The annual Corporate Meetings & Incentives/ Incentive Research Foundation survey, conducted in December 2012, found few differences from a year ago when it comes to company performance. Sales are slowly creeping up, with 83 percent of responding companies saying sales had increased or stayed the same in 2012—slightly more than in 2011 and 10 percent more than in 2010. Just under half (46 percent) saw sales increase, but that’s still slightly worse than in 2010, when 48 percent of respondents reported stronger sales.

Of course, not as many programs are being canceled as during the economic crash, but more than one in 10 companies still canceled their incentive trips.
Perhaps the biggest indication of “the new normal” comes from the budget and per-person spending figures. The amount spent per incentive attendee has fallen for four years straight, to $2,500. Looking way back to 2006, almost a quarter of respondents to this same survey were spending $5,000 per person, and 56 percent reported increases in their incentive budgets. (Only 35 percent of this year’s respondents saw increased budgets.)

The main culprit, no surprise, is the economy, according to 68 percent of those responding.
Readers have gotten creative about working within these parameters, finding ways to make their
incentive programs special year after year. Interestingly, rising to to the top among their strategies for dealing with smaller budgets is the decision to have fewer management
personnel attend the trips (reported by 36 percent of respondents), perhaps because senior management is also increasingly maxxed out due to budget cuts. Companies also continue to reduce the number of on-site gifts (22 percent), as well as choose second-tier cities, avoid five-star properties, and cut sponsored activities, such as golf (all mentioned by 19 percent of respondents).

The good news? (Yes, there is some.) A full 59 percent of respondents expect their companies’ sales to increase in 2013—a healthy increase from 2012. And 35 percent expect their incentive budgets to grow.

What a Difference Five Years Make

What a difference five years make. Back then, per-qualifier spend rose a healthy 7 percent from the year before to an average of $3,659, vs. today’s $2,500.
Looking back at our 2008 Incentive Travel Trends Survey, incentive experts bemoaned the skyrocketing cost of hotel, air, and destination management companies, and the shrinking value of the U.S. dollar for overseas programs. “A 7 percent budget increase is barely going to cover your increased costs,” said Bob Dawson, the research chairman for the Incentive Research Foundation at the time.
Procurement departments were finding their way into the incentive realm, too, and starting to demand that planners hold their budgets steady. Today, 51 percent of respondents to our survey are working with stagnant budgets, and 14 percent with smaller ones.
No doubt, the situation back then was getting harder than in previous years—but everything is relative. Dawson recalls overhearing participants at an incentive program cocktail reception complain about the lack of golf on the itinerary. “It’s really hard for the planner to say, ‘Look, the company didn’t want to fund it,’” he told us. Today, how many companies fund golf?
Almost half of our 2008 survey respondents were taking their incentives outside the United States every year, and nearly 80 percent at least once every couple of years. “Pure incentives” were just starting to fizzle, with most companies were starting to include a meeting or two. Today, incentive attendees spend 36 percent of their trips in meetings, according to our survey.
Back in 2008, Bob Vitagliano,  the former CEO of Site, was the executive director of the Site Foundation. He told us: “We’re getting to the point where we’re pushing employees too far and expecting them to make too much of a sacrifice without enough rewards.” They have been sacrificing ever since; in fact, most winners have grown comfortable with fewer perks, anything-but-five-star hotels, and even having to spend some of their own money during incentive trips.
 “I recall things being this tight only once before: during the recession of the early ’70s,” he said. How could he have known what lay ahead?

We're in a Holding Pattern: Insights from the IRF's Melissa VanDyke

The top findings from this year’s survey show little change from last year, in part due to the negative economic picture painted in late 2012. The overall message from incentive travel planners seems to be: “Hold steady.” In fact, the majority of planners are showing strong consistency in many aspects of their programs:

Program Maintenance: The vast majority of program owners (almost 80 percent) maintained their programs heading in to 2012, and 90 percent will be maintaining them going in to 2013. Just over half of respondents will be maintaining the same budgets in 2013, with another quarter raising them slightly.

Similar Challenges: It seems the new economy presents a stable set of challenges for planners. Staying within budget, finding the right destination, and negotiating with suppliers continue to be the top challenges, similar to last year’s findings.

Stable Investment: Per-person budgets continue to average around $2,500 per person with the standard program attendance radiating around 160 people.

Flat Trend Lines: Corporate social responsibility and wellness continue to generate a great deal of discussion in the industry, and a consistent third of planners reported using each of these in their programs heading in to 2013.  
Melissa VanDyke

Social Media Foothold: Social media seems to be one of the few places where change is taking hold in the industry. Almost 40 percent of planners now report using social media to promote their programs. Sixty percent of these planners are using Facebook and more than half are using Twitter to get the word out about their programs.