Corps. Reconsider Use Of Cash Over Incentive Travel

Improved financial performance has sparked some corporations to re-examine the potential motivational effects of travel versus other incentives, including cash, debit cards and merchandise. Many buyers believe incentive travel is the most effective of the motivational tools, but its cost and inherent security concerns deter others.

"The use of incentive travel has rebounded considerably. However, since the economy is uncertain—based on the stock market, interest rates edging up a little and earnings questionable at best—we have not come back to pre-9/11 levels at this point," said Jonathan Danforth, president and CEO of meeting and incentive management firm Navigant Performance Group. "Individual travel and merchandise incentives are on a slight upswing because different objectives are being served."

Danforth noted that corporations remain conscious of happenings around the world. "Every incident has a bearing on perception and reality as corporations look at destinations," he said. "There is a slight upswing at international destinations, but corporations are playing it safe and looking toward domestic destinations, the Caribbean and Hawaii as safe havens for incentive travel programs."

Better corporate performance and a general resignation to the uncertain international situation have brought back some incentive travel.

"In 2002, companies reallocated funds for travel incentives to other types, such as merchandise," said Dave Sonricker, senior vice president and general manager of WorldTravel Meetings & Incentives. "With people now traveling more despite safety concerns and some re-emphasis on North American travel, money is coming back. Corporations aren't willing to do away with travel incentives."

Some incentive travel buyers' support has never wavered. At Mutual of Omaha, incentive travel volume remained consistent, even following Sept. 11, 2001.

"We have three important objectives for our incentive travel programs," said Ken Juel, Mutual of Omaha's manager of sales incentives and recognition programs. "It's important for peers in a particular group to get together. It's also important for these top producers to interact with senior management so they better understand each other. Most important is to reward and recognize their performance."

Brett Barrowman, vice president of conferences and travel management at Oklahoma City-based American Fidelity Group, said his company exclusively uses travel incentives. "There's an intrinsic value in travel incentives," he said. "You get to socialize with your counterparts, which you don't get with cash or merchandise. With those, you're rewarded with something very material instead of what we want from the incentive: synergy, enthusiasm and the sharing of ideas."

Many corporations offer incentives other than travel to reward mid-level employees or dealers, WTMI's Sonricker said.

"A lot of merchandise incentives are offered in tandem with a travel incentive," Sonricker said. "The travel incentive usually rewards the very top performers. Merchandise incentives are used to move the middle 60 percent of your audience. A lot of folks in the middle can't always reach the top performance level, but you want to keep them engaged. In order to do that, some kind of incentive needs to be offered to them, such as merchandise, which is not as costly as a travel incentive."

While cash traditionally is the most popular incentive, according to Steve Damerow, CEO of Atlanta-based Incentive Solutions Inc., "debit cards have all sorts of advantages over cash: accounting, safety and control. It's like a billboard in your wallet. Debit cards may not take business away from merchandise or travel incentives, but they do take business away from cash."

The cost of a travel incentive easily can deter corporate interest, Damerow added.

"Travel is relatively expensive. I can change behavior with a $50 debit card, but I can't send someone to Hawaii for $50," Damerow said. "Travel appeals to the top 5 percent to 10 percent of the incentive industry." Damerow manages debit card program development and sales tracking and said corporations can save 35 percent to 40 percent more with debit cards than travel or merchandise incentives.

The international situation has been a boon to debit cards, Damerow said. "Everybody knows it's not as much fun as it used to be and it's become more of a hassle, especially for shorter trips," he said. "As a consequence, debit cards are extremely popular because people get to pick and choose what they do with the money. We can make cards good for travel, or only good for gas or restaurants or for anywhere they want to use it. We also can use the debit cards in conjunction with an incentive travel program."