Participants
Greg Boswell, Director of Performance Recognition, O.C. Tanner
Karen Eglitis, Unit Business Manager, Premium & Incentive, Bose Corp.
Ann Godi, President, Benchmarc360
Vladimir Haltigin, Program Manager, Xerox Canada Ltd.
Tim Lang, Senior Vice President, USMotivation
Terry Markwart, Director & Assistant General Manager, Special Markets, Photographic Products Group, Canon U.S.A. Inc.
Dori Marx, Manager ABCN, Austrian National Tourist Office
Lillian Murphy, Senior Vice President, Atlantic Region, Carlson Marketing Group
Ross Sawai, Director of Account Development, Blockbuster, Inc.
Alexandra Tint, National Sales Manager, The Westin New York at Times Square
Joe Zanone, Senior Vice President, Movado Group, Inc.

Moderator
Danine Alati, Editor-in-Chief, Incentive


On April 1, eleven incentive experts met in Manhattan to exchange their insights on issues impacting the marketplace. At the Westin New York at Times Square, the diverse group representing incentive companies, corporate end-users, as well as merchandise and travel suppliers shared their thoughts on topics ranging from rewards to recognition. Following are highlights from the discussion:

Danine Alati (DA): How is the economy affecting incentive planning?

Tim Lang: Last year, we didn't have much activity until late February early March 2003. This year it started in mid-January. So there is a lot more activity, opportunity, as well as solid budgets.

Vladimir Haltigin: It's getting tighter and tighter. Budgets are flat at best. They are being allocated on a more short-term basis. [If you] have a good quarter, then you get money for the next quarter. As a result of that key trend, the whole [incentive] business appears to be very short-term. In our case, nothing has been cut. But it is very much the case of performance drives the future.

Karen Eglitis: We are seeing a higher level of placement and commitment to programs. But along with that, a large segment of programs at the mid-level are starting to move down cost-wise. There is also opportunity to work in programs that we haven't worked with before. But the redemption levels are lower than they had been. We believe they will come back in the near term at least for a segment of the market. Where I don't see programs dropping off and going away, I do see the levels declining somewhat.

Joe Zanone: I've seen a dramatic increase in consumer-based programs this year. We're in three different programs that just happened in the last month, and we're looking at about $3 million worth in Tommy Hilfiger watches. It's just something we haven't seen in the last two years. At the same time, I see a dramatic increase since Sept. 11th of the use of luxury-branded products in lieu of travel.

Lang: A lot of clients have combined their group incentive travel with a meeting to get more bang for their buck.

Ann Godi: We see a tremendous trend in that direction. We call them hybrid programs that combine some meeting element instead of a pure stand-alone incentive program.

Lillian Murphy: There are even programs that are being developed that have the combination of the meeting and the event, and also there is sometimes an overlay of merchandise. It's kind of managing the entire budget within the perspective of balancing the travel and the merchandise. While we see an increase in programs, the commitment is much later in time. It is a real scramble to execute it.

Dori Marx: Program planning is shifting into being a financial decision for a lot of companies. It's a growing movement that procurement departments are getting involved and taking over the planning of these programs.

Alexandra Tint: My job right now is to develop an identity [for out hotel] in the marketplace so that we can start partnering with different companies and work with different programs, like incentive programs where we lay a base for a couple years out. We can achieve this by partnering really well and listening to the needs of the client.

Zanone: Are the budgets for service awards and recognition flat or are they going up? Is the market shifting away from five-year, back to ten-year, or vice versa?

Greg Boswell: Certainly, it's not moving away from five-years-companies have actually moved to lower-year levels than five years. At the same time companies are looking at an overall recognition strategy. Whether it's recognition or incentive, the approach is: how do we make these programs more strategic? Or [you can] tie it back to your performance management strategy, or your human capital strategy, whatever the HR trend is today. That's where you start to get the dollars that you need for these programs. Coming out of a tough economic time, I'm seeing positive results from the perspective of companies looking to do more. The way companies are getting the dollars to do more is by linking it strategically to what the organization is trying to accomplish.

DA: How are world events impacting incentive travel?

Marx: Security has become a part of everyday life. A couple of years ago, only planners of high-profile meetings dealt with the security issues. Now, every planner is aware and does due diligence, which is a very positive development because you have to be prepared. As for Austria as a destination, we see a total rebound. I think Americans are getting used to world events and terrorism. It's going on all over the world. You can't really find a hot spot anymore. People are beginning to travel.

Lang: It is starting to open up for us. But it's not where it needs to be. The destinations we use a fair amount now include Europe, the Caribbean, Hawaii and Mexico. Cruises are big.

Murphy: Cruises are very big. One of the first stops to look at is the kind of vehicle to execute the program. The European market, for us, is opening a lot more in consideration of programs. We're seeing it come back. Proximity to the Middle East is a factor. But, definitely, Europe is coming back.

Haltigin: Canada is very open at this particular stage, very cognizant of world affairs of what's going on. But coming the other way-for people who don't hold a Canadian passport, or hold a passport where you need a visa-visa regulations are so tight, and some people have missed trips as a result. They cannot get interviews with the U.S. consulate or U.S. embassy in time for the trip. With the trend being shorter-term all the time, the time frame between the end of the contest and the travel date sometimes restricts those people from traveling.

Zanone: Is it primarily in the United States?

Haltigin: It's into the United States. Many people live in this land of immigrants but still travel on foreign passports. As a result of that, there are expectations. But one must budget time far in advance to overcome those situations.

Godi: It's coming into the United States. We've seen the same thing. We handle a lot of global programs that will have participants from over 60 countries participating, with some having to get new visas out of Europe. The backlog and the time frame are very, very slow. It really varies by country.

DA: Is there an alternative for those participants, who aren't able to go the travel reward program?

Godi: It varies, but a lot will offer it. It depends on whether the person was being negligent or whether there was an undue delay in process. They often offer an alternative, which is a stand-alone equivalency to be taken at a future date.

Zanone: What about the people who decline the trip because of their fears? Is there an alternate to that as well?

Godi: We're not seeing our clients offer an alternative to that.

Lang: We're not either. They either go, or they don't go. Unfortunately, if there is enough that don't want to go then the program is not very motivational.

Godi: We also see spouses not attending, especially parents of young children. That's an issue we have to deal with in the industry.

DA: What does this mean for locations closer to home?

Lang: I think they have to be realizing a lot more business than they originally planned.

Godi: The destinations have obviously shifted. In the past, an exotic location carried the whole incentive program. Now, I think it is how you market it, how you structure it and how creative you can be.

Tint: From the [Westin] hotel's perspective, what we are seeing after 9/11 is that it's a different time. One, we have to acknowledge that the police and the whole team in New York City are doing a great job of keeping the identity of our city in tact, which is tremendous. Number two, incentive groups are beginning to use cruises more and more. We are getting more interest from companies as the pre two-day and the post one-day hotel destination. New York is being discovered as a great place to bring people for two days before they go on a group incentive. It's our commitment to start showcasing the beauty of the city. That's what we're trying to focus in on.

Ross Sawai: The key is to adjust marketing plans and strategies and the ability to adapt to the customer base, because the customers are the ones who are going to speak. You know margins don't matter. What matters is what the customer says. If this is the way the trend is going, then we have to find a way to get there. So that's very important. We've seen a lot of that in our business.

DA: Have you noticed a shift into family incentives?

Godi: We don't see that. We do see the trend of young parents who don't want to travel.

Lang: We've had two programs in the last 30 days that allow the spouse and children to attend domestic destinations. Those are pre and post, but not woven into the agenda or itinerary of the program.

Murphy: Yes, the same trend. It is not from a North American perspective. We are seeing that kind of expand into the islands, but not necessarily into Europe. It is North America but a little bit larger than the United States. It encompasses some of the islands. Mexico seems to be a very popular destination in terms of being able to bring families.

DA: Have you noticed an increase in individual travel versus group?

Lang: If you asked participants if they prefer individual or group travel, I think most cases they would say individual travel, because they can go where they want and when they want. But sponsoring companies don't get as much leverage and bang for their dollars. When you get your top performers with your top executives there is certainly a lot of benefit, esprit de corp, teambuilding, that kind of thing. We haven't seen any major trends. We do have individual travel in some of our programs as options, but it's more tied to merchandise, all other kinds of programs, versus group and incentive travel.

Terry Markwart: Our company does a little bit of both. Instead of going to Switzerland, which we have done, now we [Canon U.S.A.] are staying in domestic United States-a little bit off into the Caribbean, but not too much. We have dealer trips, sales incentives, that are being done much differently than what we used to. It is being leveraged differently. They are picking one place and leveraging that whole property for several different groups. Again, that's coming back to managing the money. When you have more than one group in a large company, that's what we're doing.

Haltigin: We do a balance of both. We choose the type of incentive award based on the type of program, whether it's a strategic or tactical program. Merchandise, for example, fits well with a tactical, short-term program. So does travel. And we actively do both.

DA: Post Sept. 11th, if companies were reluctant to travel, did you offer merchandise? Also, have you [merchandise suppliers] gotten more business as a result?

Zanone: In my luxury branded business, I've seen dramatic increase in sales. It's always been explained to me as in lieu of this trip. On the flipside, I have worked with Successful Meetings, a magazine that works with meeting planners, to not only broaden the scope of what you can do in lieu of travel, but to enhance travel using merchandise. It's been a nice trend, but that segment started before September 11th. After September 11th, it has been all luxury branded.

Markwart: We've noticed a significant increase in digital cameras. That is kind of the hot thing in the marketplace for use. It has been: 'Get 100 percent of your quota, then you get a camera. If you exceed that, you get to take the trip.' We've seen that with our binoculars and safaris. So it's been very successful.
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