There are (slightly) rosier times ahead, finds incentive report
Growing industry optimism about incentive travel programmes, merchandise and non-cash programmes, as well as ROI and budget considerations. 
Last year was a challenging one for the incentive industry, but as 2010 unfolds, it continues to be a vital, multi-billion-dollar business that plays a critical role in motivation, engagement, productivity and profitability at hundreds of thousands of companies worldwide.
That is one of the findings of a new Pulse survey by the US Incentive Research Foundation (IRF) which reveals several indications of (slightly) rosier times ahead.
The IRF says that, while the incentives industry is not quite ready to breathe a sigh of relief, these results indicate a brightening outlook as practitioners plan programs for 2010.
“Cautiously optimistic is the term I would use to describe the overall message in the data from the survey,” says Mark Peterman, chairman of the IRF research committee. “Our sense is that companies may have been sitting on budgets for the past 10 months or so waiting to see how things were going to play out and whether there was going to be more pushback from the media and community regarding incentives.”
The survey found a growing optimism when it asked incentive industry professionals about incentive travel programmes, merchandise and non-cash programmes, as well as ROI and budget considerations.
When asked what impact the economy will have on their ability to plan and implement incentive travel programs, 69% of respondents said it will have a “positive” impact, compared to 33% in the Fall of 2009 and only 24% last Summer.
What impact will the economy have on their ability to plan and implement merchandise/non-cash incentive programs, 41% indicated that it will have a positive impact, compared to only 26% last Fall and a mere 20% in the Summer of 2009.
Reality
While clearly feeling better about the economy, one-third of those surveyed did predict that budgets for incentive travel will decrease this year, while 37% say they’ll remain unchanged. Things were a little better on the merchandise/non-cash side, where only 22% expect a decline while 40% predict an increase and 37% say they see no change in budgets. Although the survey results show an uptick in optimism about the economy in general, it may not translate into more money for programs – at least not yet.
Other key issues and trends from the survey include:
• Image issues remain: Key “influencers” on incentive program design, implementation and product selection that peaked in the Fall of 2008 have stabilized in 2 out of 3 areas (Corporate Financial Forecasts and Competitors’ Reactions to Programs). But Sensitivity to Program Extravagance remains high, having risen from 45% to 64% between Fall 2008 and Spring 2010, making it the second most important influencer.
• Growth in individual travel: Respondents were asked if they anticipate their award strategy to include more individual travel and fewer group trips, either temporarily or permanently. Although two-thirds predict no change in policy, 29% see some movement from group to individual travel. A similar question found that 24% see movement from merchandise awards to individual travel, and 21% see more use of debit/gift cards.
• Increased involvement by procurement: While most respondents anticipate no change with regard to the involvement of Procurement/Purchasing departments in incentive travel programs, 44% agree that their involvement will increase by some degree. Similarly, 38% say Procurement/Purchasing’s involvement in merchandise/non-cash programs will increase in 2010.
• More Domestic Travel: Although nearly half of respondents (47%) felt there would be no change in the basic make-up of incentive travel programs in 2010, another 42% predict a shift from international to domestic destinations, and 47% say the average length of travel programs will decline.
A full copy of the report can be downloaded here