of Scottsdale, Ariz.,-based Joselyn, Tepper & Associates, sees air fare costs as the most significant variable today in long-term incentive planning.
“Fuel increases—and thus fare prices—could radically change choice of destinations,” he says. “People might elect to do more regional programs within the U.S. But I don’t see that as a problem. You just have to keep the ‘wow’ factor within incentive programs, and you can certainly do that in this country. You don’t have to go to Rome for it.”
