Five Factors Driving Incentive Travel in 2016

One month after terror attacks hit Paris, corporate incentive clients are more attuned than ever to the need for contingency and disaster planning. But recent world events have not deterred clients from planning incentives to Paris and other international destinations, incentive travel professionals told Travel Market Report.
 
A healthy U.S. economy coupled with a strong dollar is fueling growing interest in international destinations for incentive travel, incentive executives said. At the same time, a sellers’ market, especially in the United States, is putting pressure on incentive planners to seal the deal sooner rather than later.
 
Those are among factors incentive travel providers see shaping the incentive world in 2016. Here’s a closer look.
 
1. Impact of terrorism
In the face of renewed terrorism fears, incentive professionals were upbeat, reporting little to no impact on destination choices and programming.
 
“People haven’t stopped traveling, which is fantastic,” said Rhonda Brewer, vice president of sales for Maritz Travel.
 
CWT Meetings & Events experienced no “immediate changes” in incentive programs in the aftermath of the November Paris killings, and its 2016-2017 programs remain intact, Shauna Whitehead, senior director, North America operations, told Travel Market Report.
 
At Atlas Travel Meetings & Incentives, MICE director Jennifer Murphy, CRP, said that shortly after the Paris attacks two corporate clients initiated plans for group events to be held in the City of Light this winter. “Even after the events happened, people are still going there.”
 
2. Planning for problems
The Paris attacks have fed a renewed focus on planning for the safety and security of traveling employees who might affected by terrorism, natural disasters, and other disruptions. Continuity and contingency plans have taken on increased importance.
 
“Before they’re traveling, they’re insuring that they have a plan in place: If something were to occur how do you react to that? People are more aware. Some of the larger companies may send additional security,” said Brewer, who is outgoing president of SITE, the Society for Incentive Travel Excellence.
 
In today’s climate, high-risk destination assessments become an important part of upfront planning, said CWT’s Whitehead.
 
3. Healthy economy expands options
A healthy U.S. economy, and particularly the strength of the U.S. dollar, is putting new destinations within reach for clients and fueling the continued growth of international incentives.
 
“Our clientele is starting to look further out destination-wise; they’re traveling a little bit further to get there,” said Murphy of Atlas Travel.
 
Maritz sees a similar trend. “With the dollar being strong, people are still going internationally. I think that’s continuing to build,” Brewer said. “You have people venturing big into the Caribbean and Mexico, because they’re all about sun and fun. Europe is big and some Canada because the dollar value is strong.”
Central America is getting a smaller share of incentive traffic, Brewer said. “Then it trickles down from there” to South America, Asia and Africa.
 
Good airlift to selected destinations in the Middle East –– notably Abu Dhabi, Dubai, and Oman –– is also sparking interest among some incentive travel clients, Brewer said.
 
4. Dealing with tight supply
Tight lodging supply and associated rising prices, especially in North America, weigh heavily on the minds of incentive planners as they look to 2016 and beyond. Group hotel rates in North America are expected to increase 4.2% in 2016, according to American Express Global Business Travel.
 
“In a sellers’ market, particularly in the US, it is increasingly hard to negotiate on cost and find availability, especially in popular destinations during peak times of the year –– typically February and March,” Whitehead said. “Those on a budget may need to flex on their ideal location.”
 
Incentive planners are urging clients to map out their incentive strategies further in advance to give them a better shot at nailing down hotel space that meets their needs and their budget.
 
When clients don’t heed this advice, it can put planners in a bind. “Once you find the space, the client wants you to negotiate,” Murphy said. “But we’re lucky to have found this. We’re kind of up against a wall.”
 
5. Bigger budgets, but . . .
While many corporate clients are budgeting more for incentives, their bigger budgets are not necessarily enough to offset rising hotel costs, travel executives said.
 
Client choices are driving up costs too. CWT’s clients are spending more on food and beverage, Whitehead said “attendees wanting to carry over their healthy habits during their travels, along with the destination influencing F&B choices and wrapping this into the themes and creative elements of incentive programs. In the U.S., we are seeing an increase of 2.9% year over year for F&B.”
 
At Atlas Travel, some corporate clients are allocating their incentive dollars differently than in the past.
 
“I’ve seen them have the same budget, but instead of having lots of events, they want to put a little more effort into one particular event,” Murphy said.

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