Massive increases in per person spend, forensic focus on cost containment, no undue anxiety
What is the SITE Index?
Through the SITE Foundation, The Society for Incentive Travel Excellence (SITE) commissions research each year around the use of incentive travel as a performance improvement tool for global businesses. What emerges is a “state of the industry” report on incentives—which sectors are using them, how much is being invested per person for incentive programmes, whether overall budgets are up or down, where in the world are incentives travelling to, and so on.
The survey, conducted in July and August 2017, received about 600 responses from 72 countries, with around 150 of the respondents located in North America. Besides the strong global spread, other key features of the survey were the relative maturity and tenure of respondents whose age across all categories averaged 49 years and nearly 20 years of industry experience.
Of the respondents, around a third were buyers of incentive travel experiences—corporate planners or incentive agencies that create and deliver incentive travel experiences. The other two-thirds were suppliers such as destination management companies (DMCs), hotels, venues and service providers based in the destination where the incentive is being delivered. Of the corporate buyers, the largest number of respondents were from the Finance and Insurance sector, with Science and Technology, Travel and Tourism, Pharma and Direct Selling also represented.
So what did we learn?
Incentive Travel budgets are growing. A headline from this year’s Index was definitely the dramatic increase in per person investment for incentives, with overall average increases from $3,000 per person in 2016 to $4,000 per person in 2017. Drilling down into the responses, this figure is even more dramatic for the corporate sector, with a year over year increase of $1,900 per person.
Buyers are attentive to managing costs. Dramatically increasing per person spend to create an unforgettable incentive travel experience, however, doesn’t mean you don’t seek to control and contain costs. The survey results clearly demonstrate that buyers, more than ever, are focused on cost containment and intent on extrapolating maximum value from every dollar invested. For corporate buyers, this has led primarily to the selection of less expensive destinations as well as less expensive amenities, perhaps the most “peripheral” aspect of the overall incentive experience. At the same time, sellers of incentive travel services are attempting to add value through greater creativity/innovative event design.
Incentive Travel Works: Buyers of incentive programs universally believe them to be strong motivators of performance, with increased company sales and profitability remaining the most important business objective, followed by improved employee engagement. More buyers say incentive travel programs have been “Very Effective” (72% vs. 51% in 2016.) There is also a slight increase in the measurement of incentive programs, driven by one-third of corporate buyers reporting they “Almost always, or Always” track ROI or ROO.
Greater investment in technology: While air transportation still comprises nearly a quarter of the budget, technology is becoming an increasingly important part of the development and deployment of programs – whether it’s for communications, budgeting or operations - such as program apps, personalized digital communications and data tracking and measurement tools.
Increasing importance of sustainability: As many companies are embracing social responsibility and sustainability, that trend shows up as a significant one in the survey. Both buyers and sellers reported that sustainability and “being green” are having the most positive impact on incentive travel. This correlates to the finding that a large majority of incentive travel programs now include at least one corporate social responsibility (CSR) activity.
Optimism is high: At the moment optimism is high for incentive travel, despite world events such as natural disasters and terrorism that have rocked the industry this year. Although safety remains a top concern, it has decreased since 2016 and does not appear to be a deterrent to a strong incentive market. Despite terrorist incidences in Europe, buyers planning programs to Western Europe increased 4 percentage points over 2016.
Destination appeal tops selection criteria: New to this year’s survey were questions about what influences destination selection. Respondents were asked to rank seven criteria for selecting one destination over another for incentive travel programs and unsurprisingly, given that this survey is all about incentive or motivational travel, the top consideration was destination appeal. For corporate buyers, overall safety and destination infrastructure ranked second and third, whereas access from participants’ city or origin -a key criteria when selecting a destination for a meeting or conference - came in at fifth place. Clearly destinations seeking to grow their market share in the lucrative incentive sector must tell a convincing story around desirability and appeal.
The immense power and benefit of industry associations like SITE, FICP, PCMA and MPI is proven by “Recommendations from fellow members of trade associations” ranking first on what most influences destination choice. Clearly members of industry associations place immense trust in their fellow members to provide an honest steer around what destinations are likely to work.
When it comes to learning about a destination, a large majority of buyers said that familiarization trips are most effective, followed by industry trade shows. And, when asked what is essential to a good destination experience, culture and sightseeing, followed by dining and team building were ranked as most important.
Buyers and sellers of incentive travel will benefit greatly from reviewing the SITE Index report, applying the findings and implementing strategies, to ensure that your business will continue to grow and the global incentive travel industry will remain strong for years to come. To learn more go to SITE Index 2018. And, for a deep-dive into SITE Index results, register for our webinar on 6 December at 11:00 AM CST.
Pádraic Gilligan is Vice President, Content & Research for the SITE Foundation and Managing Partner SoolNua Marketing.