Incentive travel at many U.S. companies is feeling the pinch. Not only are trips shorter and closer to home, but some procurement officers are cutting luxury brands altogether, according to a panel of five hotel executives who spoke at the Society of Incentive & Travel Executives' International Conference in Toronto, November 3 — 6.
“Incentive trips are now four nights, when they used to be seven,” said Geoff Ballotti, president of Starwood Hotels & Resorts' North American division. Wolf Henger, president of worldwide operations at Four Seasons Hotels & Resorts, also reported less long-haul travel. “In 2000, incentive destinations like Bali would have seen many groups; now maybe they have one or two.” He is seeing the most incentive business in his chain's resorts in Florida, the Caribbean, and Mexico.
“Procurement officers are creating a squeeze on everybody,” said Henger. “One problem I see is that they look at hotels as a commodity. Our job is to prove that we are not a commodity.”
The group also agreed that the Sarbanes-Oxley Act is having a significant effect on meetings and incentives in the financial services sector, and expressed concern that the scrutiny of meeting and incentive spending that is pervasive in the pharmaceutical industry is starting to take hold in financial services.
The executives discussed how they could better serve their incentive industry clients while remaining loyal to the third parties that bring them the business. “A convergence issue has developed,” acknowledged Chris Cahill, president and COO of Fairmont Hotels & Resorts. “Procurement has muddied the waters as far as who owns which customers because they're buying business travel as well as incentives.”
Some audience members complained that hotel companies were trying to get customers to book directly and leave out third parties. But the panel firmly disagreed. “We couldn't do business without them,” insisted Ed Fuller, president and managing director, Marriott International Marketing. In fact, at his chain's European hotels, almost all business is booked through third parties.
“Sometimes a customer will reach out directly to us and and we get back to them directly, which is a mistake,” said Geoff Ballotti, president, Starwood Hotels & Resorts, North American Division. “We need to always ask ourselves, ‘Who owns this customer?’”
What are the emerging incentive destinations, from the five hoteliers' point of view? South America, Central America, Mexico, and Eastern Europe were all mentioned as up and coming incentive sites.