Fewer activities, shorter programmes, and lower agency fees are some of the knock-on effects of ongoing budget constraints on incentive travel. A recent webinar hosted by the Incentive Research Foundation (IRF) explored how incentive professionals are delivering exceptional programmes despite financial limitations, with airfares and hotels consuming most of the budget. An IRF survey found that airfares make up 21% of incentive budgets, with hotels and food & drink accounting for 27% and 18%, respectively.
Chris Johnson, Director of Global Travel at Land O'Lakes, explained that while legacy incentive programme budgets are mostly flat and not keeping pace with inflation, new programmes have more flexible budgets. To cut costs, destinations and timing are being adjusted. Johnson noted that luxury, all-inclusive properties are proving beneficial as they help control food and beverage spend.
He also pointed out that costs in areas like AV and technology are being trimmed. For example, stage builds, which once lasted five days, are now being limited to just two days to save money.
Richelle Suver, Chief Revenue Officer at One10, a company managing incentives and rewards, mentioned that budgets are tightening in the tech sector due to tougher macroeconomic conditions, whereas industries like automotive and luxury are still showing strong incentive budgets. She also noted that clients often underestimate airfare costs, making it difficult to manage expectations when planning travel.
"Airfares are beyond our control," said Suver. "If a client has a cap per person, it's challenging, especially if we're not far enough in advance or if the winners are spread out."
Johnson suggested building an 'escalator' for airfare budgets over time, particularly for long-term programmes, and recommended an air contingency fund to manage unexpected price increases.
Adding more free time to incentive programmes is an obvious cost-saving measure. Johnson also suggested planners could get creative by offering low-cost activities or privatising spaces like pools for networking.
"It's important not to lose the special nature of the incentive," Suver added. "People love the freedom to choose, but make it unique, brand-worthy, and Instagrammable."