UNIT 2 INCENTIVE TRAVEL

Structure
2.0 Objectives
2.1 Introduction
2.2 The Concept
2.3 Growth in the Incentive Travel Sector
2.4 Motivational Houses
2.5 Types of Incentive Organisations
2.6 Motivation
2.7 Client’s Profile
2.8 Selling Incentive Travel
2.9 Incentive Travel Winner Form
2.10 Let Us Sum Up
2.11 Clues to Answers

2.0 OBJECTIVES
After going through this Unit you will be able to know the:
• meaning of incentive travel,
• reasons that can motivate incentive travel, and
• role of motivational houses.

2.1 INTRODUCTION
Incentive travel, very broadly defined, is the lure of a travel trip to motivate employees at work.
Incentive travel has become increasingly popular with a lot of corporations in the last few years. So
much so that it has become a huge market for the industry. In this Unit, we are going to discuss the
evolution of Incentive travel and its various phases. The role of professional motivational houses in
this regard has also been discussed. The Unit also takes into account the future of incentive travel and
the form it might take after a few years.

2.2 THE CONCEPT

Incentive Magazine (October 1996) defined incentive travel as a global management tool that uses
an exceptional travel experience to motivate and/or recognize participants for increased levels of
performance in support of organizational goals. Society for Incentive Travel Executives (SITE)
defines incentive travel as a modern management tool used to achieve extraordinary goals by
participants or a travel prize upon attainment of their share of the uncommon goal. Meaning
whereby that incentive travel is a reward programme which employees get after attaining certain
targets.
The corporations of North America started the phenomenon of incentive travel some years back. Trips
to popular destinations such as Bermuda, the Caribbean, Mexico and even Europe were showcased for
the employees as incentives for giving extra ordinary performance. Destinations within the United
States such as Las Vegas and Hawaii were also utilised as attractions for incentive travel.
Companies that offer their employees the possibility of an incentive trip are generally motivated by
one or more of the following direct reasons:
• Increasing sales volumes and/or employee productivity,
• Selling new accounts and/or slow moving items,

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• Introducing new products,
• Pushing low season sales,
• Overtaking competition, and
• Generally doing something profitable for the company.
In addition there may be indirect benefits to the firms using the concept of Incentive travel in such
areas as
• Improving employee morale and goodwill,
• Improving attendance, and
• Getting demotivated employees to perform better.
The concept of incentive travel is that it should be self-liquidating to the company. In other words, the
incentive programme should pay for itself through increased sales or reduced company costs. Infact,
incentive travel is the carrot in front of the employees who would then work harder and smarter to
avail it. For example a medical firm in USA used the extraordinary excitement surrounding the 2000
Olympics in Sydney, Australia to increase levels of performance in the new millennium. It presented
new opportunities and challenges for talented sales staff to move to the next level of selling. Sales
representatives and leaders, who were measured on whether they could meet their goals, sought to
accumulate enough points by selling the targeted products to earn travel rewards. Multi-destinations
were offered, including travel to Costa Rica or the grand prize of a trip for two to the Olympics in
Sydney, Australia.
Incentive travel is found especially effective for increasing the morale and goodwill of employees.
This is because it is one of the most obvious forms of recognition – the basic element in any incentive
programme. It also offers a unique chance for the management to communicate with its employees.
Incentive programmes also serve some educational purpose in the vast majority of instances where
business meetings, introduction of new products, seminars and training programmes for sales people,
etc. are also incorporated in the travel programme. In fact, incentive travel is widely recommended by
HRD experts not only as a motivational tool but also as a salary perk for attracting talent to the
organisation.

2.3 GROWTH IN THE INCENTIVE TRAVEL SECTOR

According to ‘A Study of the Incentive Merchandise and Travel Marketplace’, conducted with 8000
sales, marketing and human resource executives from a cross section of American businesses by the
Incentive Federation at the end of year 2000, there is a steady growth in the incentive industry. But
there is plenty of room for further growth, the study shows. Statistics on incentive travel are few and
far for most of the countries. The only country that has tabulated the incentive travel industry is the
USA. According to Convention Liaison Council, USA, 1995, the total dollar volume for US
Incentive Travel industry is $3.41 billion with top destinations being Florida, California, Hawaii,
Nevada, Arizona, Caribbean, Mexico, Bahamas, France and Italy. Another organization in USA
called the Incentive Federation, conducted a study including focus groups and written responses
from 6500 sales, human resource and marketing executives in a cross section of American businesses.
The study revealed that 38% of firms used individual travel and 29% used group travel as major
incentives for motivation. Today, corporate houses all over the world have started adopting incentive
travel as a motivational tool for their employees. This concept is no more confined to multi-national
corporations but even small businesses are using it.

Check Your Progress – 1

1) What is the motivation that needs to be tapped to foster incentive travel?

……………………………………………………………………………………………………….
……………………………………………………………………………………………………….
……………………………………………………………………………………………………….

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2) How is the incentive travel sector growing?
……………………………………………………………………………………………………….
……………………………………………………………………………………………………….
……………………………………………………………………………………………………….

2.4 MOTIVATIONAL HOUSES

The fast growth of incentive travel led to the creation of several organizations (sometimes referred to
as motivational houses) that specialize in arranging incentive travel and trips for the companies
involved. We have already talked about some of these organizations. Let us now see what these firms
engage in. Incentive travel-organizing firms negotiate with suppliers such as airlines, cruise
companies, hotels and car rentals to establish total travel costs per trip to which they add a mark up
usually 15 to 20 percent that they charge to the company. This mark up covers the organizations costs
and provides them with a profit. The organization thus acts as a tour wholesaler that acts on behalf of
the company so that it does not have to be involved in all the details of arranging the incentive travel
trips for its employees. In this way the company is relieved of its burden of going into petty details
about the trip and the incentive travel-organizing firm gets a neat profit. In many cases the incentive
travel-organizing firms also assist in promoting incentive programmes to motivate the companies
employees and chalking out customized or tailor made trips for various organizations. Many travel
agencies and tour operators have started establishing business links with various organisations for this
purpose.

2.5 TYPES OF INCENTIVE ORGANISATIONS

There are several different types of incentive organization. Gee, Chuck Y., Dexter J. L. Choy, and
James C Maken (The Travel Industry. Westport, Connecticut, 1984, p 153) identify the following
three types:
1. A full service organization that specializes in incentive travel and is able to offer client assistance
in developing and managing the incentive programme within the clients company, and in
planning, organizing, and directing travel.
2. A fulfilment type of organization that is usually a smaller company that may have been started by
a former executive of a full service firm. A fulfilment company tends to specialize in the sale of
the travel portion of the package and does not offer fee-paid professional assistance in planning
the incentive programme. Compensation comes from normal travel commissions. Compensation
for the work of a full service company is usually received on the basis of professional fees,
expenses, and normal commissions on the sale of such travel services as transportation and hotel.
3. Travel agencies that have established special incentive travel departments. These firms may or
may not be able to offer a client professional assistance in the incentive planning portion. If they
do, they will often charge on the same basis as a full service firm.
However, these kinds of incentive organisations do not exist in India. There are many reasons for it:
i) incentive travel is still not rampant in the smaller corporations where cash rewards are still
considered the best.
ii) Secondly the concept of rewarding employees is still in its infancy. Medium sized firms India do
not believe in motivating employees through such means, so incentive travel is yet to pick up.

2.6 MOTIVATION
A little understanding of the human psychology will give you an insight into the reasons why
incentive programmes can be successful. A prominent psychologist A. Maslow suggested that there
are different levels of human needs and wants. He presented these in the form of a need hierarchy or a
pyramid which is as follows:

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Level 5: need for self-actualisation and self-fulfilment
Level 4: “ego” need (self confidence, self esteem, and other psychological needs)
Level 3: Social needs (friends, community acceptance, and status)
Level 2: need for security and protection
Level 1: Physiological needs (food, sleep and /or shelter)

He further theorized that as each level is satisfied, the needs of the next higher level become more
prominent.
Let us now apply this to a business situation.
We can say with fair degree of certainty that the primary reason for a person to earn or get a job is to
make money in order to survive e.g. to satisfy the physiological needs of hers or his –the need for
security and/or protection (level 1 and 2).
Now let us assume that the person has been able to earn a lot of money and does not have to worry
about the basic everyday needs and about survival. Maslow then explains that his appetite for social
recognition and acceptance (level 3 and level 4) will become more dominant. This explains as to why
many rewards, other than money, are found in the business world, e.g. prestigiously located office,
official car, membership in clubs and incentive travel etc.
Imagine that you are a travel salesperson and are already enjoying the monetary rewards for the work
done, but now, in addition you are given a travel package with your family – infact the one that you
had been selling to others. This is a great motivation for almost everyone in the circle of business for
providing better results in relation to the tasks assigned by the organisation.

2.7 CLIENT’S PROFILE

Any business that manufactures or sells anything can be a prospective client for the incentive
programmes.
The manufacturer sells his or her products through the sales force to distributors; the distributor ‘s
salespersons re-sell the product to the retailers or dealers who finally sell them to the consumer. Thus,
to increase sales and production the manufacturer has many opportunities to motivate. The
manufacturer has his or her own personnel, salespersons, distribution staff, distributor’s salespersons
and finally the retailers. All these people can be a target of the incentive travel schemes.
The distributor generally handles several lines of products and buys from different manufacturers. He
or she will, therefore, need specific motivation programmes to promote his or her own line of
salespersons and dealers. Distributors are numerous and can be found in almost every major town.
Department stores and service companies such as banks, brokers and insurance companies can also be
good markets for incentive travel schemes. Incentive programmes may also be used by retailers as
low cost advertising, e.g., for a special event or the opening of a new store.
Incentive travel is not a buy-able commodity like an inclusive tour or a ticket. Which means that
clients will not walk into an agency to buy a programme. Infact, it is the work of the travel agent to
prospect clients and direct their energies towards companies that are interested in launching such
motivation programmes.

As referred earlier, business houses are primary targets for incentive travel schemes. Many companies
already have personnel or customer motivation programmes of some kind and they are usually
interest ed in launching new kind of a motivational programmes. Apart from them, local chambers of
commerce can also give a lot of information on the groups interested in having such programmes in
their personnel department.

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2.8 SELLING INCENTIVE TRAVEL
Before selling incentive travel one must understand the size of the company and whether it is really
interested in launching such a programme. In this respect information about the business size,
organization, lines of product, methods of distribution, sales force etc. have all got to be analysed.
The next and the most important step is to determine the budget i.e. what funds are available and how
these can be allocated. Given below is a sample of the budget plan that can be used by you to
determine the approximate cost of the trip and whether it can be viable or not.

1. What increase in actual sales is the programme expected to produce?

……….% = Rs………………………………………………………..……………………………

2. What will be the company’s profit on this increase?

……….% = Rs………………………………………………………. .……………………………

3. How much of this profit can be budgeted to provide incentive trips?

Rs…………………………………………………………………………………………………….

4. How many salespersons are expected to qualify for the trip?

……………………………………………………………………………………………………….

5. Dividing 3 (i.e., expected funds for incentive trips) by 4 (expected number of winners) will
provide the incentive trip budget per individual including promotion costs.
Funds for the incentive programme may also be obtained from other sources such as the company’s
regular and special promotional budget.

Source: IATA

2.9 INCENTIVE TRAVEL WINNER FORM

Here we provide you with a sample of the Incentive Travel Winner form.

• Name of Client : ……………………………………………………………………………………

• Number of Participants : Adults ……………………… Children ……………………………
• Dates : Departure ……………………………………… Arrival …………………………….
• Point of Departure/Arrival : …………………………………………………………………………
• Itinerary (Special Points Of Interest and Sightseeing)
……………………………………………………………………………………………………….
……………………………………………………………………………………………………….
……………………………………………………………………………………………………….
• Type Of Tour : Independent ………………………… Escorted …………………………………..
• Type Of Transportation : ………………………… Class of Service …………………………….
Air ……………………………………… Rail …………………………………….……
Road ……………………………………… Cruise …………………………………………...
• Transfers : Included ………………………. Not included …………………………………….

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• Hotel : Type, Situation : …………………………………………………………………………….
Class: Luxury: ….………….. First: ………………….. Standard: …………………..
Accommodation: Single: ………………………… Double: …………………………….
Twin: ………………………….. Triple: ……………………………...
• Sightseeing: Car: ………………………… Motor Coach: …………………………….……...
• Budget: ……………………………...……………………………...…………………………….…

• Visa: ……………………………...……………………………...……………………………...…..
• Remarks : ……………………………...……………………………...……………………………..
• Address and Telephone : ……………………………...……………………………...……………..

Source: IATA

Check your Progress – 2

1) What is the motivation behind incentive travel offering?

……………………………………………………………………………………………………….
……………………………………………………………………………………………………….

2) How will you select clients for incentive programmes?

……………………………………………………………………………………………………….
……………………………………………………………………………………………………….

2.10 LET US SUM UP

Incentive travel is a marketing tool. It is a prize offered to industrial workers, salespersons, retailers
etc. to obtain certain results in relation to their work targets. Incentive travel programmes may be
applied to solve many problems, productivity can be increased, lines of distribution extended,
absenteeism reduced and public image enhanced. Whatever the company objectives, incentive travel
can help to reach them. Incentive travel programmes be proved to be the most successful form of
motivation. People need excitement to be motivated and the prospect of a trip with all expenses paid
can be a great stimulant. Incentive travel programme also represent an additional source of revenue
for the travel agents for they can offer professional assistance to potential clients in the planning,
promotion and implementation of the programme.

2.11 CLUES TO ANSWERS

Check your Progress – 1

1) Motivation in all respects. Refer Secs. 2.5 and 2.6.

2) See Sec 2.3.

Check your Progress – 2

1) Refer Sec 2.6.

2) Refer Sec 2.7.

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