Incentive qualifiers find destination motivation in far-flung locales such as Australia. Credit: Tourism Australia

The big picture is promising for incentive travel, as corporations have been increasingly using that reward strategy over the last 20 years, according to the Incentive Research Foundation. The IRF’s 2017 Trends Study estimates that the use of non-cash rewards has increased from 26 percent of all U.S. businesses in 1996 to 84 percent of all U.S. businesses in 2016. The study also cites that incentive travel specifically is used by nearly 40 percent of U.S. businesses today, according to the Incentive Federation. But for financial and insurance companies in particular, incentive travel has seen its challenges, including the infamous AIG incident of 2008 that led to the paring down of the extravagance of the trips.

Fiduciary Fuss

More recently, the U.S. Department of Labor’s 2016 Conflict of Interest rule has been impacting the work of incentive planners at many firms. The rule is intended to ensure that retirement investment advisors act in their clients’ best interest, especially in the sale of annuity products, and redefines an advisor’s fiduciary responsibility in reporting the incentives tied to those sales. One response to the rule may be to not count annuity sales toward trip qualification, which can decrease the number of qualifiers. In any case, the design of incentive programs in light of the regulation has become “more difficult” according to 60 percent of respondents in the latest IRF Pulse Study.

“Every single financial services firm in the country is spending significant amounts of time and energy trying to understand the rule and the implications that it will have for their incentive and recognition programs,” says Tom Wilson, division vice president, financial services sector lead, Maritz Travel Company. Roughly 35 percent to 45 percent of Maritz’s client companies are in the insurance and financial sectors. “The clients that we work with have taken the appropriate steps to design their programs such that they eliminate any conflict of interest,” Wilson adds. “So we and our clients feel very comfortable with the programs that they’re operating.”

“Our research shows that destination is a very significant driver from a motivation perspective.”
— Tom Wilson

While the first round of compliance with the DOL’s new rule was set for April 10, President Trump issued an executive order on February 3 that requires the DOL to delay implementation and conduct a review of the rule. The administration, known for its aim to deregulate the financial services industry, argues that the rule would effectively limit consumers’ choices in financial products. With the Conflict of Interest rule suspended, it remains to be seen whether the industry’s preparation for compliance has been time well spent.

Budgets and Booking Challenges

Aside from the new ruling, rising costs present a different sort of challenge: Over 50 percent of planner respondents in the IRF’s most recent Pulse survey said costs — including travel, room rates and F&B — are rising faster than their budgets. According to Colleen Deckert, CMM, CMP, assistant vice president, event marketing with Investors Group Financial Services, “there doesn’t seem to be the same pressure to reduce budget. I would say my experience is more of the budgets remaining flat year over year, as opposed to the big decreases as we’ve seen in the past.”

Deckert explains that when budgets remain flat in the face of rising costs, “you have to make the same dollars go further, and then something in that program is suffering, whether it’s entertainment or digital technology.”

Lynn J. Schwandt, CMP, senior event planner with Thrivent Financial and a new FICP board member, corroborates the trend Deckert cites: “In general what I hear is that budgets are pretty much staying the same.”

Lead time, however, cannot remain status quo. Hotel availability overall is lower than in the past, and planning incentives in popular markets with a relatively short lead time can present a booking challenge. The IRF 2017 Trends Study notes that planners are “pushing out their booking, with over half of planners now booking more than a year out.”

“We do contract (our incentive programs) well in advance; for example, we have several programs contracted through 2019 and will soon be working on 2020,” Schwandt says. “Our recognition conference is contracted through 2021 because it’s our biggest conference, and it requires a large room block as well as a large ballroom.”

Destination Motivation

It’s not just about securing space in the desired property, but also securing the desired city itself. More so than the hotel, the destination is a major motivator for potential qualifiers. “Our research shows that destination is a very significant driver from a motivation perspective,” says Wilson. “So having the right destination, having the right program inclusions, all of that is critically important.”

The Maritz team queries its clients on the ideal destination as well as aspects such as program length, activities, family participation, and so on, in order to achieve a “guest-centric design” for the incentive trip. In general, sun-and-fun destinations are still highly popular, with the IRF 2017 Trends Study reporting that “Mexico and the Caribbean…remain top destinations for U.S. planners’ outbound programs, with roughly 70 percent or more of planners sending groups to those regions.” In addition, “the strong dollar and larger budgets also are contributing to an increase in European programs, with 64 percent of planners headed to European destinations in 2017 — a large jump from 40 percent last year.”

As far as international travel, Lisa Ramsay, CMP, A.V.P., event and meeting management, Protective Life Insurance Co., adds that destinations such as Africa, Australia and the Far East have “bucket list” appeal, as “they may be destinations the average family would not experience on their own.”

Many planners also have had success with less commonly selected cities, as they can offer the well-traveled agent a new experience. “We did a program a couple years ago in Stockholm,” Deckert relates. “I thought it was a fantastic city, but it was a little bit of a harder sell. It wouldn’t be a city on most people’s radar. We were challenged a bit with the weather when the group got there, but at the end of the day it was a strong program. We did our welcome reception at the Vasa Museum (a maritime museum displaying the only fully intact 17th century ship ever recovered). We’re reluctant to do events at museums; typically they’re not best suited for incentives. But seeing the Vasa up close really set the tone for that conference.”

Off the Beaten Path

Less traditional domestic destinations also can host successful programs, although again they can be a “harder sell.” “A few years ago we booked a 250-person incentive in Coeur d’Alene, Idaho. After announcing the location, responses were mixed: Why there? What’s there to do?” Ramsay relates. “However, after arriving in this truly amazing destination, everyone’s questions were answered. At the conclusion of our week together, attendees were commenting they would definitely return.”

Allyson D. Singer, CMP, manager, The Event Group with TD Ameritrade, recently saw Lake Tahoe, Nevada, deliver a great experience for 125 incentive participants (including spouses). “The program had traditionally been in Las Vegas for many years, so we were a little bit nervous about the change,” says Singer, “but it ended up being a successful program with amazing feedback. We did an evening dinner cruise that people seem to really enjoy, and they said they’d like to do that during the day. So for our next Tahoe event we’ll do it in the daytime so they can really see the 360.”

Along the same nontraditional lines, TD Ameritrade is bringing its May incentive program to Portland, Oregon. “We’re excited to offer some outdoor activities and winery tours, and sort of get them out of the ‘beach box’ if you will,” says Singer. “It’s just another opportunity to keep everything fresh.”

While the destination remains a key motivator, there is something to be said for the motivational value of the company brand itself, which is the common denominator through all its programs. “We’re fortunate in that we have a sales force who know the quality at which our incentives are delivered,” says Deckert. “We’ve had instances where they’ve gone to a destination that maybe didn’t incentivize them as much as others, but they had faith that the program would be strong, and the survey results told us that we’ve achieved the goal at the end of the day. So we’re actually promoting the brand of the incentive in conjunction with destination. People aren’t going to say, I don’t want to go to Stockholm or Tokyo or Russia, so I’m not going to qualify. They’re motivated by being in this incentive group regardless of the destination.”

Authentic Local Experiences

Of course, destination is just part of the story; it’s also the kinds of local experiences qualifiers have that distinguishes the program. According to the IRF 2017 Trends Study, “The focus for travel is now not only on the destination and venue, but equally important are the authentic, unique, individualized experiences delivered throughout the agenda. This has led to the product­izing of mini-experiences: from various types of tastings to personalized training sessions to behind-the-scenes introductions to chefs.”

Indeed, 42 percent of program owners are increasing the number of “experiential rewards” in their portfolio, the study notes. What makes for a rewarding experience is subjective, and so the ideal program affords participants time to seek out those experiences that match their tastes and interests. “We offer a pick your own activity day,” says Singer. “That might be spa, golf, hiking, zip lining or horseback riding — whatever is indigenous to the area that makes sense. And then if they just want to enjoy the day at leisure, they may do that as well.”

Millennial Preferences

Millennials especially appreciate those unstructured days where they can immerse themselves in the destination as they choose. “Free time is very important to that generation; they would rather have the opportunity to explore on their own, as opposed to, say, a group teambuilding event,” Wilson observes.

“We are finding that our groups like the adventure,” says Schwandt, who notes she is starting to see a shift toward younger, under-40 qualifiers. “Not necessarily a risky activity, but something that’s not just a walk through a museum. Some examples from previous programs: Sydney Harbor Bridge Climb (in Australia), zip lining in Coeur d’Alene and even biking in Paris is more” to their preference.

Millennials also are more likely to be keen on having a mobile app that complements the incentive trip. The most recent IRF Pulse Study reports that 60 percent of respondents are incorporating mobile apps into their programs. Among Maritz’s incentive clients, Wilson sees the adoption of apps rising annually: “The use of mobile apps is definitely a trend even on smaller incentive and recognition programs, just as a means of communication.

“From a sustainability standpoint it’s greener than using paper, which is important to a lot of our clients,” Wilson continues. “And being able to have their customized schedule on a mobile app is becoming just as important on an incentive and recognition as a large user conference. We love to have the app go out before they leave for the destination and use it to send a welcome message when they hit the ground. Mobile apps from our perspective are another touchpoint with attendees.”

Nonetheless, there are planners who have not found that investing in an app for incentives offers a significant return. Deckert, for example, observes that on incentive trips “we find that once the qualifiers get to the destination they’re not on their devices.”

More Business Content

However, incentive programs that are incorporating more business content may eventually benefit from an app, which attendees can use to access documents relevant to those meetings. “We’re obligated to deliver on the business content, and it will actually become an even bigger component going forward,” says Deckert. “We really are moving toward a model that has a very heavy focus on education for our attendees in terms of how they can grow their practice and build their business.”

“That is the biggest trend that I’ve seen over the last five years,” Wilson affirms. “There are legitimate business reasons to be getting together and celebrating success, but more importantly there is a learning opportunity to help attendees serve their clients better. How can we create an experience for an individual that recognizes him or her, but more importantly how can they take that back home to make their business better? That is the absolute key.”

Resources at the destination, such as universities, also can support the education component. “We work with one client for whom continuing education is paramount, and so we tie in an academic experience with the program,” says Wilson. “There might be a day at Stanford if the program is in San Francisco, or a day at Georgetown if the program is in Washington, DC, where you bring in the academia to talk about the economy, the political environment, trends that are shaking the broader world and so forth. They have found that to be highly engaging for their guests, so I think there’s some uniqueness associated with that.”

Giving Back

Business meetings, educational experiences and corporate social responsibility (CSR) activities all count toward the “50 percent business” component that Investors Group, as a Canadian company, is required to build into its incentive programs, Deckert explains. “We’ve done some great CSR activities. We have partnered for a number of years with Stop Hunger Now, where we package meals and send them to affected areas all around the world,” she says. “Over a four- or five-year period I think we’ve made over 3 million meals, and we just have tremendous success when we offer that. This past year we traveled to South Africa for our incentive and we delivered two CSR programs where we refurbished a daycare and a senior citizens home. It’s really part of Investors Group’s overall culture.”

Similarly, Protective Life Insurance Co. is incorporating a “give back” component to an upcoming incentive this spring. “We are working in conjunction with an organization to arrange a silent auction of art pieces from youth around the community, and all proceeds raised will be given to their school,” Ramsay says.

Event Disruptions

With firms continually exploring new incentive destinations, new opportunities arise to assist communities in more parts of the world. New concerns also arise, however, as to the safety of travelers as they venture to these locales. Threats can range from diseases such as Zika to terrorism to political unrest to extreme weather. According to research by the IRF and the University of South Carolina that will be released this June, “almost 60 percent of planners have experienced some form of disruption in their events, estimating that almost a quarter of their events have been affected in some way.”

In addition, “almost 50 percent of planners said they experienced a disruption costing their organization $10,000–$99,000.” The most frequently cited kinds of disruption were “weather-related events (38 percent) followed by vendor failures (28 percent).” Crisis management is a team effort that includes a planner’s supplier partners, and respondents to the study found hotels to be “best prepared to handle crises or disruptions, followed by destination management companies and airlines.”

“We’re starting to do more checking with the hotel on how they handle security,” Schwandt says. “Our in-house security does an assessment of the location (city) and also submits a questionnaire to the hotel security, which is then compiled into a final security report.”

Ramsay’s team also relies heavily on the host hotel’s insight on local safety conditions. “Our incentive house and us as the company’s planners are very diligent about staying in constant contact with the hotel property and monitoring current affairs taking place in that country,” she says. “We also have security procedures outlined in our program specs that our staff and hotel partners have at their fingertips for the duration of the program.”

The crisis management plan can and should involve other suppliers as well. “We’ve done a lot of work over the last 18 months or so to make these plans as comprehensive as we can,” Deckert says. “Besides hotels, the focus is also now on the offsite venues, busing and all of those other components. All of our suppliers need to complete forms that tell us the information that we need to build out our crisis management plan.”

The Show Must Go On

Today incentive travel has an unquestionable value, not just for recognition and motivation, but also as a vehicle for business content, teambuilding, education and CSR. Given that value proposition, “the show must go on” despite the threat of disruption.

Ramsay relates a telling case in point: “We are contracted for an incentive in Monte Carlo this October. When the terrible tragedy happened in Nice (Bastille Day, 2016), we discussed if we should postpone this location for a future incentive and considered staying stateside. However, our senior executives made the decision to stay the course. Unfortunately, we’ve witnessed terrible atrocities in the United States, and took the stance we can’t put our lives on hold. But we will do everything in our power to ensure everyone’s safety.” I&FMM