Prognosis for recovery of Incentive Travel
Maybe it’s a lame analogy but here goes anyway.
Today’s incentive travel industry is like an elite athlete who has just done her cruciate ligament. When the crunch happens she knows it’s serious but hopes, at the same time, that it isn’t a cruciate. Now, however, the diagnosis is clear and unambiguous. It is a cruciate and, as a professional athlete, she knows for certain that recovery will take months, maybe a year, maybe even longer. There’s even a chance she’ll never be the same.
Excepting the appalling pun, this, maybe, is not such a lame analogy after all. When Covid-19 started to impact on the incentive travel industry in late February / early March we knew it was serious. Initially, though, we appealed to clients to “postpone, don’t cancel” and tried to figure out how we might accommodate all these displaced programmes, along with ones already scheduled, later in 2020, in Q3 and Q4. It was a serious re-organisation but, in the overall scheme of things, manageable. We allowed deposits roll over and tried to stay positive.
Recovery for Incentive Travel will take time
Then March became April, April became May and this unseen, mysterious virus got a stranglehold on our lives, closing businesses, confining folks to barracks, introducing social distancing, wrecking havoc on our industry. We looked to our governments, accepting any supports we could get as cashflow became a big issue. We laid off long standing, precious team members. We dove deep into contracts and started to read up on Force Majeure. We took to Zoom in droves.
But then a far more dire diagnosis began to materialise. This was, indeed, far more than a mere bang on the leg. It was a full scale cruciate injury and the prognosis was far from pretty. The industry would, potentially, be on its knees for months, at the very least. Possibly longer. This might even be an inflection point for the incentive travel industry as those SMEs, the heart of our industry, incentive agencies, DMCs might run out of cash and have to close their doors permanently.
Research from Incentive Research Foundation & Magid
Research conducted in April and released recently by the Incentive Research Foundation (IRF) confirms our worst suspicions. 2020 is done and dusted as far as incentive travel programmes are concerned. Anything previously moved from Spring to Fall is now sliding into 2021 or even 2022.
Presenting responses from 884 working adults typically travelling to conferences and events (70%), meetings (58%), group incentive trips (26%) and individual incentives (23%), the IRF research detects reasonable optimism and positivity amongst its cohort with 57% excited, grateful or looking forward to a resumption of travel post-Covid-19, preferably to a destination they’d never been to before.
Positive sentiment, however, is not the over-riding characteristic of research conducted by Dr Rick Garlick of Magid who joined me at SITE last week for a conversation on what research can teach incentive travel professionals at this time of existential crisis. Comparing two consumer datasets of 1000 responses from March and June, Garlick’s research shows deteriorating sentiment, trust and confidence amongst potential travellers in the 3 elapsing months. This applied across the full travel and tourism spectrum – airports, airlines, hotels, restaurants, cruises, theme parks.
A recent McKinsey report also shows that most CEOs believe recovery will be long and slow. To return to the opening trope, this is an anterior cruciate ligament injury, an ACL if you’re in the business, and you’re not getting back on that field anytime soon.
What should incentive travel professionals do?
So what do you do?
Many players on the incentive travel spectrum have options and are already exploring these. Thus larger full service agencies are concentrating on other non-cash rewards like merchandise, learning opportunities, vouchers etc or on their meeting / events business which, with technology, can be switched to virtual. Hotels and venues, too, are exploring technology and the opportunities around virtual while tailoring their room product to the leisure market.
The players facing the greatest challenge, of course, are those dedicated incentive travel specialists, the source-market-based incentive houses that only do travel and the destination-based DMCs. In both cases these players are SMEs without deep pockets and, with the current prognosis, without any hope of revenues coming in anytime soon. Like the severed cruciate ligament, this is not a pretty prospect, but here’s what I think they should do.
Boutique Incentive Houses & DMCs
Small incentive travel houses and DMCs need to double down on their expertise in travel and, more specifically, in their unique, in-depth knowledge of travel as an agent of personal transformation, where journeys outward to places are also journeys inwards to places within yourself. The key trends in travel today, particularly amongst high net worth individuals, have been at the heart of incentive travel for decades: the creation of enduring memories in and through serendipitous, authentic, local encounters with people and places.
While travel, too, is impacted by Covid-19, individual travel will recover much quicker than group travel. There’s even scope for innovation and creativity in terms of local travel, ie, travel experiences within the source market that do not rely on border friction. Staycations with a difference, planned with the highly creative nous of a dedicated incentive house or DMC.
For small incentive houses in source markets, the opportunity is obviously around individual incentives, ie, creating a portfolio of incredible, bucket list trips that can be sold through existing corporate clients, retaining these important relationships until group incentives resume. But these unique experiences can also sold direct to high net worth individuals via a dedicated website. With a small pivot (ouch!) and investment in technology, a new revenue stream can be created without the need to transition out of your area of expertise.
And it’s the same, of course, for DMCs. Working with their existing incentive house clients, they can deliver the ultimate travel experience for individuals but also develop new revenue channels by offering the same once-off destination experiences to luxury, high end travellers either direct on-line or via travel agents in source markets all over the world.
Simple as? Of course not. This is an existential crisis and, with it, there’s a deep and numbing angst that many of us still need to move beyond. It’s the deer-in-the-headlights moment when we’re frozen with fear. At times like this, more than anything else, we need a community, we need people around us and we need to stay in touch. There’s no quick solution here but there are options and, in the overall scheme of things, this, too, shall pass.
Pádraic Gilligan is the Chief Marketing Officer of SITE. This blog post originally appeared on padraicino.com.