The global economic downturn has made life difficult for the incentive travel industry. Budgetary cuts and media criticism have seized on employee bonuses and rewards, while extravagant corporate trips are looked on with increased scrutiny.
But the incentive travel industry is answering back. A recent study by the Incentive Travel Council (ITC), Behavioral Economics of Incentive Travel, argues that travel incentives offer complex and intangible psychological benefits for employees. While about half of ITC’s survey respondents said they have trimmed incentive travel programs since 2009, industry insiders say the sector desperately needs a revamp: Programs must provide more value-added services, and expand into new markets like China more effectively.
To combat today’s negative media attention, those in the incentive travel industry have to raise awareness on how non-cash incentives are not merely nice-to-have extras, but critical to meeting business objectives, the study said. For example, cutting travel incentives leads to a loss of meaningful experiences for employees – which can help foster team-building and brand loyalty.
“Participants can very easily confuse cash rewards as being part of their compensation. Recipients do not remember, especially in the long-term, that they used incentive cash to pay bills,” said Jim Ruszala, ITC president and director of marketing for Maritz Travel Company. “In contrast, travel rewards offer memorable experiences that help nurture and develop relationships.”
The intangible benefits of incentive travel, such as greater employee engagement, are difficult to measure by traditional calculations of investment returns. Costs, on the other hand, may reach as much as US$10,000 per head for a luxury travel program lasting three to four days.
Ruszala points out that travel rewards play a particular role in fostering brand loyalty by communicating company culture. A well-organized trip can linger in employees’ minds, providing a lesson on what the company’s brand represents.
“Incentive travel programs need to mirror brand essence. Whatever the business objective, the company’s culture rests in its brand and so should the incentive travel program,” Ruszala added. “Beyond motivation, there’s also a degree of communicating and educating participants in areas such as organizational goals, culture and the role they play in performance achievement.”
Lori Moggy, head of events for BI Worldwide China, a business improvement and employee incentives company, agrees. A special meeting, or a travel reward, can speak volumes in terms of employee motivation and retention.
“[Incentive travel is] great for the participant’s ego – there’s an overwhelming sense of pride. They get to hobnob with other key executives, shake the company president’s hand, and be cheered on by their spouse and peers,” she said.
“Having a photo of the event or certificate to display when they return is also really important. No bonus or physical object can give them that sense of glory.”
Benefits aside, the incentive travel industry must face post-recession realities. Value-added services, where programs do more to emphasize personal uniqueness and recognition, may help MICE (meetings, incentives, conferences and exhibitions) planners differentiate themselves from normal travel agents. Heightening the work element of incentive travel is one such strategy, where top-performing employees are given a red carpet into private store openings, product previews and exclusive industry events.
Ruszala stresses that the incentive events organizers who stand out are those who make a greater effort to involve clients in devising programs.
It is something that BI Worldwide China takes seriously. “When businesses come to us to achieve targets, we really try to suggest incentive travel as part of their package – especially for their highest-level employees,” Moggy said. “We have to convince companies that the travel programs we design are not like those from travel agencies; that it’s a whole unique experience.”
At the same time, in China – where cash bonuses and luxury gifts remain popular employee motivators – the added value of psychological incentives has yet to take off. This poses both difficulties and opportunities for the incentive travel industry.
While BI Worldwide China attracts minimal business from local companies, the firm faces challenges even within multinational corporations (MNCs). Persistent communication and word-of-mouth marketing is needed to build anticipation, as many Chinese employees are still new to incentive travel programs.
And people are getting the message. While the global incentive travel sector has been slow to recover after the recession, BI Worldwide China’s business has been brisk since the latter half of 2010.
This is a result of how more MNCs’ China divisions are looking to implement incentive travel programs among lower-level employees. “We have been pitching a lot for new business, and not just for the top sales positions but also sales manager level, ” Moggy said. “It can only get better in future.”