• by Jack Loechner , Staff Writer @mp_research, November 21, 2008

The findings of the 2008 Incentive Travel IQ Report indicate that the poor U.S. economy, combined with the high cost of travel, is having a significant impact on how planners are conducting their incentive travel programs, showing that 47.6 percent of the survey's respondents are choosing to operate their programs on U.S. soil. Of those planners who are operating their programs in the U.S., Las Vegas continues to shine with 46.5 percent of planners considering the destination, with Florida/Disney (45.7%), San Diego/California (30.6%) and Hawaii (29.4%) as the runners-up.

The down economy has had a greater negative impact on travel incentive programs than merchandise non-cash programs. A full 81% of survey respondents feel the down economy is having a negative impact on their ability to plan travel incentive programs.

When asked how the growing difficulty and cost of air travel had affected destination choices, nearly 60 percent of respondents said the airline industries' changes are having a "moderate" or "significant" impact on their programs.more than 35.2 percent of the survey respondents said they look for destination with no more than one transfer for all participants, with another 33.2 percent saying they are trying to stay closer to home or are not considering long-haul destinations at all.

• 56 percent of planners are now including round trip air transfers
• 53 percent are covering all costs of air transportation
• 44 percent have shifted from international to domestic destinations
• 35 percent have reduced the number of days/nights, as well as the number of rooms included in the travel
• 33 percent have decreased in on-site "extras" at the hotel or resort such as paid meals, pillow gifts, Spa treatments, water sports, tennis, golf and mini-bar services for participants

This study also reveals ways incentive program administrators are adapting their incentive travel and merchandise non-cash programs in a down economy. Less than half (48 percent) of respondents consider the down economy to have an impact on their ability to plan and implement merchandise non-cash programs.

Jennifer Juergens, editor-in-chief, Incentive, says "Travel rewards continue to be the cornerstone of corporate incentive award programs... But... companies that have been running incentive programs... need to rely more heavily on program(s) to keep the best sellers selling, and others motivated... incentive program planners (are) putting together programs that continue to reward and motivate employees... without undermining incentive goals."

Forty-nine percent of respondents say the economy has had no effect on merchandise non-cash incentive programs. Although 61 percent have had to cut their program budgets, 34 percent comment that there has been no change, and 6 percent even say their budgets have increased.

Respondents are modifying their merchandise non-cash incentive award mix in response to the economy with things like:

• Increased use of debit/gift cards (21 percent)
• Including individual travel as an option (19 percent)
• Decreasing merchandise award value (16 percent)
• Including experience-related options, such as spa treatments, cooking classes, wine tasting events (9 percent)

Most frequently mentioned budget cuts/reductions include:

Number of total qualifiers (56 percent)

• Number of total qualifiers (56 percent)
• Awards budget (56 percent)
• Incentive program on-site gifts (48 percent)
• Communications (38 percent) and administrative (35 percent) budgets

For more information on "Effects of a Down Economy on the Incentive Industry," and to download a PDF of the report, please visit the IRF here.