THREE YEARS AGO, American Fidelity Assurance Co., based in Oklahoma City, Okla., jetted its sales incentive winners halfway around the world. The Hong Kong excursion was “a great trip,” says Brett Barrowman, vice president, conference and travel services at AFA, but it was the last time, for the foreseeable future, that the company will plan a reward that far from home.
“We've pulled back on international travel to other continents,” says Barrowman. “Our people don't want to go too far away for a number of reasons,” he says. “One is they don't want to fly for 13 hours.” He also cites the unsettled world situation and winners' reluctance to be away from the office and family.
AFA's thinking is in line with many others questioning the use of long-haul incentive destinations. Four years after September 11, 2001, and two years after the Centers for Disease Control and Prevention lifted SARS-related travel alerts, incentive trips to places such as Australia and the Pacific Rim still have not bounced back to 2000 levels. But unlike before, when security and disease were the prime deterrents, today, apprehension is more focused on budget and perception concerns, time away from work and family, and uncomfortable flight times.
“In today's business climate, incentive trips are looked at on an ROI basis, like any other corporate investment,” says Michael Schron, partner in New York — based meeting and group travel incentive firm Robert P. Schron Associates. “Long-haul incentive trips tend to be more expensive and require more days away from work than trips to closer destinations, and may be viewed by management as less time-efficient or cost-effective.” In other words — less return on investment.
And recent corporate accounting scandals have added to the problem, believes Karen Bolinger, general manager, marketing, at the Sydney (Australia) Convention and Visitors Bureau. “Since September 11 and the introduction of new U.S. corporate governance rules,” the U.S. incentive market to Sydney has slowed, she says.
“Most companies are doing incentives closer to home to cut costs, especially since Enron,” agrees Lorenzo Giani, sales manager, Sun International, a destination management company in Johannesburg, South Africa. U.S.-based incentive business at his company is down about 10 percent this year compared to last year, he says, primarily because of clients' concerns over cost and the long flight. And, he says, those concerns are sometimes more perception than reality. While it is a long trip to South Africa, costs and flight times can be comparable to traveling to Hawaii from the U.S. East Coast, he says.
Many companies simply do not want to give the impression that they are jetting all over the world. “It's more the perception of cost than it is the actual cost,” says Roger Tondeur, CEO, MCI Group, an event management and performance improvement company based in Geneva, Switzerland.
Besides smaller budgets and accounting scrutiny, time is a factor. “Long-haul destinations are encountering an increasing lack of willingness by management to have sales staffs off for an extended period of time,” says Carly Bogaerts, spokeswoman, Tourism Australia.
RE/MAX Promotions Inc. is a case in point. Marianne Thompson, director of special events and meetings for the Mississauga, Ontario — based company, is keen on a long-haul trip — perhaps an African safari. She has proposed it, but the idea hasn't flown. Why?
“It's the time away from the office more than anything else,” she says. A flight of more than five hours is too long, she adds. Usually, the trips are four nights, tops, to “easy access gateways where there are no plane changes.”
Long-haul trips are also “a bit of a harder sell,” for Julie Johnson, director, events and incentives, Lennox International Worldwide Heating and Cooling, Richardson, Texas. Two years ago, the company took an incentive trip to Australia, and the numbers were about one-third lower than usual. “The people who went had a fabulous time,” says Johnson, but the 17-hour flight proved to be a disincentive for many of Lennox's qualifiers. “It was really just due to the travel time,” she says.
Going forward, Lennox has altered its strategy. It will continue to book international trips, but plans to stick to Europe and the Americas. “For our incentive trips, we have decided that making such a long trek is not the direction we want to go,” she says. “Many of our travelers are not well-seasoned travelers, and flying for more than 10 to 12 hours in coach proves challenging.”
For MCI Group's Tondeur, all these factors have changed where his business gets booked. “We see a very clear regionalization of the corporate meetings and incentive business,” he says, citing three distinct areas: the Americas (the United States, Canada, Mexico, and the Caribbean), EMEA (Europe, Middle East, and Africa), and Asia-Pacific. More than ever, he says, companies are running incentives within their respective regions. Almost 95 percent of the meetings and incentives MCI runs each year are within the EMEA, and Tondeur suspects the same holds true in Asia-Pacific and the Americas. “It's very difficult for us today to sell Asia or to sell the U.S. to our corporate clients because they want to stay generally in the region.”
Gillian Taylor, general manager, Australian Incentive Travel Co., Sydney, agrees that markets are changing. “The traditional markets can no longer be relied upon to perform as before,” she says. “In the future, China and India — the new driving forces in the economic world — will surely affect the incentive world as destinations to go to or as a source of incentive participants.”
Singapore's incentive experts see a similar trend. While there are encouraging signs from China and India, incentive travel numbers have been down the past several years, with groups from Europe dropping from 8.1 percent in 1998 to 5.2 percent in 2003. One of the reasons is “keener competition among regional destinations for the incentive dollar,” says Remy Choo, assistant director, incentive travel, Singapore Tourism Board. Security and health concerns are other fears that have reduced traffic, he says.
Although North American arrivals are just a small fraction of Singapore's incentive business, its market share has, in fact, grown: from 2 percent of Singapore's incentive visitors in 1998 to 3.3 percent in 2003. This points up the fact that while long-haul destinations can be a tough sell for U.S. companies, many destinations are holding out hope for, and some are seeing, improvements in incentive arrivals.
“While there hasn't been a complete turnaround, there has certainly been growth in long-haul incentives [out of the U.S.],” says James LaValle, manager, conventions, exhibitions, and corporate events, Hong Kong Tourism Board. Hong Kong saw a 45 percent increase in corporate meetings and incentive business from the United States in 2004, but that is compared to a dreadful 2003 when the SARS epidemic kept visitors away.
In Australia, U.S. incentive business has remained consistent over the past few years, says Bogaerts. However, a recent survey by Tourism Australia of incentive buyers around the world found that 82 percent would increase the number of incentive groups sent to Australia in the next 12 to 24 months.
One U.S. group that made the trip Down Under this year was Carpet One of Manchester, N.H., which brought more than 1,200 people to Sydney, one of the year's biggest incentives in Australia.
Bob Spellman, president, Spellman Travel Partners, Boston, which ran the trip for Carpet One, says his long-haul business is already back to normal. “Companies that have the enthusiasm and the budget for long-haul incentives, and understand it's not a four-night program, are talking about it again,” he says.
Mark Bondy, president, Viktor Incentives and Meetings, Traverse City, Mich., is also upbeat. “This year was really the first year that we really started seeing international travel to Europe and beyond coming back,” he says. He expects his long-haul business to be back to pre-9/11 levels by 2006 and 2007.
As Spellman sums up, “Sure, they'll be on the plane 10 more hours than if they went to Europe, but they're going to have an experience of a lifetime.”
Long-haul destinations are not sitting idly by waiting for business; rather, they are aggressively marketing themselves to incentive planners. The Singapore Tourism Board's “Make it Singapore Plus” promotion is being offered through the end of the year. The bureau will pick up the management fee for Singapore-based destination management companies and will provide financial support for speakers, videographers, photographers, teambuilding activities, and welcome gift packs. Also, complimentary hotel rooms are offered to key decision-makers, and discounts are available for opening receptions and airline tickets. Events must be held by December 31, 2007. For more information, go to www.makeitsingapore.com.
Tourism Australia is taking a different marketing tack, launching the Australian Exposé Awards to honor the creativity of meeting and incentive planners in four categories: most creative incentive program, most creative corporate meeting program, best use of a unique venue, and best teambuilding activity. The promotion has a dual purpose: Encourage the creativity of planners and boost Australia's destination appeal. “We want to expose not only the destination's attributes, but how many options and ideas are out there,” says Michelle Gysberts, partnership director, Tourism Australia.
Finalists will be profiled on Tourism Australia's Web site, www.meetings.australia.com, and winners will receive awards at ITME's Motivation Show. For more information, visit Tourism Australia's Web site.