To say that incentive trips of late have been more low-key than usual is like saying the past year has been a little... challenging. Budget cuts have forced planners to shrink the number of nights and reduce the management staff that attends. Companies have done away with golf, spa, and spouse programs—even the little gifts on the pillows. They’ve shied away from five-star properties and resorts, kept trips within a short flight from home, booked off-season, and even taken their chances with second-tier destinations they would never have dreamed of using in the past.
Of course, the expectation among management is that these programs will still get the job done and drive sales. And planners are hoping they will have the same perceived quality and value in the eyes of attendees. But do they? Are companies still achieving sales success with scaled-back incentives? What are their participants saying about the programs? And how do incentive planners feel about the impact they’ve had on sales, morale, and retention?
This survey—a joint effort between Incentive Research Foundation—found that there has been a cumulative effect from the continuous incentive travel reductions of the past years. In some cases, as many as one-quarter of the winners walk away unhappy with some aspect of the trip. The first year that a company cuts the standard of its incentive trip, there’s a corresponding strong negative impact on morale; the consequence of repeating these cuts year after year could be that companies will lose their top performers.& Incentives and the
What Was Cut?
Of all the kinds of incentives that were cut in 2009, group travel was the hardest hit, with more than twice as many respondents (37 percent) having canceled group trips as having canceled individual incentive travel programs (16 percent) or merchandise awards (16 percent). Budgets in 2009 were way down: 63 percent of the survey respondents said their budgets were slightly to significantly less than in 2008; 31 percent said they were the same. Most telling is that 20 percent said their budgets were significantly less (down more than 25 percent).
Respondents were forced to deal with these tighter budgets by making cuts to their travel programs. The most popular cost-cutting strategies were eliminating on-site gifts (59 percent), shortening the stay (41 percent), sending fewer managers on the trips (41 percent), and inviting fewer qualifiers (34 percent).
Doing less with less also posed significant challenges to incentive planners, who said staying within their budgets was their biggest challenge (61 percent), followed by generating excitement among potential qualifiers (45 percent), and promoting the program (26 percent).
What About the Winners?
In 2009, it seems that most qualifiers weren’t surprised at the lower-profile trips their companies held; their expectations were low because they realized that everyone had to reduce costs. But there’s no question that some of the cuts nonetheless had a negative impact on the winners.
When asked if attendees were disappointed by the lower quality of their incentive trips, 66 percent of respondents indicated that attendees were just as satisfied as in past years, and some respondents (6 percent) received feedback from their attendees that was even more positive than in the past. However, combine “dissatisfaction with program inclusions” (13 percent), “dissatisfaction with the destination” (9 percent), and “dissatisfaction with the property” (3 percent) and you get a total 25 percent dissatisfaction score, according to planners.
We then asked, “If you lowered the level of your 2009 group incentive travel program from previous years, what effect do you think those changes had on sales, morale, and retention?” Nearly one-third of respondents reported a negative impact on morale (32 percent), while nearly one-fifth saw a negative impact on sales and nearly one-fifth on retention.
A full third of respondents indicated that at least one of their 2010 incentive programs would be canceled. That’s fewer canceled incentives than in 2009, but still a significant number. And as in 2010, group incentive trips will be canceled twice as frequently as individual incentive travel and merchandise programs.
When it comes to incentive trips, budgets are loosening slightly: 43 percent of respondents indicated that their budgets have not been cut; the 55 percent whose budgets were cut are using similar cost-cutting strategies as they did in 2009.
However, put another way, 91 percent of 2010 programs will have budgets that are either the same or less than in 2009. The key is that these budget cuts are cumulative: 2009 budgets were already coming in at an average of 20 percent less than 2008 levels. Companies are cutting back even more on what they had already cut back on the year before.
When asked if they thought these cuts would have a negative impact on their winners, 30 percent of respondents said they expect the cuts will affect morale and 19 percent expect they will hurt sales. When you look at the 30 percent predicting damage to morale, however, that’s significantly higher than those who don’t expect a negative impact at all (19 percent).
Another revealing finding of this survey is that significantly more respondents expect a negative impact on retention
(30 percent) from 2010 cuts than in 2009 (19 percent). Reading between the lines, it just might be that the cumulative cuts of 2010 and years past could drive away companies’ best performers.
- The median per-person expenditure for respondents' major group incentive trip was $3,500 in 2009, vs. $3,846 in 2008.
- The most popular domestic destinations for respondents’ last major group incentive travel program were Florida, Las Vegas, and Hawaii. The most popular international destination was the Caribbean/Bahamas.
- The unfavorable exchange rate with the Europe was a factor in companies' site selection in 2009; among the destinations that companies chose to replace their European trips were Hawaii and South America.
In November 2009, Penton Media (the publisher of Corporate Meetings & Incentives), e-mailed invitations to participate in an online survey. Over 4,700 domestic subscribers of Corporate Meetings & Incentives and Research Foundation supporters received the invitation, with 109 participating, for an effective response rate of 2.7 percent after bounce-backs. Job titles of respondents included general management/administration, sales/ management, and meeting planning/management; all participants have responsibility for their company’s incentive programs. (There were no incentive suppliers or consulting firms participating.)