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 2014.

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 2014.

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 2014.

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; and

••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 247 survey participants can be categorized1 as follows…

  • Corporate (i.e./ Buyer, Planner, Sales, HR) (21.5%)

  • Supplier (i.e./ Hotel, Airline, DMC, Merchandise) (13.8%)

  • Third Party (i.e./ Incentive Company, Travel Agency, Consultant) (59.1%)

  • I am not involved in incentive programs (5.7%)

Data collection was conducted April 15th through May 2nd, 2014.

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 2014. 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.

 
The Incentive Industry Trends 2014
 

Incentive Travel Trends

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

Respondents in the current survey (Spring 2014) 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 November 2013. (All positive 62% May 2014 vs. 69% November 2013)

  • Strongly negative 2% November 2013 vs. 0% May 2014.

  • All negative impacts 17% November 2013 vs. 12% May 2014.

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 81.8% total positive
  • Third Party 68.7% total positive.

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

Most respondents (44%) have a negative perception of the current Air Transportation Environment and it’s impact on incentive travel plans. 
The percent of “negative” responses has decreased 7% compared to November 2013.

  • Significantly negative- 6% November 2013 vs. 5% May 2014.

  • All negative perception- 52% November 2013 vs. 44% May 2014.

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” (31.8%) than the Corporate and Third Party segments.
  • The Third Party segment is significantly more likely to perceive the impact as “negative” (49.2%) than the Corporate and Supplier segments.

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

  • 45% anticipate that “Only tickets will be provided”, are to be included components of Incentive Travel Programs in the coming year.
  • 37% indicate that “All costs for air transportation” will be provided.
  • 11% indicate that “Non-air options” will be included.
  • 8% indicate that seating upgrades will be included.
  • >1% 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 "Only tickets will be provided" has increased significantly since 2013 and the inclusion of "All costs for air transportation related expenses" has decreased slightly by 2% compared to November 2013.

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

Most of the respondents (40%) anticipate no change with respect to the program destinations for Incentive Travel Programs in the coming year.

  • 12% “Will pick locations closer to “home” with regards to the travel program destinations.
  • 15% indicate that they anticipate a change from “International to Domestic” , and, 19% anticipate a change from “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
  • From land to cruise

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 November 2013, all components are reporting similar results.

Anticipated Changes In Coming Year With Regards To Incentive Travel Accommodations

  • 16% 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”
  • 14% indicate the “Total number of days/nights will be reduced”.
  • 12% 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 within all areas.

Trending Anticipated Changes With Regards To Incentive Travel Accommodations

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

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

  • Fifty-one percent (51%) 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
  • 28% 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

Both Corporate and Third Party respondents anticipate a "moderate increase" for Sponsored Non-Meal related components.

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, 48% agree that procurement involvement will increase by some degree in the coming year.

  • 36% indicate that procurement and purchasing involvement will “Moderately Increase” in the coming year.
  • 12% 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 are more likely to anticipate the involvement of procurement and purchasing in travel incentive programs to “remain unchanged” when compared with Supplier and Third Party Respondents
     
  • —Supplier respondents are more likely to anticipate the involvement of procurement and purchasing in travel incentive programs to “significantly increase” when compared with the Corporate and Third Party segments.
  • Third Party respondents are more likely to anticipate the involvement of procurement and purchasing in travel incentive programs to “significantly decrease/moderately decrease” when compared with the Corporate and segment.

Anticipated Changes In Incentive Travel Program Budgets for This Year

  • Fifty-Two percent (52%) of the respondents anticipate budgets for Incentive Travel Programs to “Moderately Increase” this coming year.
  • 13% indicate that budgets for Incentive Travel Programs will decrease by some degree in the coming year.
  • 32% indicate that budgets for Incentive Travel Programs will remain unchanged this coming year.

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

  • —Third Party and Supplier respondents anticipate travel incentive program budgets to “remain unchanged”, when compared with the Corporate segment.
  • —Corporate respondents anticipate that travel incentive program budgets will “moderately increase” 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 (72%) of the respondents do not anticipate changing (either temporarily or permanently) from "group trips" to "individual travel packages" in the coming year.
  • A combined 12% indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages“ in coming year to decrease.
  • 16% 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 respondents indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages“ to slightly decrease in the coming year when compared with the Corporate and Third Party segments.

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

49% of the respondents indicated that North America was their chosen region for Incentive Travel Destination programs.
Top regional destinations include:

  •   The Caribbean (41%)
  •   Europe (41%)
  •   Central America (17%)
  •   South America (15%)
  •   Asia (15%)

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
Europe
Caribbean
Central & South America
Asia

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 May 2014, 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 11% in May 2014 vs. 13% in November 2013.
  • No impact 42% in May 2014 vs. 31% in November 2013.
  • Positive impact 48% in May 2014 vs. 56% in November 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 Third Party segments are significantly more likely to perceive the impact of the economy to have a more “positive” impact than the Third Party segment.
  • Corporate 44.7% total positive
  • Supplier 49.5% total positive.

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

  • 17% of the respondents anticipate “Included experience-related (SPA, event tickets, etc.)” in the coming year with regards to Non-Cash Incentive Program Award Selections
  • 21% indicate “No change” to the merchandise non-cash incentive program this year.
  • 16% indicated “Increased use of debit/prepaid gift cards”.
  • 14% indicated “Included individual travel as an option and “Added merchandise”.
  • 12% 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 (43%), Jewelry/Watches (33%), and Open Card (36%) are the most common merchandise used in Reward and Recognition Programs.
Other popular merchandise types identified by the respondents are:

  •  Golf Items (32%)
  •  Clothing/Apparel (31%)
  •  Housewares (30%)
  •  Luggage (29%)

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 “Jewelry/Watches”, “Clothing/Apparel”, “Housewares”, “Office Accessories” and “Plaques/Trophies” when compared with the Corporate respondents.

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

  • A majority (78%) of the respondents indicate they use a points based system  for their Merchandise Non-Cash Incentive program(s).
  • 22% indicated they do not use a points based system
  • Compared with November 2013, slightly less respondents indicate the use of a “Points Based System” for Non-Cash incentive programs.
  • Third Party respondents are significantly more likely to use a points based system than the Corporate and Supplier respondents.

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

  • Fifty-one percent(51%) 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 29% total positive.
  • Third Party 46.4% 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 38%.
  • The following elements received “Increased” ratings of greater than 20% for the coming year:
  •   Awards budget (34%)
  •   Incentive program non-meal components (20%)
  •   Third Party/Incentive Company Involvement (20%)

General Industry Trends

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

  • 39% of the respondents anticipate no changes to the budget for Incentive Programs in the coming year as a result of the recent economic conditions.
  • 30% indicate that budgets for Incentive Programs have increased as a result of the recent economic conditions.
  • 18% indicate that that budgets for Incentive Programs have been reduced as a result of the recent economic conditions.
  • 11% indicate no budget change, but reduced the component and added or increased a merchandise incentive program component.
  •  3% Eliminated to program entirely.

Use of Enhancement Tools/Techniques for Incentive Programs

  • Slightly more than half of the respondents (53%) indicate they use Social Media tool/techniques to enhance their incentive program.
  • 36% indicate the use of CSR components and Gaming techniques.

Trending of Enhancement Tools/Techniques for Incentive Programs

  • All components showed decreases in the enhancement of incentive programs compared to November 2014 as an enhancement tool for incentive programs.
  • CSR Components, Integration with Sales Management Tools and Virtual Elements each have significant decreases as enhancement tools when compared with November 2013.

General Perceptions of the Coming Year

  • The majority of respondents (71%) perceive “The Economy” to be either Slightly or Extremely positive in the coming year. 
  • While the outlook on the Economy is generally “positive”, 17% of the respondents also indicate a “negative” perception of the economy in the coming year.
  • In general, over 35% 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 (89%) indicated that goals/objectives are used to determine incentive payouts.
  • Most respondents (65%) indicate that they use “Results assessment (ROI, etc.)” to determine a programs’ success.
  • Only 4% of the respondents indicated they have no method to determine a programs success.

Primary Reason For Ending An Incentive/ Recognition Program

  •  Slightly less than half of the respondents (47%) indicated that they have not ended a program. 
  •  24% indicated they lost executive support.
  •  15% indicated there was no budget.
  •  11% indicated lack of results.

Frequency of Results Analysis and Program Design Element Changes

  • Thirty-one percent (31%) of the respondents indicated that they analyze results and program design elements Annually 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 “3-4 times” during a programs duration.