by Leo Jakobson | September 01, 2010
INCENTIVE: Last year it was Las Vegas, now Arizona is having a lot of problems after the immigration bill and subsequent boycott. How do you deal with that?
ANDERSON: From what our members are telling us, it’s more on the convention side that they are feeling the hit, and the meeting side. Not so much on the incentive side—yet, anyway. But we all know that the sting is in the tail. I think it’ll still be six months before we know the full picture of the damage.
  
INCENTIVE: How about Florida, the Gulf Coast? What’s the impact of the oil spill going to be on incentive travel?

DANNA:  Whether it’s a natural disaster or political—legislation on incentive travel—we are prepared to respond to the clients’ wishes on a dime. Whether it’s floods in Nashville or an H1N1 [Swine Flu] outbreak in Mexico, we are prepared to move that event, within a day’s notice, to a new venue to give the maximum experience to our participants. And so, we should be prepared for all of this, it is our business.

VAN DYKE:  You see [Gulf hotels offering] a 100 percent money-back guarantee if you want to cancel. Some of them said, “if the oil spill closes down the beach,” but some of them also said, “for any reason.” Just to get people there, because they don’t want to have the risk of talking their event down there. What [hoteliers] are having to put on table is going to start cutting into the limited margins that they were already making. 

ANDERSON: I know that New Orleans just met with [U.S. Commerce Secretary] Gary Locke [in early June] to try to look at ways to keep things moving forward. While [the oil spill] is such a horrific natural disaster, I guess less than 30 percent of the Gulf is closed. So, they are still open for business, but I think their challenge now is optics. We’ve all gone through that, the whole perception factor—you know, can you eat the seafood when you go there? Can you drink the water now? They’ve got to manage this massive perception issue, much like our industry had to manage the perception issue the last two years [due the AIG Effect and anti-incentive backlash].
  
INCENTIVE: For the last two years we’ve heard companies have been going less to resorts and more to city hotels, due to the perception issues. Also staying closer to the U.S., rather than going abroad. Is that changing? Where are companies doing programs now?

BRAZIER: We still got a quite a lot of demand for the Caribbean. Our [Radisson and Radisson Blu] hotels are more in the four-star deluxe market, which I think is one where people can play it safe little bit—they’re not seen to be too extravagant, they can still keep it fairly close to home. We have seen some demand for some of the cities in Europe pre- and post-cruise, or some of the eastern block countries where there’s still pretty good value. Those are fairly safe in terms of a destination, in terms of perception. So they might not be doing Monte Carlo, but I think if you’re touring Prague, Budapest, or something like that, it’s not quite as flashy. So you can still do a regular program where people are going to have good memories. But we are suffering a little bit in terms of the budget—we are lacking the budget, at the moment, in some of the programs, to really do the “wow.” It’s still a tough market.
  
VAN DYKE:  The switch from international to domestic was still the biggest change that we’ve heard. It was the largest change in our data. That and the switch, interestingly, from five stars to four.

ANDERSON: They’re looking for good values. So it’s not necessarily if it’s five or four [stars], it’s what it will give to the overall experience and right now with the Euro tanking a little bit, its good value to go outbound again. But, generally, yes, I agree with what you’re saying. It’s been more regional.

LYNN: I would concur to a degree, but I think there are green shoots of optimism that we are seeing, as oppose to a year ago. I’d say we were cautiously optimistic. I think people are more optimistic—the caution’s kind of gone. They’re still managing the perception, but people are prepared to look in the right direction as oppose to saying, “Can you come talk to me in 12 months?” 

I think international destinations and the world we live in are very different. You’re having to re-address things a lot. Our biggest hurdle has just been taken away with the exchange rate—again getting the bang for your buck. You can actually get the “wow” factor in a destination like London, without actually paying the budget, because it’s kind of a “wow” just to go there. People are very familiar with it and you can really work with the destination. I was talking with Monaco [representatives] the other day. I think they have higher perception issue than London does because London is a business capital before its luxury capital. But at the end of the day it’s, how do you position it, how do you work with it? We are lucky that we are throwing another 20,000 hotels rooms at the world in the next two years, so you have an immense amount of choice. 

I think it’s turned around. We’re seeing incentive meetings, if you will, as oppose to pure incentives, but also we’re seeing pure incentives that are smaller but coming from either private companies, or entry sectors such as multi-level-marketing companies, that we wouldn’t have otherwise pursued. Most of my colleagues in the U.K., if I said, “Tell me where Utah is,” they wouldn’t be able to. But that’s where you’ve got 30 of the top multi-level-marketing companies.
  
BRAZIER: Yeah, even throughout last year that’s one market that was still pretty buoyant, and it was a good area of business. I think Chris and I were doing the same trip about same time. It’s one area of the business that was still carrying on with their programs, because there isn’t an option—they have to do them.

LYNN: It’s a way to motivate people who are geographically spread because they are all working from their homes. Growing up at the U.K., Avon cosmetics was the big one, but now, there are everything from hair product to nutrition companies. Companies I’ve never even heard of that are immense. One of them, for an incentive, is looking to put a 3,000-person sales conference in London now. It’s made us dig deep, because it is very easy to go after businesses from finance to insurance to pharmaceuticals—all the big very high profile Fortune 500 kind of companies. 

ANDERSON: You said something interesting about meetings and incentives together. There’s actually a term that I’m hearing now called meetcentives. 
[Editor’s Note: The term was roundly mocked, and Anderson declared it “vetoed.”]

BRAZIER: A lot of the European incentives have been done like that for a while, Where it seems to be more of a meeting and then add on the incentive side. I think we’re seeing more of that over here.

DANNA:  I know that at ITA Group, we’re advising our clients not to change their destination choice, but maybe look at the content. Maybe it’s not the extravagance that we use to have, it’s not the big name entertainment, so the destination remains the backdrop. It might the content that changes to provide the value the client’s looking for.

INCENTIVE: Where are you seeing clients going?

DITTMAN: A lot of Caribbean. Programs that would have gone to Europe have gone to the Caribbean or Palm Springs. But clearly the challenge is on the budget side. You have to do more with less, you have to be more original, have to be more creative. And it’s still possible to do things that are different: They can be socially responsible things, they can be participatory things, experiential things. 
I wrote an article in 1981 or ‘82 . It made the case of why the recession was a good and necessary thing and was beneficial to all of us. Unfortunately, I had to bring it out in 1990, in 2000, and again last year, but I always believe that the great ideas emerge during difficult times, because that’s when you’re forced to think. So much of the incentive travel industry is an habitual one. [The trips] were kind of automatic, they were givens and now when they haven’t been going for while, you really have to think them through, think them over again, and justify them.
  
So the question is, how much you’re going to spend, do we really have to spend as much as we have? The answer is invariably no, you don’t have to. But, you really need to have something great. As long as people keep saying we have to do something great, we’re in fine shape, because we as an industry, we continue to find ways to do great things. It’s when they say, “Well, we don’t really need to do great things anymore,” that the nature of the incentive travel industry changes forever, and for the worse.

ANDERSON: Won’t be interesting to see those companies—the ones that stopped their programs for a year—and look at what their revenue streams and their ROI was as a result of that. 
  
DITTMAN: I had that thought too, but unfortunately, I think it was under such strange circumstances that it wouldn’t really be a valid clinical comparison, because everybody’s business was just a mess over that period of time.

INCENTIVE: I’ve been hearing that a lot of programs are offering less activities and more free time. Is this a generational issue—I’ve heard younger winners prefer free time—and I’ve heard that it’s a way to cut expenses: you’re still at a nice resort, but there’s no spa or no Jeep tour.

ANDERSON: I think part of it is, we’ve been talking about the pace that we operate in, the 24/7 nature of everything, people just need some downtime. I don’t think it’s so much motivated by a budgeting shift in the programs or trying to manage to a particular cost as much as it is meeting the attendees’ needs. Particularly the younger generation’s that are coming up—they do want more downtime and more flexibility. They want to know they have the choice, so I think that’s motivating a lot of it.

PEER: I think a lot of the younger millennials are being sobered, because they have spent so much time being insulated from life’s difficulties, getting the gold star for showing up. Now they're finding, “Oh wait, this is a competitive, tough world and the promotion is going to the one that actually did do the extra work.” And so, I think that there is evidence of some changes in their reality and what their expectations are. It’s like I said a few minutes ago: We’re pretty simple. Millennials, at their core, are not different from Baby Boomers in terms of what it is they want.

They want career success, happy families. They want a long, healthy life. The core things that drive their behavior are not that different. It has to be packaged differently, hence the eco- and the social responsibility. You know those things are different, they are modern. But I'm finding especially if you look at the ones that you work with—as a baby boomer who looks skeptically upon these young people like we were looked at when we were that age too—they're learning some tough lessons with this recession and part of it is, is they’ve got to let go some of the notions they had from their entitled childhoods.

DITTMAN: In fact one of the interesting things to observe over the next year will be, with the cancellation of so many major group travel programs at least for a year, many of us created some white glove individual travel programs, which were met with great success.

Some of the winners actually prefer this. Both he and she are both working.  They’ve got kids, they can’t necessarily go off the same time. They want the freedom of choice of both place and timing of things. That was an interesting substitution and a very effective proposition both for us and for our clients, in terms of trying to keep people motivated and engaged.
  
The question is, how much of that will stick? Many of our travel programs have come back. Some haven’t. They're going to stick with individual travel for another year, because they were getting a good reaction to it. Personally, I don’t want to see that become a long-term trend, because I believe too much in the importance of personal relationships and the melting of formal business barriers that occurs on a group travel program, and the great things that you can do to engrave the corporate fingerprint all over the experience. But, it will be interesting to see how strong individual incentive travel remains as we get back to near normalcy

BRAZIER: As a participant on some incentive programs, I think the conversations you have with your colleagues that you would not normally get to spend time with is one of the really beneficial things. I think when you're doing the individual programs, then you're really missing that interaction between participants from different locations and on different levels that really have the bonding time during a program, and although I can see it would work for a number of people, for different reasons, I think it would be a sad loss for a company to actually miss out on that.

VAN DYKE:  I think it is somewhat incumbent on us, as well, to make sure that we harvest that benefit for the companies. I don’t know that every trip that has that collaboration, that networking element, really takes it to the next level to say, “Okay, now how do we take what we've learned here, in terms of best practices, in terms of idea sharing, and bring that back to the organization and codify it. That’s something we [the IRF] definitely heard in our case studies is the main primary benefit, but there is that next step that really makes it of business value.

DITTMAN: I think in each case you have different benefits. The only thing that group travel and individual travel have in common is travel. Really, one is a completely different experience than the other. But for those companies who got burned with big cancellation penalties or are a little afraid to put their toe back in the water and make a big-time commitment again, you can do individual programs. An individual trip is very much like a television, in a sense. You say, “Okay, here is the number, if you make your number you get the trip.” It’s used in different situations for different marketing reasons, but I’ll say it again: I think it would be a sad day for our industry if that is a permanent trend, but you have to be aware of it.

ANDERSON: I agree with Cherryl though, the magic happens when those borders come down, when those boundaries we have in the office fall away. That’s when the connections really happen and the relationships kick into a different gear. That’s the emotional piece we've been talking about.
  
RYAN: But generationally there maybe different aspects of individual travel that are appealing the younger folks. Number one, they have might two spouses in the house that work, they might have a young child, it might be difficult for them to get away on a certain day. The other is, when you look at millennials, I think the one thing that they really have as a generation that defines them is they want to do things on their terms. So the ability to have a trip that allows them to do something that might be off the beaten path, that wouldn’t normally be part of a group travel experience, might be more appealing to them. I think organizations that balance that are smart. 

INCENTIVE: We’ve heard a lot about airline budget cuts, baggage and other fees, things like Spirit Air getting planes with non-reclining seats, so they can pack more people on. Is air travel becoming an impediment?
 
ANDERSON: Yes. It’s kind of become the necessary evil. We [Site] were doing our European conference when the news came out that one of the European carriers wanted to have Boeing actually remove one of the toilets so that they'd have more seats. Or that you’d have to pay [to use the toilet]. It’s become something you just need to incorporate within your decision-making. It does limit your choices, based on the lift into a particular area, because you’ve either got it or you don’t. It’s just not something that can be negotiated. 

INCENTIVE: I'd actually heard that some Caribbean destinations were hurt by flight cancellations. If it is a small island, one or two flights being cancelled can be a big deal. 

BRAZIER: It can be a big deal and we've got some hotels in places like Freeport, [The Bahamas]. It is an issue when you’ve got a big hotel and limited service. It’s definitely a factor in terms of the programs. People looking at Europe at a time where there was the volcano [eruption that grounded airplanes across the continent], the British Airways strike, and riots in Greece—any short-term business that was looking at Europe [asked], do we still want to carry on with that?  

It has been an issue in terms of additional costs in the airlines as well— more on the meeting side, but in the incentive side as well. It’s not just the main cost, it’s what additional costs have we got now for the program, that the airlines are putting on top of everything else. 

VAN DYKE:  And a lot of incentive houses are picking up all of these extra costs. In order to create the same experience, you got to absorb those costs into the program. 

INCENTIVE: One of the things about London is, it’s one of the easiest destinations in Europe to get to from the United States. Chris, are you seeing any of this impact? 

LYNN: We are very fortunate. As far as lift, we are able to connect to any city on the planet. As far as direct flights, New York to London is the most commercially successful in the world. So, there is always another way [to get here]. We used to be an island, but we are, of course, now connected to the continent with the Eurostar [Channel tunnel].

Carriers have added additional air into U.K. as a whole over the past 12 months. And, I think with the march towards 2012, with Olympic Games coming to the city, everyone kind of has their eyes on the city, and airlines looking to make a return to the city. So you’ve got lots of options, and we are very delighted with that.
  
INCENTIVE: How are incentive programs using the Olympics, and other major events? There was talk this year about companies not doing incentive trips to a golf tournament or other sporting events they sponsored.
 
LYNN: Requests are already coming through. I think it’s almost a good time from an economic perspective. It’s a significant enough time away—two years—that now we are on that journey of optimism, it’s a good target to aim at. I think because of the size of the London Summer Olympic games—10 million tickets will be sold—it will create an exciting platform. But whether you use the games itself, whether you simply just touch the games, whether you want to be in a city that’s going to be playing host to the games, or did play host to the games, I think there is all of that pre- and post- and legacy dialogue. We’ll probably be the first host city in history to be a ready a year out, so actually, we’ll be running as an Olympic City next year, with a number of test events running throughout the year. People are going to come and have an Olympic experience, but it is their own Olympic experience, as opposed to one with the 10 million people coming through the city [during the 2012 games].

INCENTIVE: One other travel topic that I wanted to hit on was cruises. I have heard some more interest in doing cruises, partially because you are out of people’s line of sight, and because they are all-inclusive, so no budget surprises.

DITTMAN: It’s the combination of the two most important things these days, which are perception and budget. There is no greater value than a cruise in many ways. The tradeoff, of course, is that unless it’s a full-ship charter or half-ship charter, you are not in control of the environment. Your guests are hearing the same, “Sign up for $29.95 diving” message that everybody else is hearing, and it’s difficult to get space that fits exactly right for the events that you want. There are a lot of drawbacks to it, but just for a quick and simple answer to what can we do with the least amount of money and the least amount of perception problems that cruise is a great answer.

DANNA:  That is all the more reason to use professionals like ourselves, whether it’s the advice that Chris can provide on travel to London, or that a natural disaster means you’ll need to rebook 1,000 people very quickly, or who has done this event before and what experience do they have. Most of the time we, as full-service professionals, can provide that advice to our clients in advance. You mentioned the restrictions in air travel, or charging for baggage now But we’ve all gotten used to our [mobile] phone calls dropping or getting static—something which, 10 years ago, we’d never have accepted on a land line. We accept the airline restrictions now. The good news is, as full service professionals, we can provide the communications, in advance, that make it a comfortable experience, or at least set the expectation of what the pitfalls and opportunities might be, so the participant is going into it fully aware of what to expect.
  
PEER: That’s a great point.

INCENTIVE: Is that a message that’s getting to the clients, and more than that, to potential clients?

DANNA: I think, clearly, experience shows in this business. 
  
DITTMAN: We are our own worst enemies and so we pay the price for our own success on many occasions, because if we do a program right, it’s a lot like the great athlete making the hardest play look easy, and the client goes, I could do that. At the end of the program we’ve had a flawless program and an experience that just is amazing. [And people say], hey how do I get a job at your place? How do I get into your business because it looks like it’s so easy, it’s child’s play, any fool could do this.