Incentive travel, a vital strategy in the corporate sector, has evolved from rewarding employees with luxury travel for achieving business objectives to providing transformative experiences, which foster deeper connections and purpose.
The earliest examples of incentive travel date back to the 1920s, with the mass production of cars and appliances. Companies like Coca-Cola and General Electric required effective sales strategies. They set territories and quotas for sales teams, using bonuses for motivation and competition. By the 1940s, organisations had started to use incentives strategically for specific sales goals. In the 1950s, changing tax laws prompted the introduction of non-monetary 'work perk' incentives such as luxury vacations and company cars.
Over time, as companies have adopted incentive and gift programmes, the benefits have quite literally paid off. Organisations have reported improved employee performance, increased company loyalty, reduced staff turnover, and more substantial work relationships among colleagues.
In addition to the single organisational value that incentives provide, they have also helped event planners in destination management companies. Research funded by the Incentive Research Foundation (IRF) found that earners of the incentive travel programme may seem like the only winners when, in fact, they are not alone. 'The sponsoring company, the destination, and all the suppliers are winners, too. Incentive travel makes people feel good, and it stimulates the economy in the process. Everyone benefits from incentive programmes. When incentive travel programmes are planned, measured, and executed with the integrity of the company and industry in mind, there are great benefits both tangible (increase in profits) and intangible (positive organisational culture).'
However, until recently, incentive travel was primarily a tool for sales motivation, often associated with hitting specific sales targets. Companies would reward top-performing sales personnel with trips, which were typically straightforward, such as a holiday to a popular destination, and were used as a powerful motivator for sales teams.
Today, the landscape looks notably different. The latest trends report from IRF illustrates a shift towards more meaningful, culturally immersive, and environmentally conscious travel experiences. Incentive travel has transformed to encompass not only the recognition of achievements but also active engagement with local cultures, a commitment to minimizing environmental impact, and a positive contribution to host communities, all within a secure framework.
This change in incentive travel is part of a wider transformation in employee motivation and engagement strategies, bringing new complexities for event managers.
In the digital era, the ease of finding vendor information online enables companies to interact directly with suppliers, such as hotels and event facilities, having accessed prices and options independently. This transparency puts additional pressure on event managers to facilitate unique and memorable experiences while offering cost-effective proposals, balancing creativity with practicality in an increasingly competitive market.
Event managers face several challenges in this evolving landscape. The growing preference for environmentally friendly options brings higher costs, posing financial demands. Crafting authentic cultural experiences requires a deep understanding of local customs to avoid reputational damage. In a post-pandemic world, stringent health and safety standards have become imperative, adding to operational expenses.
Economic instabilities complicate budgeting efforts. Simultaneously, keeping up with the rapid pace of technological evolution demands substantial investment.
Another pressing concern revolves around the vulnerability of Destination Management Companies' intellectual property. Clients sometimes solicit proposals from DMCs, only to replicate the ideas and pricing structures and seek out cheaper alternatives elsewhere. This practice places DMCs in the unenviable position of seeing their creative resources and intellectual property essentially pilfered by clients. In some instances, clients leverage DMCs to obtain quotes and concepts, only to present these identical plans to competitors, aiming for a more budget-friendly offer. Alternatively, clients bypass DMCs entirely and engage directly with suppliers, circumventing the DMC's role in the process.
Furthermore, the labor-intensive task of crafting proposals represents a substantial yet often uncompensated effort on the part of DMCs. This process entails meticulous service outlines, creative ideation, product availability assessments, transportation logistics, and price structuring, all with no assurance that the client will ultimately choose the DMC. Constructing these proposals demands an investment of considerable time, energy, research, and creative finesse, a level of commitment that automated solutions like chatbots cannot replicate. The ongoing debate centers on whether to directly charge clients for proposal creation or incorporate these costs into the overall pricing structure, making it a contentious issue within the industry.
To address these challenges, event managers are turning to a suite of innovative strategies. Leveraging event management solutions like Meetingbox streamlines the planning process, stimulates communication, and supports effective budget management. Partnering with local vendors and venues committed to eco-friendly practices helps optimise costs and ensures authentic experiences. Flexibility in planning is crucial to adapt to changing circumstances, such as fluctuating participant numbers or imposed travel restrictions.
Utilizing local expertise enhances the authenticity of cultural experiences and endorses respect for local traditions. Diversifying revenue streams through virtual event components, merchandise, or exclusive experiences adds value for participants. Adhering to the latest health and safety protocols is essential for maintaining compliance and building trust. Utilizing data analytics provides insight into participant preferences and market trends, empowering informed decision-making. Building a robust network within the industry leads to collaborations, shared best practices, and cost savings contributing to improved service quality and profitability.
Another potential solution could be transitioning into consultants who offer valuable insights, expertise, and guidance throughout the event planning process. Charge clients for services like proposal creation, site inspections, and consultancy, highlighting the depth of knowledge and experience they bring to the table. Position yourself as strategic partner who can help clients navigate the complexities of event planning and destination management.
To wrap it up, the most suitable pricing model for Destination Management Companies could encompass:
• Hourly or daily consulting rates for providing expert advice and guidance.
• Flat fees for proposal creation, site inspections, and other value-added services.
• Percentage-based fees tied to the total event budget for comprehensive event planning and management.