During the downturn and its immediate aftermath, rewarding and motivating top performers in the insurance and financial industries entered a limbo period. Companies were torn between pushing programs to drive up sales and holding off on putting money down until it was clear that the worst was past. But in recent years, as the economy stabilizes, planners see incentive travel programs morphing in response.
“Things are definitely picking up, and moods are a lot more optimistic than they’ve been in the past several years. It’s great to see, because incentive trips are so important, and it was unfortunate that they were scaled back or completely cut,” says Sarah Whitlock, CMP, meeting and event manager at Boston, Massachusetts-based Pioneer Investments.
Though the U.S. Travel Foundation calculates that incentive travel and business meetings and events account for $92 billion of the annual American business travel spend, it’s unclear how much of that pie belongs to financial and insurance companies. In these industries, the incentive travel situation is still mixed. Some companies have ostensibly shut theirs down, while others have used them to fuel growth. And as companies in many cases look to rehire positions that were downsized during the recession, reward programs can be a key differentiator.
“The economic impact of a recession is always going to be closer to home in some industries,” notes Susan Adams, director of engagement at New Brunswick, New Jersey-based Dittman Incentives. “There are some industries that are more conservative than others. Many organizations will want people to be out of the office for less time than a distant destination allows. And there is sensitivity to the image of spending ‘other people’s money’ in some industries. That doesn’t mean there is reluctance to invest in incentives, but there is increased emphasis on ROI. Across the board, whatever position people took during the recession, they’re taking two or three steps out from there as things improve.”
The bottom line — incentive travel budgets — points clearly to the renewed importance of rewarding and motivating top performers. Companies are continuing to invest in their programs, and slightly increasing budgets, but changes in the travel industry are quickly eating into planners’ funds.
“Our budget per attendee is relatively flat, but hotel prices are continuing to rise due to demand — especially February through April in warmer weather destinations where we typically hold our incentive,” Whitlock says. “The demand for these properties is incredibly high. Between finding the pattern we’re looking for and working around non-compete clauses, it’s getting a lot more difficult to find space. As a planner, it can be frustrating because the accountants don’t realize it’s quickly becoming a seller’s market in the hotel industry.”
“At this point hotel and air costs are outstripping people’s expectations, and I don’t think some clients are braced for that,” Adams notes. “Everyone expects an inflationary bump from year to year, but clearly airlines and hoteliers have found that there is a lot more room (for corporate rates) to rise than that in the transient marketplace. This makes it difficult for corporate programs, as budgets are set with room for inflation, but not in anticipation of a surge like the one we are seeing now.
“For planners, it can be a tough battle to find the right location at the right price in this environment,” she continues. “I really don’t know how long that upward trend can continue before some destinations become unaffordable for most travelers — corporate or individual. At the same time, travel is consistently appealing and a dynamic driver for top performers, who are motivated by travel far and above anything else.”
“Things are definitely picking up, and moods are a lot more optimistic than they’ve been in the past several years. It’s great to see, because incentive trips are so important.” — Sarah Whitlock
“We have seen a large increase in demand based on Forethought Financial Group being acquired by Global Atlantic Financial Group Limited in early 2014,” says Kelli Livers, CMP, CTE, assistant vice president at Hamilton, Bermuda-based Global Atlantic Financial Group Limited. “We are growing, and that is clearly reflected in our meeting volume.
“Consequently we are running into availability issues with hotels, venues and restaurants,” she continues. “We are developing processes and procedures to educate our internal stakeholders and to allow us to conduct the appropriate RFP and negotiation process to ensure best pricing and meeting placement.
“When I’m sending leads, I’ve got to review and select the hotel much quicker than in prior years. They can’t hold the space, because they’ve got people knocking on their door. When you reach out to these smaller boutique resorts, they’re busy. It used to be that you could plan a short-term trip in three or four months, but that’s not the case anymore.
“I’m looking at 2015 and 2016 for city destinations and encouraging my stakeholders to look at 2017 for the larger programs. I’m hearing ‘I might be able to accommodate the meeting if you come in on a Saturday and you’re out on a Tuesday.’ It makes you struggle from a resource perspective, because you’re taking on more through all the searching and RFPing. I’m trying to get internal stakeholders to really focus on where they want to look so I’m not going out to 10 cities. Hoteliers know when you do that, so they’re not giving you their focus and best offering upfront.”
Static budgets and rapidly rising hotel costs have, surprisingly, not had a significant impact on the destinations planners are targeting. Restraints on location more often come from corporate mandate. We’re limited to the continental U.S. as a company policy, and I’ve worked for other financial companies that also have this policy,” says Whitlock.
“In addition to budget, optics play a very large part,” she explains. “Taking a group to South Florida looks a lot different than taking your group to the South Pacific or the south of France, even if you end up spending the same amount in the long run.
“My attendees from the North are definitely more excited about warm weather beach destinations. Florida is always a top place for groups that need to stay within the continental U.S. We’ve been to Naples, and this past year we were in Key Biscayne. The South Carolina and Georgia islands, like Sea Island and Hilton Head Island, as well as Scottsdale are always popular, too.”
Within the continental U.S., planners are uncovering “new” destinations that still surprise and excite award winners. “We took our group to Lake Tahoe in March of 2013. At first people weren’t very excited because it’s a cold weather destination,” says Whitlock. “They said, ‘We have snow here. We can ski here.’ I had to convince them that it’s warm and you can ski in a turtleneck and ski pants, and it’s very different than skiing in the Northeast. My attendees ended up raving about the trip, it was such a beautiful place and a location where most people hadn’t been before.”
“During the recession, we saw many more regional incentives,” Adams agrees. “We operated an incentive program in Cleveland, which is not typically known as an incentive destination, but it was a very successful gathering for our clients.”
At the 2013 FICP Annual Conference, which Livers chaired, the topic of incentive destinations came front and center during the Planner Exchange. “We started with domestic locations,” she says. “Everybody is obviously still doing domestic, but I asked, ‘are you going international on your incentives?’ and I didn’t do a count of hands, but it was a pretty strong response that most people are doing international. To me, that’s big to go from doing nothing to international.
“It seems like a lot of people who are doing international trips tap into cruises, because it’s a good segue from the international perspective,” Livers explains. “When you’re trying to do Vienna and Budapest, it makes it more reasonable from a cost perspective. But there are a couple people that are doing the African safari, Australia and Costa Rica, which is certainly on my own bucket list. When I talk to my peers, there are even people doing Vienna five nights, six days.”
Even within her own company, Livers admits that the shift has not yet happened, but due to market forces, it’s on its way. “We still do North America, Caribbean and Canada, but I could foresee in the next year that we do something more exotic, because I pulled some reports on our competition, and they are going international, especially on the independent producer side.”
Companies that stayed especially close to home in recent years — opting to explore second-tier cities domestically — are looking to more affordable destinations abroad. “Now, organizations are more willing to look further out. There’s no Abu Dhabi on our schedule right now, but there is interest in looking outside of North America,” says Livers. Spain and Ireland, where their own recessions have kept prices down compared to other destinations in Western Europe, and Mediterranean cruise itineraries are also increasingly attractive for planners looking to move abroad at the right price point.
Like those opting for cruises, Amy Ingalls, senior meeting and event planner for Cedar Rapids, Iowa-based Transamerica Life & Protection, tries to stick to all-inclusives to keep costs under control, and this often brings her incentive trips abroad. “Our budgets have remained flat for incentive programs, so with rising lodging and travel costs, all-inclusives have helped us remain more budget-conscious,” she explains. “This means that we’re looking more toward the Caribbean, since there aren’t really any true all-inclusives in the U.S. We’d like to think that we’re pretty similar to other insurance carriers, but we do hear of others offering Europe and the real exotic destinations.”
When it comes to program design, planners in the financial and insurance industries are experimenting with a wide variety of strategies to stay within budget while making sure incentive travel programs achieve their intended purpose: motivating employees to exceed their goals.
To stretch static budgets, some planners are opting for smaller programs that allow for a higher budget per attendee. “I’m a member of FICP, and I see a lot of my meeting planner colleagues doing an elite trip,” explains Ingalls. “They raise the expectations quite a bit and take the top tier — the top 20 or 30 or 50 — to far-flung destinations, like Australia and Taiwan. I would love to try that in the future, but our mandate is to include as many people as possible, and I’m constrained by a static budget.”
Livers also has found that constraining attendee numbers allows planners to maintain the higher end trips award-winners are accustomed to. “You have to increase your qualifications. We’re still doing higher end, but we keep them smaller, compared to prior to 2008, when they used to do an incentive for 800. We’re actually adding programs, and we’ve seen a little bit of an uptick in our budget for these smaller, higher end programs.”
At Transamerica, Ingalls runs incentive programs for nine different distribution groups and experiments with different approaches to program design from one group to the next. “For one group, we’re going to try shorter qualification periods of six months rather than 12,” she says. “The thought process is that an agent with us in month seven, if they’re nowhere near their production requirements, will just give up and not try anymore. We’re going to try the six-month qualification to try to create more excitement and not lose people. But each distribution group is different. For some, there’s a minimum. For others, they have to meet a specific production level. We have an agent base of 3,000 and we take the top 135.”
At the opposite end, Livers has seen some companies extend their qualification period. “Some companies went to 18 months to help from a cost perspective,” she says. “We have not done that, but everyone felt very strongly that the sales force needs to be rewarded. Qualifications still successfully run on a yearly basis.”
One of the biggest changes facing planners today revolves around demographic changes in the industry. As a new, younger generation concerned more with experiential travel and connecting with locals rises in the ranks, the type of travel that award-winners desire is morphing in response.
“We want to hit as many producers as we can,” Ingalls says. “Our feeling has always been that once we get them on a trip, they’re always going. I have looked at our program design in terms of the wide variety of ages: we have 20-somethings and we had an attendee who turned 80 in Jamaica this year. When you read about the different generations, the older generations like the structured meetings, whereas Gen Y likes more time to explore and swim with dolphins.”
To try to touch as many preferences as she can, Ingalls offers more freedom — not more choices. “We have given them one more extra free night, rather than having group dinners every night,” she says. “And we’ve given them more free time to go out and explore a destination on their own, see the property, or hang with their friends. Currently, we do not host family programs, but we’re going to start offering them in 2015. Quite a few of our attendees consider our incentive program their vacation during the year, and we’re trying to reach that mid-level agent. Since they consider this their vacation, they want to include their families.”
For some planners, demographic changes are unlocking new activities that can even appeal to the wider group. Whitlock has found that “a lot of my attendees are big golfers. Because of the age shift, last year in Miami we had a group that went jet-skiing, which is something that I’ve never done in the past. Even in Lake Tahoe, we went snowmobiling.”
Though the incentive travel picture in the financial and insurance industries has certainly improved, it also has changed. “Incentive travel business is strongly up throughout the industry, and I’m hopeful this will continue as the economy gets healthier and healthier,” says Adams. “I don’t think, however, we’ll ever see a return to the real no-holds-barred incentive trips of the ’90s.”
With new destinations to delight award-winners, with new demographics shaking up group activities and new types of program design to experiment with to increase employee motivation, incentive travel planners don’t need a return to the past: There’s something better on the horizon. I&FMM