Companies Fine-Tuning Incentive Travel Reward Options, ROI Strategies

Reward travel programs for top earners are under greater scrutiny this year as senior management increases pressure for measurable returns and new research highlights ways to make incentives more effective, corporate meeting buyers said. Though corporate spending on incentives has remained steady year over year, a greater number of companies plan to adjust their incentive strategies in 2007, according to an exclusive Meetings Monitor survey of 220 corporate meeting buyers.

Buyers said their incentive winners are looking for a greater variety of reward options. Some companies even said they will increase their expenditures on incentive travel next year to gain a greater return on investment.

Karen Bennett, vice president of sales strategy and support for Atlanta-based Cingular Wireless, said a survey of her top salespeople showed they prefer multiple regional trip options to one large event. The company plans an annual reward travel program for the top 5 percent of earners.

"Without full engagement—from the top producers on down—the motivational value of the incentive is limited. If you're going to make this kind of investment, you want to make sure that you've got the engagement and motivation and that it is clearly linked to your business drivers so that you can get the maximum value," Bennett said. As a result of the survey, Cingular Wireless' annual trip will be broken into six regional events, at a cost increase of 5 percent to 10 percent, but the targeted approach will increase return on investment, she said.

Among the 49 percent of Meetings Monitor respondents who said their companies have incentive travel programs, 77 percent said expenditures in this category remained steady in 2006. For 2007, that percentage drops to 66 percent and the number of buyers who said their companies will spend more on incentives jumps to 18 percent.

The most common reason given for increasing expenditures on incentives was that more employees are qualifying for reward travel.

Armed with new analysis on which types of travel programs best motivate employee, Chris Gaia, vice president of marketing for Maritz Travel Co., said the three most important factors in making an incentive program truly motivating are destination, guest policy and the quality of accommodations. Gaia said employees overwhelmingly prefer beach and water destinations.

"We've actually have had some clients, when we tested them on destination and type of experience, that could take a night off the program if they went to a beach destination," he said.

Maritz also found that while employees generally continue to appreciate a five-star property, a growing number of top earners would be happier trading luxury for a more relaxed setting and a greater number of activities.

"You're probably better off taking them to a lesser star-quality property and putting money into paying for all the activities," Gaia said.

The trips or destinations that best motivate a workforce are unique to the type of audience—particularly its average age and income level, he said. Though it may seem that multiple trip options are preferred over one large group activity, Gaia said companies can achieve their business goals of networking and teambuilding by using a tiered approach.

"The question is: Can you get what you want just by going to a different tier or different structure? Maybe for the people that are in the top 5 percent or 1 percent there's an add-on of a couple of days for a chairman's club, where you can give them a more intense experience, but you don't necessarily have to burden everybody else," Gaia said.

Allowing top earners to bring their friends and families also poses a dilemma, according to Gaia. "There are some overall trends that are starting to emerge from the data, one around the issue of guest policy," he said.

Employees increasingly are asking to buy extra tickets to bring their families, not just spouses, along on incentive trips, Gaia said. However, this trend also raises a question of whether to offer multiple trips—one for families, another for singles or couples.

"This is probably an area that companies want to look at, because there's a shift coming in how your workforce is viewing these programs and the ability to translate it into a broader family experience," he said, adding that the ability to add more than one guest could be worked into an incentive program as a production goal.

Value in exchange rates was the issue corporate customers were most concerned about for their 2006 international incentive trips, according to a survey conducted of 211 incentive travel management companies by International Conference Research Inc. and published by the Society of Incentive Travel Executives. Security was a top concern of just 22 percent of respondents, according to ICR, and one unidentified respondent said, "Although security is an issue, our clients continue to look at, and travel to, Europe."

Nine out of the top 10 international travel destinations for North America-based buyers were in Europe, according to ICR. The only non-European destination to make the cut was Australia in the survey of 350 North American corporations that had run at least three incentive travel award programs to Africa, Asia/Pacific or Europe from 1999 to 2004.

Hugo Slimbrouck, director of the corporate division at MCI in Brussels and president-elect of the Society of Incentive Travel Executives, said many of his counterparts planning incentives in Europe said their attendees are looking for multicultural experiences in unfamiliar destinations and also are adding community service elements or opportunities to give back to their host communities.

"We really look at this to make it a much more valuable experience than just an off-the-shelf type of programs," Slimbrouck said. "If you really want to do this well, you have to take one day out of your incentive program and spend it on the community project."