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Travel Trends
IRF Research Shows Uptick in Travel Budgets

By Deborah L. Vence

It looks like incentive travel budgets are growing, according to the annual incentive travel survey released earlier this year by the Incentive Research Foundation (IRF).

The survey showed that budgets for incentive travel spending are climbing toward pre-recession levels.

"Our data over multiple years shows that incentive travel has a very elastic response to the economy. As the economy gets stronger, so do budgets for incentive travel. We see virtually the same number of people who say the economy is having a positive impact also say they are increasing their budgets," said Melissa Van Dyke, president of the IRF, McLean, Va.

Back in early 2008, the survey indicated that the average per-person spending on incentive travel programs was at $3,659, but it was downhill from that point. For seven years, spending took a steady dive, hitting a low of $2,397 in 2014. Finally, last year, things started to change in a positive direction, according to the report.

When asked about 2016 incentive budgets, overall, most planners indicated that budgets are stable or have grown over 2015. However, that's not quite the same response as last year when nearly 54 percent saw increases (and half those increases were more than 10 percent). For 2016, planners whose budgets are up (about 38 percent of respondents) are typically working with modest—and more sustainable—increases.

Other survey data revealed that only one in five planners said they add room nights when the budget goes up, but more than half will cut room nights when the budget goes down.

The following list includes some of the respondents' cost-cutting strategies. They include: shorten the trip (55 percent); cut the on-site gift budget (36 percent); avoid five-star properties (36 percent); eliminate spouse/guest attendees (36 percent); book shoulder or off-season (32 percent); cut sponsored activities (spa, golf, tours, etc.) 32 percent; cut the F&B budget—without cutting meal functions (32 percent); invite fewer management attendees (32 percent); have fewer qualifiers attend (27 percent); move from a long-haul to a short-haul destination (23 percent).

To boot, the survey showed that third parties plan cruise incentives more than others. Cruising remains a notable option for incentive travel programs. Overall, almost half of survey respondents hold cruise incentives.

What's more, one in four incentives include a corporate social responsibility (CSR) activity. In fact, about one-quarter of respondents said they offer CSR events as part of their incentive trips.

The survey also revealed that the most common reaction when faced with a shrinking incentive travel budget is to shorten the length of the trip. But, when budgets rise there are seven strategies more common than adding more room nights. They are, in order:

  • Adding "wow" elements.
  • Choosing a more luxe property.
  • Increasing the food and beverage budget.
  • Accepting more qualifiers.
  • Adding more off-site events.
  • Developing an app.
  • Including an on-site merchandise experience.

When it comes to destinations, two locations—Africa and Asia—are seeing a pop in incentive travel programs compared to last year, but home-grown destinations remain the most common choices, and will be used by almost eight out of 10 incentive planners this year, according to the survey. Meanwhile, emerging Latin America destinations are a priority, too. And, Cuba leads the list of emerging destinations that have respondents' attention. (It's moved up from third place on last year's list.)

In terms of where companies will take the incentives in 2016, the survey revealed the following: U.S. (78.6 percent); Caribbean (47.8 percent); Mexico (47.3 percent); Europe (40.7 percent); Canada (25.3 percent); Asia (19.8 percent); Central America (16.5 percent); South America (13.7 percent); Africa (11.5 percent); and the Middle East (6.6 percent).

And, as far as what is expected in 2017 and beyond for incentive travel, Van Dyke said: "Unique, authentic experiences will continue to draw the attention of planners. Longer haul trips will continue to grow. Demand will continue to outstrip supply at the best incentive travel destinations and properties, making early booking a requirement."