Incentive Travel Trends
Merchandise & Gift Card Non Cash Incentive Programs
General Trends

Background and Survey Purpose

Beginning in August 2008 it was decided that an appropriate topic for the 2008 Pulse Survey would be an incentive industry trends outlook for the upcoming years and with the continued economic conditions, also an appropriate topic for the trends outlook for 2013.

Given that the Incentive Research Foundation (IRF) is charged with advancing the science of incentives, it surveyed industry professionals to obtain their opinions about the more salient trends affecting the industry during 2013.

To this end, the IRF asked these professionals questions on trends with regard to incentive travel programs, merchandise non-cash programs, and budget changes forecast for 2013.

In addition to the current topic on industry trends, the IRF tracks core issues of continuing interest to the industry:

  • The extent to which company financial forecasts influence incentive programs
  • The effect of competitor reactions on company incentive programs
  • Sensitivity to others’ perceptions of company incentive programs
 

Research Methods

 

Invitations to participate in this online survey were sent to 2550 incentive providers, suppliers to the industry and corporate incentive travel buyers.
The 254 survey participants can be categorized1 as follows…

  • Corporate (i.e./ Buyer, Planner, Sales, HR) (13.4%)

  • Supplier (i.e./ Hotel, Airline, DMC, Merchandise) (21.3%)

  • Third Party (i.e./ Incentive Company, Travel Agency, Consultant) (59.8%)

  • I am not involved in incentive programs (5.5%)

Data collection was conducted October 10th through November 1st, 2013.

Highlights: Core Issues

Findings indicate that the trends have stabilized this period compared to the previous four survey periods which indicated a strong positive upward trend for each of the core issues beginning in July 2009 – April 2013. The overall trends continue to remain lower than reported in 2008. The positive trend continues with respect to the perceptions of the company’s financial forecast influences the design and implementation of our incentive program(s) compared and the previous three survey periods. The perception of internal (non-incentive) stakeholders influence on the design of incentive programs decreased significantly compared with Spring 2013.  These questions were asked only of Corporate participants.

 
 

Incentive Travel Trends

Perceived Impact of the Economy on Ability to Plan and Implement Incentive Travel Programs

Respondents in the current survey (Fall 2013) indicate they continue to be more optimistic and consider the economy as having a more of a positive impact on their ability to plan and implement incentive travel programs when compared with the previous result in April 2013. (All positive 69% November 2013 vs. 56% April 2013)

  • Strongly negative 3% April 2013 vs. 2% November 2013.

  • All negative impacts 31% April 2013 vs. 17% November 2013.

Perceived Impact of the Economy on Ability to Plan and Implement Incentive Travel Programs
By Category

Comparing the perceived impact of the economy on the ability to plan and implement incentive programs by respondent category, we find:
The Supplier and Third Party segments are significantly more likely to perceive the impact of the economy to have a more “positive” impact than the Corporate segment.

  • Supplier 85.3% total positive
  • Third Party 69% total positive.

Perceived Impact of the Current Air Transportation Environment of Incentive Travel Programs

Most respondents (52%) have a negative perception of the current Air Transportation Environment and it’s impact on incentive travel plans. 
The percent of “negative” responses has remained unchanged compared to April 2013.

  • Significantly negative- 9% April 2013 vs. 6% November 2013.

  • All negative perception- 52% April 2013 vs. 52% November 2013.

Perceived Impact of the Current Air Transportation Environment of Incentive Travel Programs
By Category

Comparing the perceived impact of the current air transportation environment on travel programs by respondent category, we find:

  • The Supplier segment is significantly more likely to perceive the impact of the air transportation environment as more “positive” (47.1%) than the Corporate and Third Party segments.
  • The Third Party segment is significantly more likely to perceive the impact as “negative” (54.3%) than the Corporate and Supplier segments.

Techniques Used In Coming Year To The Air Transportation Portion Of Incentive Travel Programs, What Component? 

  • 40% anticipate that “Only tickets will be provided”, are to be included components of Incentive Travel Programs in the coming year.
  • 39% indicate that “All costs for air transportation” will be provided.
  • 14% indicate that “Non-air options” will be included.
  • 6% indicate that seating upgrades will be included.
  • 2% indicate that “Airline club passes” will be included

Techniques Used In Coming Year To The Air Transportation Portion Of Incentive Travel Programs, What Component?
By Category

  • Third Party respondents are more likely to use the following techniques than Corporate and Supplier segments:
  • Only tickets will be provided.
  • All costs for air transportation-related expenses will be included.
  • Seating Upgrades.
  • Supplier respondents are more likely to use “Non-air options” techniques than Corporate or Third Party segments.

Trending of Techniques Used To The Air Transportation Portion Of Incentive Travel Programs 

The inclusion of both components remained the same compared to the results reported in April 2013, however still significantly lower than the periods March - September 2012.

Anticipated Changes In Coming Year With Regards To  Incentive Travel Program Destinations

Most of the respondents (37%) anticipate no change with respect to the program destinations for Incentive Travel Programs in the coming year.

  • 19.2% “Will pick locations closer to “home” with regards to the travel program destinations.
  • 15.8% indicate that they anticipate a change from “International to Domestic” , and, “Domestic to International” with regards to the travel program destinations

Anticipated Changes In Coming Year With Regards To  Incentive Travel Program Destinations By Category

Most  of the Corporate and Third Party segments anticipate no changes to program destinations.
Third Party and Supplier segments anticipate more changes than the Corporate segment in the following:

  • From international to domestic
  • From domestic to international

Trending Anticipated Changes With Regards To  Incentive Travel Program Destinations

There has been a significant decrease in program destinations from “International to Domestic” since 2010.
Compared with April 2013, all components are trending slightly higher.

Anticipated Changes In Coming Year With Regards To Incentive Travel Accommodations

  • 18% percent of respondents anticipate a change to “all inclusive” pricing options for the accommodations portion of Incentive Travel Programs in the coming year.
  • 27% indicate “No Change”
  • 13% indicate the “Total number of days/nights will be reduced”.
  • 11% indicate that the “Number of rooms” will be reduced and on-site inclusions per participant be decreased.

Anticipated Changes In Coming Year With Regards To Incentive Travel Accommodations By Category

Most  of the Corporate and Third Party segments anticipate no changes to program destinations.
Third Party respondents anticipate more changes than the Corporate segment in the following:

  • Total number of days/nights reduced.
  • On-Site inclusions per participant increased.
  • Total number of rooms increased.
  • Change to “all inclusive” pricing options.

Trending Anticipated Changes With Regards To Incentive Travel Accommodations

The “anticipated reduction” of both components with regards to hotel accommodations continues to decrease compared to the past four survey periods.

Anticipated Changes In Coming Year With Regards To Sponsored Non-Meal Related Components

  • Fifty-nine percent (50%) of respondents anticipate No Change with regards to Sponsored Non-Meal Related Components for Incentive Travel Programs in the coming year.
  • 17% indicate that Sponsored Non-Meal related components will be Moderately Reduced, and
  • 24% indicated that Sponsored Non-Meal related components will be Moderately Increased.

Anticipated Changes In Coming Year With Regards To Sponsored Non-Meal Related Components By Category

Corporate respondents anticipate a “moderate reduction” for Sponsored Non-Meal related components when compared with Third Party Respondents
Third Party respondents anticipate a “moderate increase” for Sponsored Non-Meal related components when compared with the Corporate segment.

Anticipated Changes With The Involvement Of Procurement And Purchasing In Travel Incentive Programs

Most of the respondents (47%) anticipate No Change with regards to involvement of procurement and purchasing for Incentive Travel Programs in the coming year, 52% agree that procurement involvement will increase by some degree in the coming year.

  • 37% indicate that procurement and purchasing involvement will “Moderately Increase” in the coming year.
  • 15% indicate that procurement and purchasing involvement will “Significantly Increase” in the coming year.

Anticipated Changes With The Involvement Of Procurement And Purchasing In Travel Incentive Programs By Category

  • Corporate respondents anticipate the involvement of procurement and purchasing in travel incentive programs to “remain unchanged” when compared with Supplier and Third Party Respondents
  • Supplier respondents anticipate the involvement of procurement and purchasing in travel incentive programs to “significantly increase” when compared with the Corporate and Third Party segments.

Anticipated Changes In Incentive Travel Program Budgets for This Year

  • Forty-nine percent (49%) of the respondents anticipate budgets for Incentive Travel Programs to “Remain Unchanged” this coming year.
  • 14% indicate that budgets for Incentive Travel Programs will decrease by some degree in the coming year.
  • 33% indicate that budgets for Incentive Travel Programs will moderately increase this coming year.

Anticipated Changes In Incentive Travel Program Budgets for This Year By Category

  • Third Party respondents anticipate travel incentive program budgets to “increase”, either moderately or significantly, when compared with the Corporate segment.
  • Corporate respondents anticipate that travel incentive program budgets will “remain unchanged” when compared with Third Party respondents.

Trend Strategy For The Consideration Of Award Strategy Moving (Either Temporarily Or Permanently) From "Group Trips" To "Individual Travel Packages"

  • The majority (82%) of the respondents do not anticipate changing (either temporarily or permanently) from "group trips" to "individual travel packages" in the coming year.
  • A combined 5% indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages“ in coming year to decrease.
  • 13% indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages“ to increase in the coming year.

Trend Strategy For The Consideration Of Award Strategy Moving From "Group Trips" To "Individual Travel Packages" By Category

Supplier and Third Party respondents indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages“ to increase in the coming year when compared with the Corporate segment.

Geographic Region Chosen as “Destinations" for Incentive Travel Program(s). 

45% of the respondents indicated that North America was their chosen region for Incentive Travel Destination programs.
Top regional destinations include:

  •   The Caribbean (41%)
  •   Europe (40%)
  •   Central America (19%)
  •   South America (11%)

Geographic Region Chosen as “Destinations" for Incentive Travel Program(s) By Category

Third Party respondents are significantly more likely to choose the following destinations than Corporate respondents:
North America
Caribbean
Europe
Central & South America

Merchandise and Gift Card Non-Cash Incentive Programs

Perceived Impact of the Economy on Ability to Plan and Implement Merchandise Non-Cash Incentive Programs

In November 2013, respondents continue to anticipate the impact of the economy to have a “positive” effect on their ability to plan and implement merchandise non-cash incentive programs potentially indicating a positive trend in the coming year.

  • Negative impact 13% in November 2013 vs. 13% in April 2013.
  • No impact 31% in November 2013 vs. 32% in April 2013.
  • Positive impact 56% in November 2013 vs. 55% in April 2013.

Perceived Impact of the Economy on Ability to Plan and Implement Merchandise Non-Cash Incentive Programs By Category

Comparing the perceived impact of the economy on the ability to plan and implement Merchandise  Non-Cash incentive programs by respondent category, we find:

  • The Corporate and Supplier segments are significantly more likely to perceive the impact of the economy to have a more “positive” impact than the Third Party segment.
  • Corporate 77.8% total positive
  • Supplier 70.6% total positive.

Anticipated Changes This Year With Regards To  Merchandise Non-cash Incentive Programs Award Selections

  • 22% of the respondents anticipate “Included experience-related (SPA, event tickets, etc.)” in the coming year with regards to Non-Cash Incentive Program Award Selections
  • 10% indicate “No change” to the merchandise non-cash incentive program this year.
  • 19% indicated “Increased use of debit/prepaid gift cards”.
  • 16% indicated “Included individual travel as an option and “Added merchandise”.
  • 13% indicated “increased merchandise award value” and “added debit/prepaid gift cards”.

Anticipated Changes This Year With Regards To  Merchandise Non-cash Incentive Programs Award Selections By Category

Third Party respondents are significantly more likely to anticipate the following changes to merchandise non-cash award selection than Corporate respondents:

  • Included experience-related (SPA, event tickets, etc.) as an option
  • Increased use of debit/prepaid gift cards
  • Included individual travel as an option
  • Added merchandise
  • Added debit/prepaid gift cards
  • Increased merchandise award value

Merchandise Types Used Within Reward and Recognition Programs

Electronics (40%), Jewelry/Watches (32%), and Open Card (32%) are the most common merchandise used in Reward and Recognition Programs.
Other popular merchandise types identified by the respondents are:

  •   Luggage (29%)
  •   Golf Items (28%)
  •   Clothing/Apparel (27%)
  •   Housewares (27%)

Merchandise Types Used Within Reward and Recognition Programs By Category

—Third Party respondents are significantly more likely to use all of the listed merchandise awards, except “Plaques/Trophies” and “Closed Cards”, when compared with the Corporate respondents. 

Use of Points Based System for Merchandise Non-Cash Incentive Programs

  • A majority (83%) of the respondents indicate they use a points based system  for their Merchandise Non-Cash Incentive program(s).
  • 17% indicated they do not use a points based system
  • Compared with April 2013, more respondents indicate the use of a “Points Based System” for Non-Cash incentive programs.
  • Supplier and Third Party respondents are significantly more likely to use a points based system than the Corporate respondents.

Anticipated Changes In Non-Cash Incentive Program Budgets for This Year

  • Forty-nine percent(49%) of the respondents anticipate budgets for Non-Cash Incentive Programs to “Remain unchanged” this coming year.
  • 9% indicate that budgets for Non-Cash Incentive Programs will decrease by some degree in the coming year.
  • 42% indicate that budgets for Non-Cash Incentive Programs will increase by some degree in the coming year.

Anticipated Changes In Non-Cash Incentive Program Budgets for This Year By Category

Comparing the anticipated changes in Non-Cash incentive program budgets by respondent category, we find:

  • The Third Party respondents are significantly more likely to anticipate changes in Non-Cash incentive program budgets to be “positive” compared to Corporate segment.
  • Corporate 27.8% total positive.
  • Third Party 44.2% total positive.

Anticipated Changes Incentive Program Elements 

In general, respondents indicated that they anticipate most incentive program elements to remain the same in the coming year

  • The "Number of total qualifiers" is the element that has the highest reported increase in the coming year at 32%
  • The following elements received “Increased” ratings of greater than 20% for the coming year:

  •   Third Party/Incentive Company Involvement (26%)

  •   Awards budget (22%)

General Industry Trends

Impact on Incentive Program As A Result Of The Current Economic Conditions

  • 49% of the respondents anticipate no changes to the budget for Incentive Programs in the coming year as a result of the recent economic conditions.
  • 16% indicate that that budgets for Incentive Programs have been reduced as a result of the recent economic conditions.
  • 19% indicate that budgets for Incentive Programs have increased as a result of the recent economic conditions.
  • 10% indicate no budget change, but reduced the component and added or increased a merchandise incentive program component.
  • 3% indicate the program has been eliminated entirely as a result of the recent economic conditions. 

Use of Enhancement Tools/Techniques for Incentive Programs

  • Nearly two-thirds of the respondents (63%) indicate they use Social Media tool/techniques to enhance their incentive program.
  • 47% indicate the use of CSR components.
  • 37% indicate that they use Gaming techniques.
  • 29% indicate that they use a Virtual elements component.

Trending of Enhancement Tools/Techniques for Incentive Programs

All components show increases in the enhancement of incentive programs except the “Integration with Sales Management Tools” which had the only decrease (2%) compared to April 2013 as an enhancement tool for incentive programs.
Social Media, Gaming Techniques, and CSR Components each have significant increases as enhancement tools when compared with April 2013.

General Perceptions of the Coming Year

Most respondents (57%) perceive “The Economy” to be either Slightly or Extremely positive in the coming year.

• While the outlook on the Economy is generally “positive”, 25% of the respondents also indicate a “negative” perception of the economy in the coming year.

• In general, over 40% of the respondents perceive “Slightly Positive/Extremely Positive” views with respect to each of the areas measured.

 

Goals & Objectives used to Determine Incentive Payouts and Measurement of Success

  • The majority (90%) indicated that goals/objectives are used to determine incentive payouts.
  • Most respondents (70%) indicate that they use “Results assessment (ROI, etc.)” to determine a programs’ success.
  • Only 6% of the respondents indicated they have no method to determine a programs success.

Primary Reason For Ending An Incentive/ Recognition Program

  • One third of the respondents (33%) indicated that they have not ended a program.
  • 23% indicated they lost executive support.
  • 22% indicated there was no budget.
  • 13% indicated lack of results.

Frequency of Results Analysis and Program Design Element Changes

  • Thirty percent (30%) of the respondents indicated that they analyze results and program design elements 3-4 times during a programs duration.
  • 5% indicated that they “never” analyze results and program design elements during a programs duration.
  • 28% analyze results and program design elements “annually” during a programs duration.