Hotels Respond to Surge in Incentive Travel – CoStar
Hotel operators have had to reinvent rewards-based stays in response to changing preferences of trip winners.
A piece of the corporate travel segment incentivizes employees to perform their best and incentivizes hotel companies to deliver on the rewards.
Incentive travel, which companies use to reward employees for achieving sales milestones or other goals, is on the rise. As more meetings and sales calls are held via videoconferencing and the number of business trips declines, an incentive trip begins to look more appealing than a cash bonus to some employees.
“You can throw bonuses at employees and all kinds of extras, but travel is the most powerful motivator,” said Janel Carnero, a luxury travel adviser with the Embark Collective.
Previously, Carnero was a regional manager for a hotel management company operating several brands and also worked as an executive with a shipping company where she always used incentive travel for her employees.
Pamela Ezeta, global group sales for the East Coast and North America at The Leading Hotels of the World, said 2023 was “a phenomenal year for incentive travel.” She added her company generates a lot of business in the incentive travel market.
With a greater number of workers in remote positions, there’s a need for deeper connection through travel, Ezeta said. Employees see incentive trips not just as an opportunity to be rewarded, but “an opportunity to connect at a human level with their fellow incentive trip winners and leadership.”
Incentive travel is “an awarded luxury” to a company’s top performers, said Catherine Demont, events director at The Londoner in London, a member of Preferred Hotels & Resorts. It is particularly popular with large U.S.-based corporations. The key factor with these travel programs is “demonstrating truly memorable, money-can’t-buy experiences to the lucky winners.”
According to a report published last year by Allied Market Research, the global incentive travel market garnered $42 billion in 2021 and is estimated to generate $216.8 billion by 2031 with a compound annual growth rate of 12.1% from 2022 to 2031. The 2023 Incentive Travel Index from the Incentive Research Foundation reported that 53% of senior leaders consider incentive travel a “need to have,” 48% call it an “essential strategic differentiator,” and only 13% see it an area to trim or cut. The largest expense expected in 2024 for incentive travel programs is for hotels, according to IRF, which should represent 25% of total budget allocation. Airfare will comprise 22%, followed by food and beverage spending at 18% and activities at 13%.
The IRF research showed that incentives are a strong differentiator in recruiting and retaining employees. Retaining talented employees was a primary reason behind incentive travel’s strategic importance, according to 90% of respondents in the 2023 Incentive Travel Index.
Throughout the hotel industry, there’s plenty of demand for incentive travel, said Kristen Lindgren, vice president of sales and marketing operations at Sage Hospitality Group, a management company specializing in lifestyle hotels. Most of Sage’s incentive business books through consortia and wholesale partners, she said, and those segments were up 12% year over year in March, and up 21% year over year in February. Companies that may have scaled back or even eliminated incentive trips are bringing them back and those employees are geared up to travel.
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Categories: Trends