by Leo Jakobson | September 30, 2013
Every year, Incentive gathers a group of experienced professionals from every sector of motivation, engagement, and incentives to talk about the state of the industry. On June 20, 12 participants gathered at the Ocean Reef Club in Key Largo, FL, for some sun, sand, and serious conversation. Topics this year ranged from government regulation and return on investment to gamification and the return of luxury. 

What follows is a more detailed and extended version of that discussion regarding the incentive travel industry, the next big incentive destinations, and more.

INCENTIVE: How is the incentive travel business doing?

MARK THEIS, Director of North America Group Sales, Starwood Hotels & Resorts Worldwide: From our perspective, as a hotel company, travel across the globe is up 4 percent across the board. That’s a nice uptick from of 2012. As a company, we’re rapidly expanding our footprint around the world, which is a testament to the confidence for travel and certainly the economy at large, particularly in emerging markets. 

The incentive market is on a swing, I think. The trend for four-day programs might be slowing down a bit. We’re still seeing three-day events, even to Hawaii, but we see international destinations having a higher appeal than in the last couple of years. 

CLAUDIA DAVILA, Tourism Director – USA, Proexport Colombia: People are venturing more out of the United States. They want to learn more about different places. Before the recession, everybody was spending without even thinking. Now they’re more careful how they spend and they are spending smarter. The decisions are not just made by anybody in the company. They’re going higher and higher. You know, the CEO has to approve where we’re going.

At the same time, people are more difficult to incentivize. They’re looking for unique experiences, for something different than other places have to offer. I have to say, this is great for us. [Colombia] offers unique things that other people don’t know about, and don’t have. So for us, it’s been good. 

KIRSTEEN SCOTT, Business Visits and Events Manager, VisitEngland: I have to agree. From an international perspective, people can’t just jump in a plane any more and, you know, go to London. People really have to think about how far their budget can reach. The biggest thing for me in my role is talking about value. You have to be more competitive, and you have to show what added bonuses you can offer for an incentive.

I don’t think we’re over the hurdle yet. I think we’re getting there. And I think there’s a long way to go. I think we’re on the right track. In the long run, people will take that next step and want to go to unique places and want to really travel further and do something different. 

LYNN RANDALL, Managing Director, Randall Insights LLC, and Education Director, Incentive Research Foundation (IRF): The IRF has conducted what we call Pulse Surveys every year since the fall of 2008, one in the spring and one in the fall. About 37 percent of the respondents to the “Spring 2013 Pulse Survey” said that they are increasing their budgets for incentive travel programs. What they are not doing is adding days. What they are not doing is adding people. Those budget increases are going to the luxury end. They’re going to non-F&B related additions to the program, things like pillow gifts or other added enhancements.

What was interesting is when we asked how budget increases have affected program outcomes — you’re putting more money in, what does that mean to you — 91 percent of those who increased their budgets saw a corresponding increase in sales results.


INCENTIVE: Where are programs going?

RANDALL: For destinations, No. 1 is North America, No. 2 is the Caribbean, No. 3 is Europe. Followed by Central America, South America, Asia, Africa, and the Middle East.

What’s really interesting are the emerging incentive destinations that we are seeing. No. 1 is China. They‘re doing a lot within China, but also people are headed there. Then Bali, Vietnam, and Cambodia — there’s a temple, Angkor Wat, that’s primarily where people are going — then South Africa and Argentina.

THEIS: I would just echo that, from what our hotels are definitely seeing. Eastern Europe is also kind of new and hot. Europe never went away — and Hawaii never went away — but I’d say in Europe, Eastern Europe is really hot. And to your point so is Asia, particularly Southeast Asia. You mentioned Bali, but also Indonesia, Cambodia, Vietnam, Laos, Thailand — those continue to be of huge appeal. We’re also seeing a lot in the Middle East now, we’re seeing Doha, Qatar, as well as a lot of Russia. 

MICHAEL DOMINGUEZ, Senior Vice President, Corporate Hotel Sales, MGM Resorts International; Chair, Meeting Professionals International; and Executive Committee Member, U.S. Travel Association: The growth in Abu Dhabi and Doha, and that area, is just tremendous. It’s amazing.

THEIS: At the end of the day it’s about making sure that they’re going to be able to experience something different and unique. [There’s] this general appetite of wanting to explore and really get their hands dirty, to have the immersion into that culture. And I think that’s what Southeast Asia offers. That’s what Latin America offers. That’s what some of these BRIC [Brazil, Russia, India, China] countries offer. Those are more prominent, particularly with these Fortune 100 companies that have global associates around the world.

ANNMARIE MOLINELLI, Vice President, Marketing Manager, M&T Securities, Inc: Once we are given the green light to go somewhere it will be domestic. It will probably be something quick and easy to get people to. We are based mainly out of the Northeast, but we would love to get to the West Coast. It depends on the number of days that we have. It’s an average of four days and three nights. If we could add an extra day, we could get to the West Coast. I would love to put a program together called “How the West was Won.” People always tell me, ‘Vegas, Vegas, Vegas.’ 

The time for trips is coming back. To get there might mean offering a fifth day, or giving them some type of a different incentive on the pre- or post- stays. But it would definitely be domestic. 


INCENTIVE: Are luxury destinations seeing a comeback?

MIKE MAY, President, Spear One, and IRF Trustee: With luxury destinations I think we’re seeing more discussion, which is positive. But it seems like we just can’t quite get over the hurdle to pull the trigger and go. Some of that is air costs in getting to that luxury destination. I’d also say I think we see more openness to luxury destinations with private companies than public companies. I do think perception issues have died down but the public company is more tied to a CFO pounding his fist on the table, where the private company, can be a little more flexible. 

THEIS: It depends on what the group is. Pharma still has rigid guidelines that they can’t have anything with the word resort or spa in it. But we’re seeing other industries, that are going to the high-end brands or destinations. Technology would be key and we’re seeing some finance and banking.

MOLINELLI: I think perception of brand is still out there. Would [we] select a Ritz-Carlton over The Breakers? [We’d] probably go to The Breakers. 

JOHN DECESARE, Publisher, Incentive and Successful Meetings: But from your company’s perspective, you’d have no problem considering that luxury brand, as opposed to a Sheraton or a Westin?

MOLINELLI: I would agree with that. 

SCOTT: I’m also finding — and I knew this happened over the past few years — that incentives and rewards had to be loosely talked about, and a meeting element was sometimes put in place, you know, to help it go forward. Companies are finding it’s actually helping. They’re going to these luxury destinations as a reward, but they’re also tagging in a component that helps the company get a key message across or, gets everyone together talking — getting back to the communication and the face-to-face. People are making sure that they’re utilizing the time that they’ve got there and getting their company message across. 

DOMINGUEZ: Something that I think is just critical is what’s happened with lift — it’s 14 percent down from 2007. It’s a challenge and in luxury destinations, that’s where it’s been pulled. I’m not blaming [the airlines]. They’re profitable for the first time, all of them, so there’s definitely some logic behind it. In Vegas it is an even a bigger drop. I am dramatically down — almost 20 percent from the seats I had in 2007. So how do you grow that attendance when you can’t get them there? What you’re finding is that airlines are giving us seats, but they’re giving us seats by replacing aircraft and larger aircraft, not more routes. We’re gaining, we gained 2,000 seats for the summer, and it’s because they’re putting in planes that have 30 more seats. And luxury is where they pulled. They pulled because that’s where the decline was. We’re trying to build luxury up at the same time, so there’s a couple of forces working against themselves. 

JOE KELLER, President and COO, MotivAction: That’s exactly right. 

THEIS: And we see a direct impact on destinations where there isn’t that lift. That can just cripple a bid.

DOMINGUEZ: I don’t think it’s by accident that every segment of the industry has recovered to 2007 levels, [according to the] latest Smith Travel Research report, except for luxury. In luxury, there’s still a gap, and I don’t think that’s by accident. We’re getting there. We fell the furthest, so I thought it would take us longest to get there. But every single other segment has recovered back to 2007 levels, except for luxury. 


INCENTIVE: Are amenities like golf, spa, and room gifts coming back?

RANDALL: When [the IRF] looked at things like program duration, it is staying about the same. They aren’t increasing or decreasing days. What they’re doing is increasing non-meal elements. There’s about a 20 percent increase in program components other than food and beverage. I would say yes, absolutely, they are coming back 

SCOTT: Golf is back. I’m getting more inquiries for golf back and I’m finding that people aren’t aware that England is great for golf. They’re adding that on as an element, and spa as well. That’s a big one because we’ve got amazing resorts that do the golf, the spa, the pool, whatever you want to do. We’re finding that there is a greater demand for these kinds of properties. 

MAY: We’re in the middle of a multi-year process of building those back in. It’s a three-year process of going in to the CFO and saying, ‘We need an extra $200 for this trip.’ Some of that $200 goes to cost increases, but then it allows you to add in one activity or add in the room gift. And then the next year you try to add one more thing back. 

DOMINGUEZ: We’re seeing the spend, but what we’re seeing is, instead of having a golf tournament, you either have golf or spa. It’s golf, it’s spa, it’s a balloon ride, it’s a helicopter tour — people are selecting what they want to do and, surprisingly golf gets smaller and smaller. It’s the experiential component that we’ve all been talking about — why you would go to Colombia or why you would go to Bali — it’s about the experience. It is being spent but it is important not to think that it’s only golf and spa. We’re getting much more demand, to the point I’ve had to hire staff to make sure they’re coordinating all this for our planners.

ANDERSON: We’re seeing many more trips coming back into place, so we’re supporting more pillow gifts and things of that nature.

PAUL GORDON, Vice President of Sales, Rymax Marketing Services: Actually, choice is coming to the product side, too. The pillow gift concept, that [participants] are going to get something each night, I find is diminishing, at least with our clients. What they really want to do is have a mini-shopping spree. Have the people come into a room and see a number of things and be able to choose what they want, or do something that’s teambuilding that culminates in a prize. They’re trying to add that extra little element of fun. I think that freedom of choice is important in terms of what they’re going to experience, and we love it, we think it’s better. Not everybody wants a camera, not everybody wants cookware, not everybody wants whatever it is. So give them what they want and let them leave happy.

DOMINGUEZ: To your point, we actually have a room at registration. You go to a room and we’ve got small bottles of booze, we’ve got beer, we’ve got wine, we have all your snacks. They get to take a little bag and they go shopping, put everything in it and take that to the room versus us sending up amenities that they will like or not like. We’re finding more groups do that and I think it’s the cool way to do it. 

GORDON: It is.

DOMINGUEZ: There are some limits on the liquor, but outside of that …


INCENTIVE: What else are you seeing?

RANDALL: We’re definitely seeing a trend in incentive travel around people desiring authentic experiences, things like wellness travel. So they want to travel to the temple that was in Eat, Pray, Love [the Besakih Temple in Bali], and they want these wellness experiences, soup to nuts.

Food tourism is another really interesting trend that we’re seeing. Going to Italy and going from the fields where you’re picking the olives right off of the tree, and taking them to a cooking class — going all the way through the process.

THEIS: I’d be curious if you are seeing the luxury cruise market coming back as well? It seems like that’s getting more attention than in the last three or four years.

SCOTT: The biggest competitor, I would say, to Britain overall is cruises. They’re winning business over, actually going to the country. The biggest thing is also that you’re getting to see different places. People do not want to go to one place. They want to make the most of the time they’ve got. They value that they can spend a day in one country, they can travel very easily to different places. They can experience different cultures. 


INCENTIVE: Can we run through Colombia, England, and Las Vegas? 

DAVILA: In Colombia, we are seeing big growth, and a lot of investment in hotels. But we still see, in the U.S., a lack of education. When I talk about Colombia, and why we are a destination for meetings and incentives, some people, the majority, ask about the safety perception. We had problems 10 years ago but that’s not an issue any more. We’re a destination like every other destination. Bogotá is safer than Washington, D.C. Will you have a meeting in Washington, D.C.? Of course. But people have to be educated. Other countries know — Europe is fairly well educated.

People also don’t know how close we are — only two-and-a-half hours from Miami. We’re in the same time zone. Get the map, we’re right there. [On the leisure side] we’re getting a lot of Americans coming; 26 percent of our visitors come from the U.S. market. And for events, the majority of visitors come from the U.S. You get a plane in Miami at 1:00 p.m., and land at 3p.m., you can be meeting them at 4 p.m.. We have more than 30 direct flights, we have Open Skies agreements with the U.S. So we have a lot of airlines going to Colombia. 

What I love most is the ‘wow factor.’ When people get to Colombia they're like, ‘Wow, I never thought this was so close, that this existed.’ You can have an experience that you cannot have in many countries. It’s magical.

We have no seasons. You can go to Bogotá and it’s fall all year long. You can have a great incentive trip there for three days and then go two days to Cartagena, and that’s hot, hot, hot. It’s very unique and very different. People don’t know we have a whole coast on the Caribbean.

SCOTT: England’s actually new to this market. London’s been around for a long time, but England didn’t really have an international presence. I was brought in last year to make sure that England got on the map more and to work with the airlines to make sure there’s airlift to other places besides London.

What’s been happening probably over the past five years is that other places within England have actually brought their attractions, accommodations, and activities up to the international level. Before, they’ve not been able to offer the market what the expectations are from America.

We’ve been able to then make sure that the suppliers who are there are able to offer incentives, rewards, meetings, and events that they’re able to bring in — whether its a large number for conferences or a smaller number for incentives — and take them on an amazing experience. From research that I’m doing, I find that 40 percent of my inquiries so far have been on the incentive side, which I was actually surprised by. I thought it would be less than that. 

I’m finding that people want the cultural perspective. People know about the royals, and they want to be part of that. Or they’ve watched a sporting event like Wimbledon, and they want to be part of that. I’m finding that sports are playing a much larger part. England’s hosting the 2015 Rugby World Cup. I didn’t think any Americans played rugby. Now I know that Americans play rugby and it’s one of the fastest-growing sports in America. That gives me an opportunity. 

DOMINGUEZ: [At MGM Resorts International], we’re 20 percent down in incentive business from where we were in the peak, but a lot of that incentive business was driven through financial. That’s what fell off the cliff in 2009 but we’re starting to see it come back. 

Seventy percent of our revenue in Vegas is non-gaming, and the convention business is the most important piece. It’s interesting: Our CEO says we needed the downturn to actually understand how important convention business and meetings business was because when it disappeared, we realized what it meant to the company. I’m fortunate enough to work for a company that’s all in when it comes to the meetings market. 

We’re always trying to stay top of mind, trying to say, ‘How do we keep reinventing the experience?’ We’re building an outdoor pedestrian park between Monte Carlo and New York-New York, because we have no outdoor experience. The old casino model was to get them in the casino and keep them there. That’s not who our customer is today. It’s about being experiential. You can go to a beer garden and be out at jazz fest, and I think that’s where the Millennials have pushed us.

We’re not trying to keep [attendees] on property. We have a campus, basically, because we own 50 percent of the Strip. So we spread the experience through our family [of properties]. We have these things called M Life moments that we had to create, because it’s all about being experiential today. You can go underneath the fountains at Bellagio and go see how that works. Or you could take your top producer, for instance, and they get to select the music that the fountains are going to dance to that evening, the entire soundtrack.

The food and beverage is the biggie. The private cooking lesson with Rick Moonen over at RM Seafood is a big hit. It’s Tuscany Kitchen that we designed at Bellagio — a show kitchen. When you bring an incentive group, we can bring in Joël Robuchon to do an experience with your group. It’s that kind of stuff that Vegas has created, and we were forced to do that, in a way.

The coolest visit that everybody loves is the behind-the-scenes security tour at CityCenter Las Vegas. To know how the security systems work, and the cameras, and to realize there’s nowhere in that building we’re not watching. It is really cool to look at. That truly is our No. 1 tour. Everybody loves to go see the security.

What I think is important, if you look at Vegas, is the need for us to change the experience consistently, so that it’s not stale. That’s what drives us every day. Look at what we’re doing at Mandalay Bay — we’ve added a new show and a new nightclub and three new restaurants. And why are we doing it? Because people have been there. They want to come back and find it’s the newest and the greatest. We closed down The Lion King and we opened Michael Jackson ONE by Cirque du Soleil, and you can’t get a ticket because everybody wants to go see this show, and all of a sudden Mandalay is back on top. Then at MGM Grand, we opened up the largest nightclub that you’ll see. It’s called Hakkasan. It’s the largest nightclub in the world and cost $80 million to build. Why? Because it’s an attraction and at 3 a.m., when you’re leaving, there are lines out the door and we’re at capacity. 

We’ve seen a shift in demographics. There is a correlation in our increase in nightclub spend with the same decrease we’re seeing in ticket sales for shows. It’s making us go back and re-examine how we do things. It’s not that they don’t want to see the show, but you’re not going to go to a 9:30 p.m. showing if you want to be in the nightclub, because if you go to the nightclub at 11 p.m., you’re not getting in. You’ve got to get in those doors before 10 pm if you want a spot in the nightclub. So we’re realizing maybe we need to run a matinee, maybe we need to go back and run a 5 p.m. show so you can get out at 7 p.m., go catch dinner and still be at your nightclub.