More than one in three U.S. companies used incentive travel or merchandise to recognize or motivate employees last year, according to recent research from The Incentive Federation, an umbrella organization that conducts lobbying and research efforts on behalf of the incentive industry.

And the investment in incentives was huge: Companies spent $32.7 billion on merchandise and $13.4 billion on incentive travel in 2006. These and other results of The Incentive Federation's U.S. Incentive Merchandise and Travel Marketplace Study were released during a press conference at The Motivation Show in Chicago in September.

Perhaps even more impressive than the big bucks posted for the year was the upward trend revealed by the study: “This boom is not going to be ending,” said Frank Katusak, president of The Incentive Research Foundation, a member association of The Incentive Federation, of which Katusak is chairman. “More than half of large companies that use incentive travel said that their budgets had increased over the past two years and will continue to increase over the next two years.” On the merchandise side, 59 percent of respondents expect their budgets to increase over the next two years.

“The use of incentive programs is bigger than ever, and it is growing,” said Bruce Bolger, managing director, the Incentive Performance Center (part of The Incentive Federation that focuses on corporate outreach), who also spoke at the press briefing. “This is a whopping, major-league industry.”

Bolger called on incentive suppliers and users to step up the training and professionalism of their employees and the sophistication of their programs. “This is an opportunity for our industry, but it is increasingly competitive,” he said. “We who are traditionalists will have to increase and sharpen our skills. We need people who understand the difference between trips and prizes — trinkets and trash — and performance improvement. It isn't about carrots. It's about lighting the fire within.”

IRF Survey Highlights

Average budget for motivational meetings in 2006 was
$68,000

The average budget for special events in 2006 was
$78,000

On average in 2006, large companies sponsored
4.7

motivational meetings, each involving
197

participants

On average in 2006, large companies held
91.3

special events

The full report is available at www.TheIRF.org.

Incentive Federation Findings

Among companies that use incentive travel,
81%

use it for sales incentives, and
58%

use it for nonsales employee recognition

Among large companies (those with revenues in excess of $100 million) that use incentive travel, the average number of incentive trips held annually was
3.6

with average attendance of
157

The average budget for incentive travel in 2006 was
$164,000

The average budget for incentive travel in 2006 was
$119,000

The full report can be found at www.incentivecentral.org. The study will be repeated in 2010.

Incentive Categories Defined

Concurrent with The Incentive Federation's study, The Incentive Research Foundation released its 2007 Industry Profile Study, which looked at spending on three categories of meetings: incentive travel, motivational meetings, and special events. Spending for all three segments was more than $77 billion in 2006.

Incentive travel, used by 10 percent of companies, was defined by the report as “a management tool that uses an exceptional travel experience to motivate and recognize participants for superior performance. The purpose of the trip is for participants' enjoyment, not for business.”

Motivational meetings, used by 50 percent of companies, were those to which attendees did not have to earn their invitation. Special events were defined as “standalone events” that could include business meetings, product launches, road shows, and social customer gatherings.

The Incentive Research Foundation was launched in May 2006 after operating for nearly 20 years as the SITE Foundation.