Back to Normal?

Incentive travel rewards used to be oh-so-predictable. First, there were the destinations—or, as Steve O'Malley, division VP, major accounts, for Fenton, MO-based Maritz Travel, terms them, the "usual suspects." Internationally, these would be Europe, Mexico, or the Caribbean; domestically, Florida, Phoenix/Scottsdale, and Southern California. "You'd be looking for a payoff in the first quarter of a calendar year," he says, "so it would always be the areas that had nice weather at that time."

The Good Old Days

Fifteen years ago, when Linda Comb (now senior sales planner for Carlson Travel Group in Minneapolis, MN) first moved into incentive travel, it was easy, and fun: "People were not nervous about traveling abroad. We did a lot of European programs for incentives." Also, she adds: "A lot of people were going to Asia—Hong Kong and Thailand. Asia was much more open, and people were willing to travel. There wasn't as much of a fear factor at the time."

In fact, there was nothing but love. Patty J. Hayes, working for Maritz at that time, says that, "Fifteen years ago, I had one account that spent $40 million annually solely on incentive travel programs, and they only operated them in international destinations." From 1990 to 1999, O'Malley traveled with one client to six continents, including Antarctica: "In many cases these would have been destinations that the winners probably wouldn't have been comfortable going to by themselves, but because they knew they were with Maritz they were excited to go, and ended up having an experience that will last a lifetime."

Air travel was taken for granted. In 1995, Marianne McNulty (now with the performance improvement company, Your Right Source, LLC, in Sugar Grove, IL), remembers, "I did three trips in two months to Kauai—back and forth, back and forth, back and forth! All were sales programs; one was for an international company that had employees both domestically and in the Asia-Pacific region, so Hawaii was obvious for them. Another company was so competitive domestically that it would have regions face off against each other. When they went to Kauai, the top region would get two extra days, or suite upgrades."

Incentives were not only breaking new ground, they were making history. In 1993, for example, O'Malley spent two months in South Africa, "one month prior to the election that put Mandela in office, and then a month after that." His job: planning, setting up, and operating an incentive program. Maritz' South Africa program remains a touchstone for O'Malley: "We saw the country open up, post-apartheid, and ever since, it's been a fantastic place for a very high-end incentive experience. On average, I still take somewhere in the neighborhood of 10 groups a year. It appeals to companies that have participants at the higher end of the spectrum, because it is, on a per-person basis, a very costly trip."

The One-Two Punch

"What we saw from '93 to 2000," says O'Malley, "was an expansion of people's willingness to visit places that seemed a bit more foreign, like South Africa." Then came 9/11. On that day, Maritz had 57 programs in operation. "We had participants all over the world that we were trying to get home," he recalls. "We had one small program in a rural area of Italy; it was very difficult to get them connected back to Rome, then get them connected back to the U.S."

Says Comb, "Everybody was stunned. Every trip that was going to take place outside of the U.S. had to be rerouted to close or domestic destinations like Mexico or Hawaii. A lot of them just canceled for that year. For a lot of people, it wasn't even an incentive to travel for a while. That was a huge change in our business." Practically overnight, the appeal of incentives changed from "trophy trip" to the travel equivalent of mashed potatoes—everyone wanted comfort. Kim Hester, now director of meetings and incentives at Travel Dynamics Group Inc., in La Jolla, CA, was working for San Diego-based Incentive Travel, Inc. at the time. "Groups that had been to Europe year after year," she says, "went to Hawaii, or the Caribbean, or Canada. It was closer to home, safer." O'Malley agrees: "We saw a pullback from those types of exotic destinations to more comfortable destinations. A lot more of Hawaii and the Caribbean, but mainly staying on the continent."

All planners interviewed, however, noted that the change really occurred before 9/11—in 2000, actually. According to Greg Malark, executive VP of the Scottsdale-based site selection company HelmsBriscoe, "It actually started before 9/11, when the stock market bubble burst. Even companies that were doing well became really hesitant to send their people on high-profile incentive trips. So the destinations considered 'high-profile' fell out of favor for a couple of years." Says O'Malley, "[The climate] has changed since 9/11, but not necessarily because of 9/11. I think the economy has not allowed people to spend on this kind of activity quite as freely as during the '90s, when all of the companies were doing so well."

Jeannine Strampel happened to pick this tough climate to quit her day job and strike out on her own. After 10 years of working for companies like IVI Travel, IBM, and Westinghouse, Strampel moved to South Florida and started her own incentive travel company, JAS Events. "It was a pretty weak year," she admits. "I was just becoming an independent; I was by myself, and pushing back on business to keep the service level up."

Ironically, after 9/11, Strampel's relocation could not have been better. "It seems that most of the groups want to come to South Florida or the Caribbean. I do a lot of sales incentives in South Florida. I like to work in my own backyard. Florida can offer great weather, golf, and fishing. I just brought a really great group from Asia here. They were from Hong Kong, Taipei, and Singapore; they had a five-day incentive trip. They could have gone anywhere in the world, but they wanted to come to South Florida."

"New World" Order

In fact, despite moving incentives closer to home in the wake of 9/11, planners say they are still able to offer high levels of satisfaction. Says Comb, "The U.S. has produced so many great resorts with spas. Some are just so top notch that people don't have a problem taking their people to domestic locations now, too." For Comb, some of the top destination resorts are The Phoenician in Scottsdale, the J.W. Marriott Desert Ridge in Phoenix, and La Costa in San Diego. "All these resorts with spa and golf are now destinations in themselves. They have all the function space right there." O'Malley agrees, saying, "Domestically, there were new builds coming online that were four- and five-star quality, in addition to activity that's taking place in Los Cabos and the Caribbean. We have been bringing our high-end clients to the newest and the best that is out there. We focus on giving them an experience that allows them some trophy value, like a private rodeo, which is what we did at the Ritz-Carlton Bachelor Gulch, so they can go home and say, 'I performed well enough that my company took me to the newest and hottest place.' "

Indeed, spas are very hot, says Malark. "We are seeing an increase in the desire to have a spa element, which has always been there, but it's much stronger now. With people stressed in today's world, the number-one commodity is time. Spa is being integrated as part of a relaxing trip and as part of people's lives. It's something that is just part and parcel of a high-end incentive destination."

Some familiar destinations are in the new lineup. "Hawaii still delivers a big bang for your buck," maintains Comb. "Vegas is the top of all our business. Florida has a lot of new hotels in the Miami area and Naples. Orlando is changing—it's got hotels now that aren't focused on theme parks. Southern California—meaning Dana Point, Laguna Niguel, and always Palm Springs—is really an incentive destination." Outside the U.S., "in Mexico, I've seen a lot of business going to Cancun and Cabo—they're affordable and have easy air access." The Caribbean? "I guess I would say Puerto Rico, the Bahamas, and cruises are pretty big."

On the Horizon

Even so, planners across the board are also seeing an uptick of interest in Europe and beyond. Says Hester, "After a couple of years, people have started to feel safe again and to say, 'Hey! We used to go on some great trips—what happened?' That's what is happening now. They want to go to more exotic places like Africa. That's one place that has come on very strong; there's a lot of interest in South Africa and in Kenya." Hester has recently come from a site inspection in St. Petersburg, Russia. "Everything about it is amazing and wonderful. It's got all the infrastructure to keep Western tastes happy, but it's still got a very exotic foreign flair."

Although Comb admits, "With the euro being what it is, it takes a higher budget to go to Europe," she is still bullish on international travel. "For those who are looking for more of a value, we're looking at Portugal, Spain, and Ireland," she says. "But the traditionals are coming back—Paris, London. Asia is slowly coming back, but it's not big at this time. But I'm finally seeing China opening up again, which is kind of exciting." And though Hayes, now senior account manager at Chicago-based Proactive Inc., admits that incentive travel has slowed down, her clients are still going international—to Spain, the Caribbean, Mexico, and Canada—as well as Hawaii, Las Vegas, Orlando and Chicago.

Looking ahead, Comb is cautiously optimistic: "Happenings in the world will sway people on which destinations they choose, but I think travel is back. It's exciting for our industry; people are excited to travel again."


Wishful Thinking

While planners contend that international destinations are back, the destinations themselves are not yet seeing it on the dotted line. A straw poll of destinations taken by Successful Meetings found that international incentives have yet to rebound to 2002 levels, let alone those of the '90s. These findings are confirmed by Michel Couturier, president of New York City-based Marketing Challenges Internation-al (a destination marketing company that promotes 10 destinations on six continents). "The incentive market peaked in 2001," says Couturier, "dropped in 2002, and dropped again in 2003, with a flattening in 2004." Frustratingly for the destinations, "Planners may say they are tired of the same destinations and want to go overseas and/or propose overseas destinations, but their hopes and wishes do not always materialize." On the plus side, however, he noted that "now, when a planner contacts us for an international destination, that planner knows for sure that the client wants to go overseas. We are enjoying a higher ratio of request to action."

Signs to Look For

People might still hanker after the old incentive travel experience, but the ways in which programs are structured have definitely changed. Here's how:

Shorter stays. Planners report that the typical incentive trip is now four nights/five days, which automatically skews programs in favor of a domestic, short-haul destination. Notes Linda Comb, senior sales planner, Carlson Travel Group: "If you're going to go to Hawaii, Europe, or Asia, you have to have a longer stay."

Shorter lead times for programs. Says Kim Hester, director of meetings and incentives for Travel Dynamics Group Inc., "It used to be, 'OK, let's work for a year towards this incentive.' Now they tell participants, 'Book the most business in the next three months and you're going to go on a great trip.' It used to not be possible; when you had to deal with paper airline tickets, everything happened more slowly. Now you have e-tickets, you have e-mail, you have e-everything! And everything operates at warp speed. Because you can plan an incentive in three months, they choose to do so."

Tailor made. Steve O'Malley, division VP, major accounts, Maritz Travel, says "We've introduced a multivariable analysis product that studies the effectiveness of up to 20 different variables, as far as product offering, for an incentive travel program. Now, instead of the company saying, 'We always do a five-night trip to Mexico, and we do 10 waves of it,' we can survey its individual participants and determine whether part of the group would be more motivated by a shorter trip to a closer destination, or different activities, or maybe a family program."

A la carte. According to Greg Malark, executive VP, HelmsBriscoe, clients are outsourcing the travel element, but doing everything else—planning, promotion—in house, and they are putting budgets under a microscope: "Full disclosure of what they're buying, line item by line item, is very important." Jeannine Strampel, JAS Events, agrees: "Our last group wanted an individual budget for every night of the group—which is unusual. But we did it."

Spa's the thing. Comb says, "We're seeing that spa is so important in every one of our programs now." Malark agrees, adding, "In some situations, it's almost a necessity, as golf was, five years ago.'"