In an Industry First, the SITE Foundation has taken an in-depth look at market forces, both within companies and globally, that have influenced incentive decisions in the past five years and will shape the industry over the next five years.

The research consisted of three efforts, a mix of qualitative and quantitative methods: 1) in-depth interviews with 20 members of the Society of Incentive & Travel Executives; 2) a focus group of 15 members; and 3) a traditional survey of 1,500 members. The goal was not only to explore the events and trends that are most affecting incentive planners, but also to offer strategies to help them adapt their businesses to these market forces.

By far, the most significant force influencing the industry has been and will continue to be technology. Respondents expressed concern that by using information technology, corporate end-users would slowly become experts in the field and circumvent incentive firms to work directly with suppliers. When asked about the future, respondents envisioned a technologically advanced industry, run by wireless systems, with online bidding being the preferred buying method and registration, programs, and payment methods residing entirely on the Internet.

As expected, the turbulent economy was a major external influence, with the past five years characterized by instability, recession, and a weakening U.S. dollar. The threat of recession is expected to continue as a major economic force, along with corporate mergers, inflation, and high oil prices.

The most influential political forces in the past five years, which also are expected to continue, are the threat of terrorism and war and anti-American sentiment in many parts of the world. In the focus group discussion, participants expressed concern that U.S. companies could prohibit travel abroad if the threat of terrorism increased.

The survey also explored forces within companies that shape their incentive decision-making (see graph above) and agreed that the major influence over the past five years has been a pervasive focus on the bottom line. This will only continue, and the increased involvement of procurement will require incentive buyers to be increasingly savvy about negotiations and cost control.

Adapting to the Times

The second part of the study explored incentive programs that are most successful during adverse political and economic times. It was agreed that incentive suppliers need to think about destination and venue changes, because global emergencies have become much more common in the past five years, with 9/11, SARS, and, most recently, the 2005 hurricanes.

It was also determined that when programs are held closer to home, the uniqueness of the offerings is what helps them to exceed expectations. A couple of programs were used as examples in the focus group discussion: an incentive to Santa Fe that incorporated American Indian spiritual and teambuilding activities; and a program in Whistler, British Columbia, that included an outdoor gastronomic event using tents.

How will these factors influence destination choices for incentive trips? On the domestic front, the “classic U.S. destinations” will continue to be popular: Las Vegas, Hawaii, San Diego, Orlando, Scottsdale, Phoenix, and San Francisco. For safety and security reasons, many respondents expect companies to keep incentives within U.S. borders in the next five years. When traveling internationally, respondents felt that security was one of the most important factors determining destination, along with easy access, reasonable travel distance, the variety of activities offered, and dollar value. Interestingly, though, when focus group participants were asked about the most popular emerging destinations outside the U.S., Vietnam — which fits few of these criteria — rated high because of its intrigue factor among well-traveled attendees and the quality of its high-end hotels. Also poised to become increasingly popular in the next five years are China, Latin America, and Cuba.