In the four years since the economic collapse of 2008, our definitions of luxury incentives have changed. There was AIG in 2008. There was GSA in 2012. In that time, luxury incentives have seen their share of scrutiny.

"We had another name for AIG," says Cindy Hoddeson, director of meeting and incentive sales for the Monaco Government Tourist Office. "We said it stood for 'another incentive gone.'"

Regardless, the luxury market, at least for consumers, seems more resilient than ever. In its 2012 "Luxury Goods Worldwide Market Study," Bain & Company predicts that the global luxury goods market will grow 6 to 7 percent worldwide and that, despite the economic turmoil that persists in the U.S., luxury goods in the U.S. currently "remain strong."

Luxury travel, similarly, is doing well. According to Smith Travel Research (STR), 2010 was a banner year for global luxury hotels and, since then, nearly every global region has seen significant growth in luxury hotels. For 2012, STR predicts that luxury hotel occupancy in the U.S. will grow by 1.3 percent. Four Seasons Hotels and Resorts, a brand synonymous with luxury, is estimating its global revenues for 2012 to increase by 9.2 percent.

Stephen J. O'Malley, vice president of Maritz Travel, says that many of his corporate clients have welcomed luxury back.  "Our clients are embracing luxury as an option to help drive the returns they seek from investing in  incentive travel programs."

Yet, when Incentive contacted planners at five companies that used luxury incentives, none would discuss it, even off the record. Which begs the question: is luxury still considered taboo?



A Different Kind of Luxury

Most incentive industry experts we spoke to said that luxury incentives, although not considered off limits, are still perceived of differently than they were before 2008.

"In the '90s, it was always about trying to do bigger and better and being opulent," says Tina Weede, president of USMotivation. "When you take the opulence away, luxury is not a bad word."

Weede believes that luxury incentives are back but there's still some residual resistance being felt from AIG. "We did have clients in the last few years who came back to us and said, 'We can't use a luxury brand,' but I rarely see that anymore," she says. "Are luxury incentives coming back? Yes, but there's still a fear factor about the return of the recession. I think people are still a little resistant."

In response to the AIG Effect, luxury brands were also forced to adjust their definitions of the service and quality that they provide. "Immediately following AIG, I think that all luxury brands had to think about how we defined what it was that we were providing," explains Don Jones, vice president of sales for the Americas at Four Seasons Hotels and Resorts.

Other experts take a slightly different view. "I wouldn't say luxury is taboo," says Kurt Paben, senior vice president, business loyalty at Aimia. "The fear of using luxury that you saw has gone away for the most part. You have to use luxury for the right reasons."

Demonstrating a return on investment (ROI) from luxury incentives has become de rigueur, says Paben. "Clients today are much more prepared to justify the ways that they build their programs to achieve the business results that they want and in many situations, it's appropriate to use luxury to achieve that result."

Today's definition of a successful luxury incentive trip or product, however, is as much determined by corporate requirements for ROI as it is by individual employees. "Not everyone has the same definition of luxury, and the same aspirations for achieving it," says Richard A. Blabolil, president of Marketing Innovators. "You have to offer different choices."

The new luxury is, in effect, a balancing act. It's about giving employees the luxury products and experiences that they want, and giving management the numbers and data that they need to meet their bottom lines, and avoid the scourge of any scandals.

The perception of what is considered luxury, both in the eyes of individual employees and the media, has never weighed more heavily. The differences in perception hinge on a variety of factors, from demographics to the power of luxury branding in the consumer market.



Brand Power

When it comes to luxury merchandise brands, the traditional players - Gucci, Dior, Louis Vuitton, and Prada among them - are still in high demand, says Tom Taraci, CEO of Taraci Motivation. The desire that these brands cultivate among consumers directly influences luxury incentive programs.

"We take consumer behavior and map it to employee programs," Blabolil explains. "Before, the consumer world and the incentive space used to be more separate but, today, the consumer world  enormously influences the incentive space."

Adrienne Forrest, vice president of special markets for Bulova, agrees. "What's popular in retail follows through," she says.  To that end, she says that Bulova is careful to make sure that the demand for its watches takes root in the general retail market first.

Forrest and Taraci agree that luxury brands hold power. "I still think people respond to luxury brands on a very visceral level," says Taraci. Adds Forrest: "If you carry a brand that is aspirational, it's a universally accepted badge of achievement."

A high-low mix of goods, both expensive and not, is  essential for any program.  "The more choices that you can provide, the better rewards you will provide to each and every participant," says Weede. "Luxury still plays a big part in creating a motivating experience. It's the 'wow' factor. It's what everybody wants. Our budgets may not be as big as they were before, but being able to provide that brand that has a great deal of recognition and satisfaction just works."



Luxury as Instant Gratification

How people earn their rewards is just as important to creating a sense of achievement. "In the old days, you could say there was a lag [between the retail market and incentive programs]," says Forrest. "Nowadays, it's about what I want right now and switching out products with just the click of a mouse."

Employees also need to be able to easily redeem their incentive merchandise at all times. Taraci recently debuted the Taraci Motivation mobile app, which allows clients to instantly track their incentive status and redeem luxury goods from  their smartphones.



Generational Gaps

A sense of instant gratification in fulfilling incentive rewards, Taraci says, is very emblematic of younger workers. "Millennials are very interested in luxury goods and experiences, and they feel that they should have them right now and not wait to acquire them," he says. "It's not unlikely for them to spend a two-week salary, for example, on clothes or shoes or a handbag or give up other things to have just the right item."

The workforce in many organizations today now consists of up to four different generations: Millennials, Generations X and Y, and Baby Boomers, each with their own unique luxury definitions and aspirations, as well as work ethics.

"The workforce just doesn't look the same as before," says Blabolil. "You have to be sensitive to what luxury means to various groups at various stages in their lives."

The different work ethics of each generational group also translate to different aspirations in terms of incentive merchandise and travel.  This page is protected by Copyright laws. Do Not Copy