Things are looking up for incentive travel. In March and April, the Department of Labor reported that the economy added more than 588,000 new jobs and upwardly revised its corresponding reported figures for January and February. That same month, a survey released by Washington D.C.-based lobbying group Business Roundtable revealed that 88 percent of chief executives of the nation's largest companies expect sales to increase within the next six months. With increasing sales comes the need to keep the salesforce motivated, and a recent survey of 540 executives found that 57 percent find travel rewards to be remembered the longest of all kinds of incentives, including cash.
"The data I have on incentive travel awards show a steady upward trend," says Ed Kinne, director of industry relations at Minneapolis, MN-based Carlson Marketing Group. And other incentive travel planners agree. "I think the thaw from 9/11 has occurred," says Scott Siewert, region manager for Atlanta, GA-based USMotivation. "We are seeing an uptick in group incentive travel."
An increase in the number of incentive programs drives a growing need for new and interesting destinations. What qualities do fledgling incentive destinations need to possess? "First of all, the destination has to be motivational," says Judy Jackson, director of industry relations for St. Louis, MO-based Maritz Travel Company. "The must-haves are that it has to be exciting, romantic, and safe. It has to have activities that would inspire the employee to meet his goal, and it has to have the infrastructure necessary for high-level award winners." And, because many of the same employees routinely compete for these awards year after year, companies cannot repeatedly offer trips to the same locations.
At the same time, Jackson continues, although incentive travel is "definitely coming back again, there is still a lot of price sensitivity and concentration on terms and conditions, such as rates, deposits, and cancellation policies." And these concerns influence companies' choice of destinations.
Follow the Money
Traditionally, Europe has been a leading incentive travel destination with such timeless cities as Paris, London, and Rome, but the U.S. dollar's weakness against the euro has put the Continent beyond the reach of some budgets. And the recent terrorist attack in Madrid has only exacerbated security concerns. While some hotels in Europe have begun to offer price guarantees matching the dollar to the euro, many companies are looking for lower-priced destinations with comparable cultural attractions. Eastern European cities such as Prague and Budapest see their popularity growing, but by most accounts, the place generating the most buzz for incentives is Iceland. "For programs that are looking to stay closer to home but still have the European feel, Iceland is perfect," says USMotivation's Siewert. "Reykjavik is a European capital, with all of the culture that goes with that." The flight time, less than five hours from New York, is about the same as a cross-country flight, and the country offers a bounty of nature's wonders, including geysers, glaciers, volcanoes, and waterfalls. Although Iceland lacks the selection of five-star properties that other popular destinations offer, its real attraction is the culture, atmosphere, and scenery. "It's the closest thing to Middle-earth in this hemisphere," Siewert says.
Speaking of Middle-earth, Siewert says New Zealand's and Australia's popularity, boosted by the blockbuster Lord of the Rings movies, continues. "If you ask somebody what's the ultimate place to go for the ultimate trip, most would say New Zealand. Australia continues to evoke images of the Great Barrier Reef, Ayers Rock, the Sydney Opera House," he says. But booking trips to Australia is often hampered by the perceived cost of getting to the other side of the world.
By comparison, emerging destinations in Central and South America continue to be economically attractive given the continent's economic hardships. "The U.S. dollar's strength in Central and South America and the fact that so far there's been no terrorism there make this region very appealing," says Maritz' Jackson, who lists Buenos Aires, Bariloche, Iguazu Falls, and Rio de Janeiro among the region's main attractions. Still, she says, it's Costa Rica that's leading the Latin American incentive market. "Costa Rica is really taking off," says Jackson, pointing to the emergence of five-star properties in the country. "In the past, it's been more of an eco-travel, individual destination, not so good for groups," says Siewert. "But, in my mind, the new Four Seasons Costa Rica has really put an exclamation mark on that destination."
Fears of terrorism, coupled with economic concerns, have driven the boost in close-to-home travel to tropical locales. "We're seeing a big resurgence in nearby warm-weather destinations," concurs Phelps Hope with Atlanta, GA-based meeting and event planning Aspen Productions. Plus, Siewert adds that "certain destinations are defined as in the North American area, and according to IRS guidelines, if you hold business meetings as part of your incentive, they could possibly be deductible."
Planners point to the influx of new product offerings in this region as encouraging incentive travel. Many cite the Bahamas' new Four Seasons Resort Great Exuma in Emerald Bay and the upcoming Ritz-Carlton Grand Cayman as ideal incentive properties.
In particular, planners see an increased interest in the Caribbean's growing portfolio of five-star all-inclusive resorts. "The five-star all-inclusive is being explored more than it was in the past," says Brenda Anderson, president of Chicago, IL-based Society of Incentive & Travel Executives (SITE). Planners agree. "We've had quite a bit of interest in all-inclusive resorts because they're as easy as can be and offer an attractive package," says Tony Korody, president of Santa Monica, CA-based incentive house FEP, Inc. "Client interest in luxury- or deluxe-level properties that are either switching to, or being built as all-inclusive resorts, is on the rise," says Aspen Production's Hope. "An all-inclusive resort provides the flexibility in food and beverage and makes budgeting far easier."
In March, Sol Melia opened Paradisus Puerto Rico on the island's northeastern coast, Puerto Rico's first luxury all-inclusive resort. The resort features two golf courses, fitness and spa facilities, entertainment venues, shopping, a conference center, a casino, and six restaurants, which, planners say, are a critical component. "Dining is the key," Hope says of the Paradisus' culinary offerings. "For top-shelf, all-inclusive options to be viable in the high-end incentive market, sufficient dining options must be offered."
Additionally, the demographic makeup of incentive award winners is shifting in a way that better suits the all-in-one approach. "We are seeing more sales incentive programs that are incorporating a service level in them, which means that there's a varied audience on the same trip. You might have sophisticated travelers with first-time travelers on the same program," says Ira Almeas president of East Hanover, NJ-based Impact Incentives. Five-star all-inclusive resorts suit these mixed groups because they feature amenities such as golf and spas—although usually at added cost—on property. "These properties take the cruise-ship premise to land, because they offer all sorts of activities and entertainment," Almeas says. "A lot of the current all-inclusives are the exact opposite of the old all-inclusives, offering a wide variety of non-buffet dining options. We're seeing properties with plush towels and finer linens."
And even non five-star all-inclusives see their slice of the incentive pie grow. Dave Ross, group sales manager for the Beaches Turks & Caicos Resort & Spa, says incentive business is up 30 percent over last year and "next year looks even better."
Mexico has also seen an increase in new properties that have revitalized the country's viability as an incentive destination. Planners repeatedly identify such properties such as the Occidental Group's Royal Hideaway Playacar outside of Cancun and the Grand Velas in Nueva Vallarta outside of Puerto Vallarta, as primary players in the Mexican incentive market.
Meanwhile, Back at the Ranch
Domestically, traditional destinations such as Las Vegas, Phoenix, and Hawaii remain popular, but there's a growing interest in less urban, more active options. "Just when things are turning around, there's a second thought about what tomorrow will be like," says Impact Incentives' Almeas. "I've seen a lot of clients suggest that we stay away from major cities." And security concerns are not the only motivation for eschewing the tried-and-true domestic destinations. "We're seeing an interest in a little more adventure rather than cities, shows, and dinners," says New Orleans, LA-based Custom Conventions' Colin Dinkler. "People want more physical activities to get involved in so they can come back with a feeling that they've actually done something."
As a result, planners are offering their clients the classic Wild West experience in a well-appointed setting. "I would say our incentive travel component is very much on the upswing," says Colleen Hodson, executive director of the Cody, WY-based Dude Ranchers Association. "Many of the ranches have been adding meeting facilities specifically to serve this market."
Although Rock Springs Guest Ranch in Bend, OR, built its conference center 15 years ago to accommodate ranchers, Eva Gill, director of sales and marketing, says she's now focused on luring more incentive-type programs. "We are seeing a real increase in the number of inquiries for incentive groups," she says. "It seems that finding a unique and interesting experience within the U.S. is a new focus among incentive planners." As a result, Gill says, she's working to develop more packages for this type of group. This fall, Gill is hosting the top dealers from an auto manufacturer on their first dude ranch incentive. "We are offering participants a choice of morning and afternoon activities which they will sign up for, including massages, golf, bike and canoe trips, caving, and, of course, horseback riding," she says. And these activities fall under the umbrella of her complete meals and lodging package, which follows the conference center CMP model of pricing, in which food, lodging, and activities are all included.
Elaine Steele, public relations representative for Harrison, ID-based Hidden Creek Ranch, says her incentive clients "want a combination of fun and teambuilding" in their programs. So Hidden Creek developed Unitree, a corporate training division that helps clients design the teambuilding component of their incentives.
Planners expect the demand for new incentive destinations to grow with continually short lead times are still short. "By now, you'd think 2004 incentive travel would have been locked and loaded," says Carlson's Kinne. "But there still may be opportunities yet to come for this year."