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INCENTIVES: THE GREAT INCENTIVE TRAVEL BOOM BEGINS
The great incentive travel boom begins
After a couple of years where international travel wasn’t viable, rewarding incentive trips around the world are firmly back on the cards again, Matt Sainsbury reports.
Incentive travel is back on the agenda and 2023 will see the first year in what will be a decade of almost unparalleled growth. With borders across the world now open and restrictions relatively light, the impact and benefit of incentive travel for organisations is expected to be even greater in the year ahead because, in many cases, this will be the first opportunity for people to get overseas again.
According to research by Allied Market Research, the global incentive travel market will grow from $US42.0 billion in 2021 to $US218.8 billion by 2031, at a compound annual growth rate (CAGR) of 12.1 per cent. Australia will be one to enthusiastically embrace the opportunity, and according to 212F director of travel and events, Jo Strachan, that has already begun.
Incentive travel is back on the agenda with accessible, one-flight-away destinations such as Dubai proving highly popular.
“70 per cent of our groups have confirmed international travel in 2023, so this goes to show they are wanting to travel again and get back to running the type of trips they had previously,” Strachan says.
This is despite the cost of flights being high and availability limited. These factors mean that those organising incentive travel awards are being recommended to allow for more lead time in planning. By contrast, however, Strachan says that there are far more incidences of last-minute changes with program numbers and logistics, right up until departure.
“Long gone are the days of having a group confirmed and ready to go with no changes two weeks prior to departure!”
That need for flexibility and disruption in planning also means that the popular destinations for incentive travel are currently those that are a single flight from home.
Strachan says Asia-Pacific, New Zealand, Hawai’i and Dubai are proving particularly popular for Australian businesses.
The growing strategic value of incentive travel
The 2022 Incentive Travel Index has found that, globally, the strategic value of incentive travel is growing. Almost all (91 per cent) of organisations see incentive travel as having an even more important role in building engagement and company culture as workforces become decentralised and dispersed. Meanwhile, 67 per cent of employers see it as critical to retaining employees. With unemployment being so low in Australia, retention is a particular priority for management.
“We have research that shows that the most highly desired reward for corporate employees is travel,” SITE Australia & New Zealand president, Nicole Tingey says.
Mount Cook, New Zealand. Popular destinations are currently those that are a single flight from home.
“It actually supersedes money, or any other benefit that has been in place over the last few years as a reward. Some businesses have launched straight back into running programmes. Others are slowly moving back into that space, but it will be the predominant reward type moving forward, because it is so critical to employee satisfaction.”
There is also a real opportunity for organisers of incentives to leverage the changing expectations around travel, Tingey adds. “In doing so, they can further deepen the engagement from the trip.”
While the enthusiasm for travel has come back strongly, there are still residual concerns about participating in large groups and going to big events, as was traditionally part of the incentive travel experience.
-Jo Strachan
“Health and safety is the number one concern for all corporates when they’re running these events, particularly if they’re taking them offshore, ”Tingey says.
“Practitioners and event managers should be looking to provide a unique destination where the client can have an experience and not feel like they’re sitting in there amongst the crowd of thousands of people.”
Tingey says that what this will lead to, in both the short and long term, is an increased appetite for travel and experiences that are highly personalised for smaller groups of people.
The focus will be on finding new experiences that deliver deep engagement.
“For industry associations, we all need to be kind of leaning on and learning from each other to provide the best outcome for our clients,” she says.
“I also think that it’s never been more important to engage the services of a DMC. Those entities can provide intense knowledge around a destination and build those unique experiences when you’re still in the research stage. It’s the time for agents, for event planners, and for DMCs.”
But what of the domestic market?
While international incentive travel was off the table during the pandemic, the domestic travel industry had a booming incentive travel business. Destinations such as Far North Queensland, the Kimberly, and Tasmania have benefitted from the unique locations they have offered clients.
The question now is, as international incentive travel opens up, what happens to the investments that went into the domestic market.
-Simone Seiler
“Right now, there’s an abundance of demand for meetings and events that include incentive programmes, but as international incentives take off, how does that impact the domestic market?”
FCM Meetings & Events general manager Simone Seiler says.
“The investment that local operators have made to meet the current demand has been significant, so will that continue to materialise for them? Is there enough demand for both markets right now?”
Travel and experiences that are highly personalised for smaller groups of people will be highly sought after.
Seiler says that two things will particularly benefit the local market. Australia has one of the most relaxed sets of requirements around incoming traffic and COVID-19 restrictions, making the country accessible. Furthermore, the weak Australian dollar will help generate significant interest in coming here, particularly from North America.
Seiler adds that it’s also important to consider those that are either uncomfortable with the idea of travelling overseas, or not currently able to.
While most people are now enthusiastic about travel again, there is a small number of people that planners will need a contingency solution for.
“There’s an opportunity for agencies like ours to generate additional or new revenue streams by having a complimentary incentive experience to accommodate those contingency plans,” she says. “Making sure that everyone who has deserved the incentive experience receives their reward is obviously a priority for organisations.
“On the flip side of that, with these kinds of things you’re looking at even more tailored and high-touch experiences for very small groups, or even couples of individuals, and that has the potential to move away from an incentive experience and to a high-end leisure experience.
The year ahead will be an opportunity to discover new locations.
The challenge there for us is in being able to deliver to the standard that is expected across both the main experience and the alternative experience - that’s hard to make sure that you get just right.”
The year ahead is going to be one of discovery and learning for the incentive travel industry. The focus will be on finding new experiences that deliver deep engagement, help distant co-workers and clients connect, and build a better relationship to their organisation by crafting memorable and tailored experiences.
It will also be an opportunity to discover new locations for incentives. Disruption at airports and juggling the visa requirements of each nation during transit make multiple-stop travel a logistical headache, so the opportunity is there to introduce people to the wonders of the nations closest to us and keeping the travel time itself to a minimum.
“People have a newfound sense of value with their time and how they spend it,” Seiler says. “They’re choosing activities and experiences with a great focus on the reason for why they’re doing them, and for now the focus is on team building and bonding activities to help people reconnect after such a long period of people being apart.”
