IRF Trends Survey, data collected Summer 2017


SURVEY Overview

The Incentive Research Foundation (IRF) sponsors regular trends surveys covering topics of current interest to those in the incentive industry: incentive providers, suppliers to the industry, and corporate incentive merchandise and travel buyers.

This report summarizes findings from data collected between July 25 and August 7, 2017.

 

 

Methodology considerations

Audience: The IRF Pulse/Outlook Study is distributed to the IRF database - a list of largely U.S. based incentive industry stakeholders. As such, results represent the outlook of industry professionals for the U.S. market.

Weighting: No weighting is done on the data to control for variances in response counts across the three stakeholder groups - Corporate, Supplier, and Third-Party. Totals reported are simple totals across all survey respondents. 

 

considerations for non-cash program design

Internal factors, such as financial forecast and opinions held by indirect stakeholders, are much stronger considerations for program managers than external factors, such as public perception and competitive activity. 

Please indicate the level of your agreement or disagreement with the following statements as they relate to your most recent incentive program. 
Base: Corporate respondents

 

Introducing the net optimism Index

The IRF has created a simplified metric to track the economic outlook for the incentives industry. Net Optimism is the percentage of people providing a positive rating, adjusted by subtracting the percent giving a negative rating. A higher positive score indicates optimism in industry.

 

INCENTIVE TRAVEL PROGRAMS

Total Participating: 176

  • Corporate: 26
  • Suppliers: 54
  • Third-Party: 96

 

Net Optimism – Impact of Economy on Programs (TRAvel)

The Net Optimism Score for Summer 2017 is 44% - the incentive travel industry is increasingly optimistic about the economy and its impact on the industry. This is approaching the historical highs in the low 50% range seen in 2013 and 2014, and continues the long positive trend that began in 2012.

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The economy

 

Incentive Travel Net Optimism & U.S. GDP Growth (TRavel)

Optimism within the incentive travel industry tracks closely with overall U.S. economic performance, with the occasional exception. In late 2011, industry optimism showed a dramatic dip – perhaps in anticipation of the economic decline that began shortly after.

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The economy 

 

Net Optimism - Air Transportation Environment (Travel)

Once again, incentive professionals have a pessimistic view of the air transportation environment and the likely impact to incentive travel programs. The upwards momentum of the past several years has reversed since October of 2016.

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution: The current air transportation environment 

 

Net Optimism by Audience (travel)

The overall sentiment within the incentive travel industry is positive for the economy and mostly negative in terms of the air transportation and regulatory environments. 

Suppliers are the most optimistic regarding the overall impact of the economy; Corporate stakeholders are much more reserved in their expectations and are significantly pessimistic about the regulatory environment. Third Parties are aligned with their Corporate clients - concerned about the air transportation and regulatory environments to a greater degree than are Suppliers.

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution? 

 

Net Optimism Compared to Prior Year by Audience (travel)

The incentive travel industry is more optimistic about the environment than this time last year, driven by considerable increases among Suppliers and Third Parties. Corporate stakeholders show a continued decline in economic optimism.

Confidence declined once again regarding the air transportation environment. Corporate and Third Party stakeholders report are increasingly expecting negative impacts to their travel programs on this front

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution? 

The incentive travel industry is notably concerned about the regulatory environment. All segments expect negative impacts to their incentive travel programs, with Corporate and Third Party stakeholders reporting the highest levels of concern.

In the coming year, what impact will the factors below have on your/your clients’ incentive travel program planning and execution? 

 

Transportation Inclusions Outlook (Travel)

The incentive travel industry most typically provides only air travel tickets, or conversely pays for all air transportation-related costs. Approximately one-third of the industry offers non-air options, and only one in five includes seating upgrades. 

With regard to the transportation portion of your/your clients’ group incentive travel programs, what techniques will be used in the coming year? Check all that apply.

 

Transportation Inclusions Change over Time (Travel)

Following a strong upswing in the prevalence of the tickets-only approach in Fall 2016, expectations have leveled out.

Likewise, the inclusion of all air transportation costs remains level – just above 50%.

With regard to the transportation portion of your/your clients’ group incentive travel programs, what techniques will be used in the coming year? Check all that apply.

 

Anticipated Destination Changes by Audience (Travel)

Most Corporate and nearly half of Third Parties anticipate no changes in the types of destinations they select for their incentive travel programs. Comparable proportions of Third Parties are moving between international and domestic.

In the coming year, do you/your clients anticipate any of the following changes will be made with regard to selection of group incentive travel destinations? Check all that apply.

 

Budget Shifts by Audience (Travel)

Incentive travel stakeholders are unlikely to be shifting their budgets between individual and group travel – most commonly budget allocations will remain consistent. A small proportion (almost one in five) does expect to add budget to offer more group travel. 

Which of the below best describes your/your clients’ incentive travel programs in the next year?

 

Outlook for Travel Programs - Net Increase (Travel)

There is a strong positive outlook for budget increases in incentive travel programs – overall and for F&B and rooms. Stakeholders also expect an increase in the number of rooms (but not nights) and the number of participants earning a trip. Wellness and all-inclusive pricing are common. The industry also expects much more involvement of procurement, but not of third-party service providers.

What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? 
(Significant increase + Moderate increase) LESS (Significant + Moderate Decrease)

 

Outlook for Budget by Audience – Net Increase (Travel)

The incentive travel industry is anticipating net increases overall and for all budget categories, with optimism for both F&B and room budgets.

Corporate stakeholders are not quite as optimistic as suppliers and third parties and expect a significant reduction in budgets for on-site gifts.

What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? 
(Significant increase + Moderate increase) LESS (Significant + Moderate Decrease)

 

Outlook for Inclusions by Audience – Net Increase (Travel)

All parties anticipate an increase in wellness/well-being elements for incentive trips, and suppliers and third parties agree that all inclusive pricing is on the rise. Suppliers expect more on-site inclusions, and all groups are conservative in their expectations for per diem cash allowances.

What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? 
(Significant increase + Moderate increase) LESS (Significant + Moderate Decrease)

 

Outlook for Housing by Audience – Net Increase (Travel)

Corporate and third parties agree that total numbers of rooms is on the rise, driven largely by more participants earning trips. Corporate buyers also expect the total numbers of room nights to increase.

What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? 
(Significant increase + Moderate increase) LESS (Significant + Moderate Decrease)

 

Outlook for Partners by Audience – Net Increase (Travel)

Incentive travel stakeholders are expecting increased involvement from procurement or purchasing – this expectation is most pronounced among those on the provider side. 

Those on the corporate side anticipate small increases in involvement or fees from third party service providers.

What changes, if any, will be made in the coming year with regard to your/your clients’ incentive group travel programs? 
(Significant increase + Moderate increase) LESS (Significant + Moderate Decrease)

 

Budget vs. Cost Outlook by Audience (Travel)

Industry professionals across all categories agree that costs are increasing more than budgets.

Thinking about the costs for your incentive travel programs, such as F&B, activities, wi-fi, room rates, etc., which of the below best describes your experience with corresponding changes to program budgets?

 

Qualification by Audience (Travel)

Nearly all stakeholders use goals and objectives to determine eligibility for incentive travel awards. A vast majority of the industry uses 12 months as the standard qualification period.

Do you/your clients generally use achievement of specific goals/objectives to determine if a participant earns a trip?
What is the typical qualifying period for your/your clients’ incentive travel programs?

 

Average Per-Person Spend (Travel)

As of Summer 2017, per-person incentive travel budgets are most commonly between $3,000 and $4,000, although about 50% of the industry spends more than that.

Average per-person spend has increased by 4-5% annually since Fall 2014. The current average spend is $3,915.


What is the average per-person spend on your/your clients’ incentive travel programs?

 

Destinations for 2018 by Audience (Travel)

The most commonly-selected destinations for incentive group travel are the USA, Hawaii, Caribbean, Mexico, and Europe. Canada is also popular, with almost half of third party service providers operating at least one program there in the coming year.


In the coming year, please indicate which geographic regions you/your clients will choose as destinations for incentive travel program(s). Check all that apply.

 

Typical Lead Time (Travel)

Typical lead times range between 7 and 24 months, with a small proportion of stakeholders reporting 6 months or less to plan and operate a trip. Compared to Fall 2015, planners are more likely to have between 13 and 24 months lead time.


What is the typical lead time for booking your/your clients’ incentive travel programs? 

 

Use of Partners (Direct Working Relationship) (Travel)

Most corporate incentive travel stakeholders work directly with suppliers, either independently (38%) or in conjunction with a third party service provider (39%). Only 23% of corporate respondents work exclusively with a third party service provider.


For your incentive travel programs, do you work directly with…
Base: Corporate buyers

 

Preferred Fee Structures

Clients have a variety of preferred fee structures for incentive travel pricing. Per-person flat fees are popular, as are flat program fees. Third parties understand clients to prefer cost-plus pricing, indicating a potential disconnect between providers and buyers.


What is the fee structure most preferred for services in support of your/your clients’ incentive travel programs?

 

Incentive Merchandise/Gift Card Programs

Total Completed Surveys: 99

  • Corporate: 14
  • Suppliers: 20
  • Third-Party: 65

 

Net Optimism – Impact of Economy on Programs (Merch)

Incentive merchandise and gift card programs are expected to continue enjoying positive benefits from the economy, as the degree of optimism increased over the past year.

In the coming year, what impact will the factors below have on your/your clients’ non-cash reward and recognition program planning and execution: The economy 

 

Net Optimism by Audience (Merch)

Suppliers are the most bullish about the economic environment and its impact on non-cash reward programs, while corporate stakeholders are negative about the outlook for the coming year. 

All stakeholders agree that the regulatory environment will have a negative impact on the incentives industry.

In the coming year, what impact will the factors below have on your/your clients’ non-cash reward and recognition program planning and execution?

 

Net Optimism Compared to Prior Year by Audience (Merch)

The incentive merchandise/gift card industry is notably concerned about the regulatory environment. All segments expect negative impacts to their incentive merchandise programs.

In the coming year, what impact will the factors below have on your/your clients’ incentive merchandise programs? 

 

Merchandise Prevalence by Audience (Merch)

Electronics are the most prevalent rewards with third party service providers, while open gift cards are most common with the corporate audience. 

What types of merchandise and gift cards are used within your/your clients’ reward and recognition program(s)? Check all that apply.

 

Program Design (Merch)

All of the corporate respondents to the survey use goals or objectives to determine non-cash reward earnings.

More than two-thirds of corporate respondents use points-based non-cash rewards programs.

Do your/your clients typically use achievement of specific goals/objectives to determine reward payouts?
Do your/your clients typically use a points-based system for your non-cash reward and recognition program(s)?

 

Outlook for Rewards Budgets – Net Increase (Merch)

There is disagreement regarding the outlook for budget increases in the coming year, with suppliers and third parties expecting increases while corporate buyers expect declines.

Stakeholders do agree that the number of participants earning rewards will increase.

In the coming year, do your/your clients generally anticipate the following program elements will increase, decrease, or remain unchanged?

 

Outlook for Rewards Partners – Net Increase (Merch)

There is a strong expectation among suppliers and third parties that the involvement of procurement or purchasing will increase in 2018. Corporate stakeholders are more moderate in their expectation of procurement involvement, and do not expect third party fees to increase, despite a slight increase in their involvement.

In the coming year, do your/your clients generally anticipate the following program elements will increase, decrease, or remain unchanged?

 

Net Increase in Use of Rewards by Audience (Merch)

Corporate and third party service providers anticipate increased emphasis on experiential rewards in the coming year, while suppliers are hoping for more merchandise to be in use. 

In the coming year, do you generally anticipate your/your clients’ use of the following reward types will increase, decrease, or remain unchanged?

 

Average Per-Person Spend (Merch)

The average per-person spend for Fall 2017 is $522, a decrease from both 2016 and 2015. These declines are largely explained by the decrease in respondents spending over $5,000.

What is the average per-person rewards spend for your/your clients’ non-cash reward and recognition programs?

 

Programs Include Non-U.S. Participants (Merch)

Three-quarters of the incentives industry includes international participants in the non-cash rewards programs they operate. On the corporate side, not quite half of program managers have an international audience.

Canada and Mexico are the most common regions on the corporate side, with Europe, Asia, and South America also prevalent on the provider side. 

All regions are at least somewhat represented in the industry.

Do your/your clients’ reward and recognition programs include participants outside of the U.S.?
Please indicate which geographic regions  your/your clients’ non-U.S. participants are in. Check all that apply.

 

Use of Partners (Direct Working Relationship) (Merch)

Corporate buyers are frequently working directly with suppliers, either independently (39%) or in partnership with a third party provider (46%).

For your non-cash reward and recognition programs, do you work directly with…
Base: Corporate buyers

 

General Program Outlook

 

Program Enhancements (General)

Social media, CSR, social recognition, and CRM integration have gained traction for roughly a third of buyers. Mobile apps have a strong presence across the industry, but have not reached critical mass at the buyer level. 

Gamification remains less common on the client side, while virtual has a very low uptake across all stakeholder groups.

Are you/your clients using any of the following as part of your incentive travel and non-cash reward and recognition programs(s)? Check all that apply.

 

Typical Length of Travel/Merch Program (General)

The most common length of an incentive travel or merchandise program is 12 months.

What is the typical program length for your/your clients’ incentive travel or non-cash reward and recognition program(s)?

 

Program Measurement (General)

Most stakeholders are making an effort measure the success of their incentive travel and non-cash rewards programs. Commonly-used tactics on the corporate side include participant feedback, top-line sales results, and general morale and enthusiasm.

Which of the below are generally used to measure the success of your/your clients’ program(s)? Choose all that apply.

 

Analysis and Adjustment Frequency (General)

Program analysis is most typically done monthly (62%), with 31% of the industry reporting that the most common analysis cadence is annual.

Despite the prevalence of month analysis, adjustments to program design based on the results of that analysis happen less frequently.

During your/your clients’ most typical incentive travel or non-cash reward and recognition program, how often are results analyzed and reviewed?
How often are adjustments typically made to the program design based on the analysis of program performance?

 

Cancelled a Travel/Merch Program Past 12 Mos. (General)

About 1 in 3 suppliers and third parties has seen an incentive travel or merchandise program discontinued in the past year. None of the corporate buyers surveyed has canceled a program recently.

In the past year, have you/your clients discontinued any incentive travel or merchandise/gift card program(s)?

 

Top Reason Program Discontinued (General)

The most common cause of cancellation is lack of budget, followed closely by loss of executive support.

Within the “other” responses, several pointed to DOL or regulatory challenges, as well as restructuring or M&A activity.

What is the top reason for discontinuing the program?

 

Overall Outlook (General)

Industry stakeholders expect the financial performance of their own firms to be strong in the coming year, despite a somewhat less-optimistic outlook for the economy. 

The regulatory environment makes it challenging to be knowledgeable about requirements that impact their incentives programs.

Looking ahead to the next year, to what extent do you agree with the statements below?