September 2008 proved to be a devastating month for the incentive travel industry. It was the turning point that hurled elaborate and expensive travel rewards for outstanding performance into the abyss.
At the bottom of the upheaval was the American International Group (AIG); after receiving $85 billion in bailout money from the government, the company paid for a extravagant trip, bringing a great deal of anger and criticism over travel incentives.
In an article, the Incentive Marketing Association explains that over the past couple of years, businesses not only reduced their travel incentive budget, but a number of them avoided or eliminated the programs in an effort to gain customer approval. The world looked on as employees were laid off and unemployment rose; these businesses didn’t want to appear extravagant.
Throughout the recession the hit to travel incentives remained intact, but it seems it is beginning to regain momentum. World Heritage Travel Group president John Tichenor told the Times, “The burn-at-the-stake attitude toward incentive travel is gone.”
President of Site International Foundation Steve O’Malley agrees with this and feels that businesses and the economy have the financial ability to initiate or increase travel incentive budgets. “There’s much higher degree of comfort in using these tools to drive business performance and also to talk about it.” He added, “The industry’s taken two years off and now employee engagement is at stake. Many companies, if not most, are saying it’s safe to get back in the water.
O’Malley is also senior vice president of Maritz Travel and states that the company’s data reflects a definite increase in incentive trips. “We have 92 percent of the 2010 volume already booked just two months into the year.” He also notes that ‘people per program participation’ is up 13 percent.
Defending the AIG 2008 incident, a former chief executive of Site, Brenda Anderson, explained that the incentive trip uproar was due to a lack of understanding of trip budget revenue and allocation. “The money for travel comes from the incremental revenue generated by salespeople. By the time the travel happens, the company has already gotten the money.”
To elaborate, Anderson adds, “By the time the travel happens, the company has already gotten the money.” She goes on to note that properly done, incentive programs can actually increase revenue. In fact, the U.S. Travel Association conducted a September 2009 study which found that the return on investment for incentive travel is four to one.
