What is Incentive Travel?

Incentive business travel is a powerful tool to motivate employees

Businesswoman using smart phone in hotel lobby.
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A good deal of business travel is related to incentive travel. Incentive travel is business-related travel that is designed to provide motivation or incentives to help businesspeople become more successful.

Incentive travel is business travel that helps motivate employees or partners to increase certain activity or to reach a goal.

According to the Incentive Research Foundation: "Incentive Travel Programs are a motivational tool to enhance productivity or achieve business objectives in which participants earn a reward based on a specific level of achievement set forth by management.

The program is designed to recognize earners for their achievements."

Melissa Van Dyke, president of the Incentive Research Foundation (the IRF), has a lot to say on the subject. The IRF is a nonprofit organization that funds studies and develops products for the incentive industry. It also helps organizations develop effective motivational and performance improvement strategies. Here is what she told us.

What Are Business Travel and Employee Incentive Programs?

For many decades, managers and business owners have used the promise of travel to appealing or exotic destinations as a motivational tool for both their internal staff and their partners. What many people do not realize, however, is that over the last half century there have been a great many research-based methodologies and best practices developed around incentive travel. Likewise, an entire industry of professionals now exists with the expertise to use incentive travel as a motivational tool inside organizations.

As part of its study, "The Anatomy of an Incentive Travel Program," the IRF provided the following concrete definition for Incentive Travel Programs:

"Incentive Travel Programs are a motivational tool to enhance productivity or achieve business objectives in which participants earn the reward based on a specific level of achievement set forth by management. Earners are rewarded with a trip and the program is designed to recognize earners for their achievements."

Who Should Have Them and Why?

In virtually every industry, incentive travel programs are often used as a motivational tool with internal or external sales teams, but any organization or workgroup can use them effectively where there is a gap in productivity or unrealized work goals.

Previous research conducted by Stolovitch, Clark, and Condly offered an eight-step process that helps potential program owners determine where incentives would be effective and provide guidelines for implementation.

The first event of this Performance Improvement by Incentives (PIBI) model is an assessment. During the assessment phase, management specifies where gaps exist between desired organizational goals and company performance and where motivation is an underlying cause. Key to this assessment is ensuring the target audience already has the skills and tools needed to close the desired gap. If these exist, then an incentive travel program may be a strong option.

What Are Some Examples of Incentive Programs and the Value They Provide?

In "The Long-Term Impact of Incentive Travel on an Insurance Company," research found that the total cost of the travel incentive program per qualifying person (and their guests) was approximately $2,600.

Using the monthly sales average of $2,181 for those who qualified and an average monthly sales level of $859 per agent who does not qualify, the cost payout for the program was over two months.

In The Anatomy of an Incentive Travel Program (ITP), researchers were able to show that well-rewarded employees tend to perform better and stay with their company longer than their peers. Net operating income and tenure of participants in the ITP was significantly higher than for those who did not participate.

Of the 105 employees who attended the corporation's incentive trip, 55 percent had top performance ratings and tenure of four years or more, achieving (significantly better results than the average employee), and 88.5 percent had top performance ratings. But the benefits of incentive travel programs are not only monetary and numeric.

This study also listed a number of organizational benefits, including positive organizational culture and climate, and it outlined the benefits to the communities that the travel program served.

What Are the Challenges Associated With Putting Together a Program?

The primary challenges with programs tend to be staying within tight budgets and executing an effective program that demonstrates some level of return.

The anatomy of an ITP study provided five recommended elements for incentive travel efforts to be successful. The research concluded that, in order to maximize the benefit of an incentive travel program, the incentive travel event should make sure the following objectives are achieved.

  1. The earning and selection criteria for the reward must be clearly tied to business objectives.
  2. Communication about the program and the participants' progress toward goals must be clear and consistent.
  3. The design of the travel program, including desirable destinations, interactive sessions, and leisure time for the earners, should add to the overall excitement.
  4. Executives and key managers should act as hosts to reinforce the company’s commitment to the reward program and recognition.
  5. The company should keep detailed records that prove the productivity of the earners and their contributions to the company’s financial performance.
  6. Earners should be recognized.
  7. There should be networking opportunities for top performers to build relationships with other top performers and key management.
  8. There should be collaboration among top performers and management about best practices and ideas.
  9. Earners should be motivated to continue to perform at a high level.

How much meeting content to include in an incentive travel program also tends to be a challenge for planners currently allowing participants to spend about 30 percent of their experience in meetings.

What’s the ROI on These Types of Programs?

In its research study, “Does Incentive Travel Improve Productivity?” the IRF found that Incentive travel is a sales promotion tool that works well in raising sales productivity. In the case of the company that was studied, productivity increased by an average of 18 percent.

In the study "Measuring the ROI of Sales Incentive Programs," the sample ROI (return on investment) of a dealer sales program using post-hoc data as the control group was 112 percent.

The success of these programs naturally depends on how well the program is designed and executed. The study "Assessing the Impact of Sales Incentive Programs" found that if the organization had not factored in changes that needed to occur in upstream and downstream processes, the Incentive Travel Program would have yielded a -92 percent ROI. However, when these changes were considered and implemented, the program realized an actual ROI of 84 percent.

What Are the Current Trends?

The primary trends in Incentive Travel Programs (and the corresponding number of planners currently using these options) are these areas:

  1. Social Media promotion (40%)
  2. Virtual (33%)
  3. Corporate social responsibility (33%)
  4. Wellness (33%)
  5. Game mechanics or gamification (12%)