The newly released 2022 Incentive Travel Index (ITI) reports that, overall, the incentive travel industry is strong....
Research / COVID-19 and Disruption in the Incentive Travel, Meetings and Events Industry: Adaptation and Recovery
by Incentive Research Foundation
By Allan Schweyer, Chief Academic Advisor, Incentive Research Foundation
Highlights of extensive advice offered by industry leaders address four key areas:
Customer Service, Employee Engagement & Relationships: Social connectivity is key. Cooperation and relationships with hotels and venues are critical to recovery – and to the opportunity to do business in the future. Play the long game with clients by postponing travel based on their comfort level and offering solutions for alternate forms of recognition, including merchandise, gift cards, and points.
Sales: Be ready to respond to your program participants’ new needs. Start building an inventory of local, safe, outdoor, and experiential destinations that you can discuss with clients. Look at resort buy-outs, ground transportation, charter flights, new room set ups, and virtual options.
Strategy: Safety concerns prevail. Emphasize cleaning, social distancing, health assessments and scans, and the presence of physicians at meetings and events. Work with partners, including DMCs, that have relationships with restaurants, entertainment venues, suppliers, local government, police, healthcare, and emergency response at the destination. Identify virtual and hybrid event technology providers.
Legalities and Disruption Planning: You bear a legal responsibility – a Duty of Care – to act reasonably in ensuring the safety of participants and staff in their programs. Thoroughly investigate risk in your targeted destinations. Work with your partners or DMCs to consult with police and government and to gain local knowledge to be prepared should a crisis arise. Document contingency plans and emergency plans for your event as well as the hotel or venue. Communicate safety efforts and expectations of the attendees’ responsibilities regarding Duty of Care well in advance of the event.
Author’s Note: In 2019, the IRF Board of Trustees voted to include ‘Industry Disruption’ in the IRF’s 2020 research agenda – well before the emergence of COVID-19. However, the surveys, interviews, secondary research, and focus groups conducted for this paper took place between February and May 2020 while COVID-19 was thoroughly disrupting the MICE industry and most others. Unavoidably then, it constitutes much of the focus of this paper. But COVID-19 represents serious disruption in general; we believe that most of the guidance offered in this paper is relevant to serious disruption of all sorts in the Meetings, Incentives, Conference & Exhibitions (MICE) industry.
On January 31, 2020, in response to the spreading Coronavirus (COVID-19), the US federal government declared a national state of emergency. It restricted travel from China to the United States the same day. By mid-March, all non-essential travel to and from the US was prohibited and its borders with Canada and Mexico sealed.
Over the next four weeks, the global travel industry – responsible for more than 10% of global GDP – saw declines of 95% in airline passenger volume, US hotel occupancy dropped by two-thirds, and the entire global cruise industry was largely suspended for 2020. As of mid-April, the World Travel & Tourism Council estimated that the industry had already lost almost $3 trillion and furloughed more than 100 million of its workforce.
“Travel & Tourism is the backbone of the global economy. Without it, global economies will struggle to recover in any meaningful way and hundreds of millions of people will suffer enormous financial and mental damage for years to come.” –Hospitalitynet
Those who earn their living in the meetings, incentives, conferences, and exhibitions (MICE) industry are well aware that COVID-19 has already wreaked worse damage to travel-related industries than 9/11 or the Great Recession. Its impact is far from over.
This report was created for leaders in the MICE industry (meetings, incentives, conferences, and exhibitions), and particularly, operators of small and mid-size MICE-industry businesses who are focused on business survival and eventual recovery. It is based on an extensive review of recent and relevant news, studies and analysis, as well as interviews and panel discussions with 36 industry leaders, poll results from 250 more, and survey findings from 791 working adults around the world.
“Regional travel will indeed be the first stage of traveling and international travel will take more time, but it will rebound very strongly.” – IRF Industry Leader Focus Group Participant (meeting planner)
In April 2020, the IRF conducted a global survey of more than 1,100 working adults (‘travelers’), obtaining full (791) and partial (53) surveys from 844, each of whom had participated in overnight travel for work in the past five years.
Those who had experienced postponement or cancellation of a meeting, event, conference, or reward travel cited a variety of reasons. Despite completing the survey at or near the peak of the COVID-19 spread, making it top of mind, weather was the lead cause of travel cancellation or postponement among those surveyed (Figure 1). This mirrors the results from an IRF survey and study published in 2016, in which it was found that bad weather was far and away the most common and frequent disruptor of offsite meetings and events. The industry leaders we interviewed for this study expect weather-related disruptions to worsen, in part due to the effects of accelerating climate change throughout most of the world.
When asked about traveling for an overnight work-related trip to a conference, meeting, or event after all COVID-19 restrictions have been removed, almost 57 percent of would-be travelers reported feeling either very excited and grateful at the prospect, or at least looking forward to it. We chose a representative set of global destinations, all of which at times were impacted by serious disruption, including COVID-19. In each case, a majority said they would feel excited about or look forward to a business meeting or event in those locations.
63% would be excited or looking forward to a business trip to a place they are interested in but have never been to; 60% to a familiar, close place they like and can drive to. For other destinations, including Cancun, Bangkok, Barcelona, Las Vegas, and Cape Town, between 51% to 58% of respondents were excited and grateful, or at least looking forward to the trip.
These results corroborate the majority view of our interviewee and focus groups experts, as well as much that has been reported in the media from late April through mid-May: People are beginning to anticipate and crave travel, especially that involving new experiences and or safe destinations close enough to drive to and/or that involve shorter flights. Tellingly, US passenger volumes on flights went from 87,534 on April 14 to 215,645 on May 11 according to the TSA.
The expectation that domestic travel – especially road trips – will increase as COVID-19 restrictions are removed was expressed throughout our interviews and focus groups with industry experts, and in media coverage concerning COVID-19’s impact on the travel industry.
Some pointed out that the combination of pent-up demand to get away, a desire for safety, slashed budgets, and cheap gas will make local travel even stronger than it was prior to the crisis. As above, our survey responses suggest that the desire for travel involving flights to foreign destinations is not as far behind as might be expected.
Overall, South Americans and Europeans are the most excited about travel after COVID-19 restrictions are removed (~70% excited/looking forward to it). North Americans come next at about 58%. Asia, including India and China, appear most cautious; in all cases, fewer than 50% are keen to travel to business meetings or events even after all COVID-19 restrictions have been removed. Other surveys conducted in the same time frame lend support to these findings, including a Skift research survey in which one-third of respondents (all Americans) expressed a desire to travel after COVID-19 is contained.
When asked about traveling for a work-related trip for reward travel after COVID-19 restrictions have been removed, the results were similar. A slightly larger majority feel excited/grateful or looking forward to the five named destinations. The greatest difference between attitudes toward travel for meetings and events versus reward travel was in the very excited/grateful category: 29% for reward travel versus 23% for events and meetings travel.
Because they completed the survey in the last half of April, most respondents were in some form of voluntary quarantine or stay-at-home orders. Despite this, only just over one in five (less for those under 45) said they would be worried about or resentful of upcoming business or reward travel. Moreover, the least favorite option among those imagining future reward travel was to simply take the week off and stay at home (50.5%). Indeed, eagerness to pursue business and reward travel remains above 60% for all age groups 18-45, dropping only slightly for those 46 years and older.
Among those who said they would be worried or nervous about participating in work or reward-related travel to any of the destinations, the threat of epidemic/pandemic was the majority concern at a 33%. Next came weather at 29%, followed by crime, getting sick, labor strikes, a terrorist attack, and food poisoning. Overall, two-thirds of the small minority worried about future work or reward travel cited getting sick – whether from a pandemic, food poisoning or otherwise – as their chief concern.
When respondents were asked what would make them “almost certainly” cancel or postpone an offsite business meeting, event, or reward travel after COVID-19 restrictions are removed, they were, on the whole, slightly less inclined to cancel business versus reward travel. Interestingly, only a recent or ongoing pandemic or epidemic would cause the majority of respondents to cancel or postpone their travel (~52%). 18% said they would not cancel a business or reward trip for any reason.
Earlier in April 2020, the IRF conducted a survey aimed at incentive travel program design providers and firms that operate incentive travel programs. Almost two-thirds of the 250 respondents reported that incentive travel programs scheduled for the first half of 2020 were postponed into the second half (~37%) or into 2021 (~25%). Overall, fewer than one-quarter had cancelled their incentive programs entirely.
Over 70% of respondents who postponed cited the need to continue recognizing and rewarding outstanding employees. Indeed, even among the minority that cancelled their programs, three-quarters substituted other rewards and recognition, from merchandise and gift cards to cash, combined with notes of appreciation and even virtual award ceremonies. Overall, 70% of respondents are maintaining their reward programs and not changing the rules about who qualifies.
“Now we focus on survival and help keep the people struggling alive.” – Focus Group Attendee
Many of the MICE leaders we interviewed and held discussions with told us they are facing the gravest threat to their survival they have so far experienced. To put this in perspective, most had come through the aftermath of 9/11 and the Great Recession.
MICE leaders told us that while survival is their main focus and concern right now, they believe there will be tremendous opportunity for new business beginning sometime in 2021. That expectation is borne out in the survey findings described above. Those that experienced 9/11 and the financial crisis, however, warn that a return to normal volumes of business and revenues is not likely for about two years following the end of the crisis.
After 9/11, MICE industry revenues returned to their pre-crisis levels roughly in 2004. Though the Great Recession began in late 2007, it was not a singular event, it lingered through 2009 and beyond. Pre-recession revenues did not return until 2011. No one can say when the COVID-19 crisis will conclude, but many experts argue it will not be over until a vaccine is both available and in wide circulation.
Most health authorities believe that vaccine discovery, approval, mass production, and distribution is not likely until mid-2021 at the soonest. Using prior crises as a rule of thumb, and assuming a vaccine is available next year, leaders in the MICE industry might expect and plan for a return to pre-COVID-19 revenues by late 2022 or early 2023.
“People are not cancelling so much as pushing their dates out to see what happens, but I think the full recovery from this will take us right through 2022.” – Interviewee (incentive travel program design)
On the whole – according to the 36 incentive travel, hotel, and meetings / events professionals who participated in our interviews and focus groups – the industry is still experiencing more postponements to incentive travel and meetings / events than cancellations. This was corroborated by the IRF survey of 250 industry professionals conducted in April 2020 described in Part One.
Nevertheless, where postponements were originally pushed into the third and fourth quarters of 2020, most are now being pushed into 2021 and even 2022. When the pandemic began in January and February, decisions to postpone programs were centered on protecting employees and complying with restrictions and shutdowns. As of May 2020, leaders appear to be growing equally concerned with company financials. For this reason, a growing number are cancelling programs rather than postponing them; in some cases, even where they incur six-figure penalties.
Either way, the situation for incentive reward designers and meetings / events planners is extremely challenging.
For destination management companies (DMCs), it may be dire. Focus group participants told us that DMCs are in true survival mode. Some have furloughed almost all of their staff. One DMC told us that almost all of their incentive travel groups are cancelled with hardly any postponed to 2021. At first, they didn’t layoff anyone but are now down 70% and expecting further cuts.
“We are processing huge cancellations and working with customers through this. We’re down 94% ¬– all meetings and events are cancelled or postponed into 2021.We’re now also in planning mode, devising strategies around how we come out of it.” – Focus group participant (large online travel firm).
Though a return to normal in the MICE industry appears destined for the longer-term (18-24 months or more), the preponderance of evidence points to near and mid-term opportunities for the industry in satisfying peoples’ growing desire for safe travel and limited social contact.
The following actions and advice for getting through the crisis, adapting to a “new normal,” and repositioning for greater resilience to disruptions of all types, were distilled from our interviews and focus groups, and from extensive and recent analysis of industry surveys, papers and articles.
“The incentive houses play a very important role for us. I have lost only one program to cancellation in all of this so far. We accommodate new dates happily for exceptional partners. The relationship is key.” – Interviewee (hotel/resort exec)
Customer Service, Employee Engagement & Relationships
Legalities and Disruption Planning
Our survey data, interviews, and focus groups reported a pent-up demand for travel – even international travel – that is emerging now and should escalate as travel restrictions are removed. A majority of our experts and much of the media mostly concur but take a more cautionary position concerning longer distance air travel. Many believe international travel, especially in large groups, will not return to previous norms until a vaccine for COVID-19 is found and made widely available. Other developments that would encourage a return to travel include the introduction of a reliable treatment alongside ubiquitous testing capability and/or a herd immunity evolves rendering COVID-19 more like the seasonal flu.
Dozens of laboratories are making progress toward a vaccine. Governments have accelerated approvals for human testing and some early-stage human trials have gone well enough that suppliers are already developing the capacity for mass production and distribution. Many expect the COVID-19 vaccine will come faster than any previous vaccine in history (see Recommended Reading below in PDF).
Even if the most optimistic forecasts are correct – and a vaccine arrives before the end of the year – it must still prove safe and effective in larger patient groups, then billions of doses must be mass produced and distributed. No nation is safe for most forms of international travel until all are safe. Though most or many Americans might have access to a vaccine in 2021, experts warn that under no realistic scenario is one likely to be distributed globally before 2022. Complicating any potential impact of a vaccine is widespread (albeit unscientific) mistrust of vaccines, particularly in the US, where in a May 2020 survey of 2,200 adults, only two-thirds said they would take an effective COVID-19 vaccine if it were available (see Recommended Reading in PDF).
Given economic imperatives, political pressure, the need to address other deadly health issues, and peoples’ mounting frustration at being confined, progress toward herd immunity might proceed faster than vaccine testing, production, and distribution, especially should treatments prove effective and widely available and/or quick, universally accessible testing arise.
Do not count on these scenarios to bring back pre-COVID-19 norms quickly, however. Herd immunity will most likely evolve slowly, in fits and starts. And it will almost certainly inflict more psychological damage as death tolls mount, again, unless an effective, widespread treatment is also discovered. Moreover, if a second wave of COVID-19 – one that many experts predict will arrive in the fall with the flu season – materializes, it will engender more caution. Whatever the scenario, large group events and group incentive reward programs involving air travel will not likely return to pre-COVID-19 volumes for at least 18-24 months.
One of our expert panelists reminded us that those who fail to plan, plan to fail. Even extreme optimists and those sympathetic with arguments that governments have overreacted are well-advised to heed the best evidence and plan accordingly. Those in the industry inclined to take personal risks should not take the same risks with employees, or clients and their employees.
The Incentive Research Foundation thanks and acknowledges the following individuals for their contributions to this paper, whether as interviewees, focus groups participants or as reviewers and advisors:
Jim Adams – Performance Strategies
Susan Adams – Next Level Performance
Stacey Anthony – NFP
Martha Austin – Playa Hotels & Resorts
Chuck Baird – Waterfall Resort
Bruce Bolger – Enterprise Engagement Alliance
Heidi Chatfield – All Star Incentive Marketing
Catherine Chaulet – Global DMC Partners
Stephen Cook – Lorandus
Sandra Daniels – Firelight Group
Craig Dooley – SDI Meetings & Incentives
Derrick Eells – TenDot Travel
Robin Eschler – Waterfall Resort
Rick Garlick – Magid
David Gould – CR Worldwide
Stephanie Harris – Incentive Research Foundation
Steven Jacobs – Really Great Meetings
Cristopher Johnson – Land O’ Lakes
Jerry Klein – Animate Growth Partners
Celuch Krzysztof – Nicholas Copernicus University
Joost de Meyer – First Incentive Travel
Mike May – Brightspot
Stephanie McVeigh – Strategicis
Mike McWilliams – MotivAction
Lisa Meller – Performance Events
Jim Micklos – This is Fusion
Barry Miller – Barry Miller & Associates
Patty Pae – Egencia
Dave Peckinpaugh – Maritz
Dave Peer – The Carlton Group
Brenda Rivers – SAFE, LLC
Mike Ryan – CR Worldwide
Michele Sarkisian – P3 Advisors
Dawn Schillinger – Maritz
Scott Siewert – Fab at Incentives
Rodger Stotz – Incentive research Foundation (Emeritus)
The Incentive Research Foundation’s Industry Outlook for 2023: Merchandise, Gift Cards and Event Gifting reports an optimistic outlook for 2023 despite continuing challenges to the global economy. With a critical focus on attracting and retaining talent, businesses consider non-cash incentive programs to be a valuable tool to motivate a changing workforce.
IRF President Stephanie Harris and IRF Chief Research Adviser Rick Garlick present this useful analysis of how incentive, rewards and recognition programs are being designed and budgeted for 2021.