“MAY YOU LIVE IN INTERESTING TIMES.” This curse may be ancient, but many of today's meeting professionals feel as if it was written for them. In late April, on the very day the World Health Organization extended its SARS-related travel warning to Toronto (which was lifted a week later), with the stock market jumpy and the last major battles in Iraq just a week old,& Incentives held a roundtable in Las Vegas, gathering corporate planners and incentive house executives for a discussion of the forces and trends affecting their incentive programs. Here are some highlights of that discussion.
CMI: Where have you seen the most impact on your travel incentive programs since September 11?
Sabo: [In fact, we saw] the shift come prior to September 11 with the economic downturn. That was the more major change for our clients.
Adams: I tend to agree. From our small company perspective, this all started with the huge economic downturn in the semiconductor industry. The last program we held was in August 2002. The Mideast situation, the SARS situation — these are certainly large things to take into consideration, but it is the economics that have really affected us.
I think it is real easy for some people within the company to say, ‘We have to cancel this Asian meeting because [of SARS].’ While it is a good reason to cancel, the reality is that if SARS didn't exist, the meeting wouldn't have happened because of the economics of it. That's the situation for our 2003 program. And because we work on such a short timeframe, as of yesterday, there were no plans whatsoever for 2004. And according to the indicators in the semiconductor industry, we're looking at probably the first quarter of 2004 before this turnaround really starts happening.
Mason: Fortunately, our business has only experienced minor changes. We have had a couple of adjustments as far as programs. In '03 we have a program that was supposed to be delivered to Los Cabos, Mexico, and because of sensitivity to traveling in general, and not knowing the outcome of the war, a lot of people seemed to be a bit hesitant. And so the client did a little survey, and decided to postpone the program. We ended up changing dates to December. There is some concern out there, and I think part of it may be the spouses' fear of traveling.
Steph: We had a trip [in 2002] to New York with spouses. The group I primarily deal with is 25- to 45-year-old males, and their spouses were invited. There were spouses who were very reluctant to fly to the East Coast out of Portland. So it did have an effect. And we did have spouses who did not attend.
Watson: You bring up a really good point, the biggest reason we changed all our plans last year was because spouses would not go.
CMI: Where was the program that spouses hesitated to go?
Watson: On the East Coast. It wound up in Napa Valley. The company used to go to Europe, do golf tournaments in Ireland. Now they are pretty much limiting everything to the continental United States.
CMI: So that has been a conscious change?
Watson: Yes. And SARS does bother me a little bit, it really does. I know there are people, come August, that if this thing is still going on and it's spreading, people won't want to go [on a planned Alaska cruise]. We did a trip to Mexico on a cruise ship a month ago, and we were really concerned about the diseases and the problems they've been having on the cruise ships. Up to a week before, they were sending me things telling me what they were doing to eradicate the problems.
Sabo: We actually haven't seen any impact on spouse programs, family programs. As far as SARS is concerned, we have a standing planning emergency team that meets daily and has been in place for a long time. So we've tried to stay ahead of the curve in terms of communicating to our clients and getting information from reliable sources — our Canadian office, Asian affiliates, airlines, and that kind of thing — and communicating that to our clients so that they're not relying on the news media, they're relying on us for that information.
CMI: What has happened to your European programs?
Sabo: That has changed. But, again, that was really more the economy prior to September 11 than anything else. We've seen the international booking on a pace to return to pre-9/11 days; it's not there yet, but it is headed that way. If SARS progresses, it may have an impact. But we just have not seen it.
Mason: We haven't had any cancellations. We are finding that the programs that are in place right now are programs that we will deliver as planned. The numbers may be down a bit, especially in '03, possibly in '04. But week to week, month to month, everything seems to be changing with the war and SARS.
As far as safety is concerned, I think those who are accustomed to participating in these types of programs are very comfortable with travel. Spouses aren't, but I think for the most part they [the decisions] are more economic.
A big issue is that [at many corporations] management is saying, ‘We could do Europe in '04, or we could wait until '05 or '06. Why not wait a year or two until things stabilize? There are plenty of places closer to home. We'll just focus on offering a more deluxe domestic program.’
Sabo: We've had no true cancellations. Just a handful of postponements. But again, the international booking pace hasn't been what it was prior to … the economic downturn in the spring and summer [of 2001]. So 2004 is going as planned. It was just that first couple of weeks of the war that really made some people uneasy.
CMI: Are qualifier numbers down?
Sabo: [The economic downturn] has caused program sizes, generally speaking, to decrease. We haven't seen it in terms of not qualifying — it's notor slippage. It's deliberate reductions in the program's scope from the pre-planning standpoint. So in some cases, program sizes are down, but it is not anything drastic.
CMI: What are the best ways to protect your programs?
Sabo: A travel program is really more than just a trip experience. It's about how the company is going to build better relationships. As long as companies are tying [the reward] back to a measurable objective, then it's sellable. By asking questions and getting to the root of what you really want to accomplish, you then have measurable objectives: Do you want to encourage them to do better next year? Do you want to give them the tools to be a little more recession-proof? To be able to get into niches where they weren't before? And it is different for every client. It is different even within one company for every program because it is different regions or different levels of people.
In doing so [defining objectives], you provide a kind of insulation from budget cuts because [you] are showing the value of the trip. It's not just lying on the beach, it's not just golfing. So there is always a way to measure [return on investment]. We don't see any clients who just say, “Our goal is to reward. That's it.”
Adams: First of all, I don't think you'd be in business if you weren't doing that. I've been in the semiconductor industry for 20 years, and I've worked for a lot of the large, well-known semiconductor companies. In the past, when times were good, there have been companies — who shall go nameless — that said, “Here's $10,000. Go have a good time.” But business has become too sophisticated. I have to prove — whether it's a meeting, advertising, collateral, a Web site, anything that I do under myand communications hat — that the program has .
CMI's roundtable tapped into a variety of issues. Here is a sampling of attendees' experiences with today's hot topics.
Sabo on Procurement: “All of us are experiencing the emergence of procurement departments into the [meeting] process, which is relatively new. Procurement is getting into the driver's seat very quickly. So numbers have to speak, because that's all they care about. They don't care about pretty brochures, and they don't care about fluffy writing. It's all about the numbers.”
Mason on Airlift Cutbacks: “We just had a program in March in Lake Tahoe, and flights from Reno used to be direct via Delta. They [Delta] have cut routes and now connect through Salt Lake. This program is usually held every other year, but the flights are so arduous now that the client may consider another destination entirely.”
Adams on Virtual Meetings: “We've cut back on travel, so they [virtual meetings] are necessary. I would rather get on an airplane and go. But the technology has advanced to such a point that it's saving a lot of money. It's quicker. It's been a big advantage for us and our customers. We're finding that a lot of customers think the same way we do.”
Steph on Spas: “I am surprised at how much spas are becoming more of an issue. It used to be golf. And while it used to be just the females who attended, now it seems like it is a couples event.”
Sabo on Sponsorships: “We are seeing an increase in sponsorships at meetings and incentives — going after affiliates to come in and sponsor a reception or an event, whatever it might be. It is broadening outreach, and it's also saving money.”
Jalet on CVB Budgets: “We're finding that, as a destination, our visitor volume dollars are not necessarily down that much, but the average room rate is. And average room rate affects us dramatically. We're funded through room tax. And since average room rate is down considerably this year over last year, that dramatically affects our marketing budget. We do not have the funds that we anticipated having.”