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Fulfillment Problems Are Plaguing the Incentive Market

A new report by the Incentive Research Foundation shows that hotels, DMCs, CVBs, and other suppliers are hard-pressed to handle all the incentive-travel programs that companies are looking to host.

The current state of incentive-travel program fulfillment is neatly summed up in the opening paragraph of the Incentive Research Foundation’s latest report, titled Incentive Expectations and Reality in the Hospitality Industry:

Companies are getting back to incentive travel as travel restrictions and bans ease, resulting in extraordinary demand on a set of suppliers still largely in recovery mode. While many event owners and planners are ready to get back to business as usual, hoteliers, destination management companies, and tourism boards face very real ongoing challenges. The resulting gap between event-stakeholder expectations and the reality of what providers can deliver is significant.

Backing up this assessment are research results gathered several weeks ago from more than 700 respondents on both the planner and supplier segments of the business, 90 percent of whom are in North America.

On the buyer side, planners are bullish: 37 percent have an incentive-travel budget that’s between 10 percent and 49 percent higher than their 2021 budget, while another 22 percent report an increase in their incentive-travel budget of 50 percent or more versus 2021. However, when considering potential destinations for a program, 93 percent of planners are highly concerned with staffing and service levels; 76 percent are highly concerned with food-and-beverage outlet availability and hours, and 72 percent are highly concerned with the cleanliness of properties.

On the supplier side, only 49 percent of responding hotels say they have returned to the staffing numbers they had before the pandemic. Meanwhile, 29 percent of convention and visitor bureaus are staffed at pre-pandemic levels, with another 43 percent saying they will likely be fully staffed within the next six months. And among destination management companies, the news is worst of all: Just 26 percent are staffed at pre-pandemic levels, while 12 percent don’t expect to return to pre-pandemic staffing levels in the foreseeable future.

Both the CVB and DMC staffing levels in warm-weather destinations are important to incentive planners, as 70 percent of planners will be using such destinations for upcoming programs.

Further, “every supplier group reported struggling with hiring and retaining staff and managing cost increases due to inflation, which creates a gap in expectations and ability to deliver” incentive clients’ desired levels of service.

One example: only 50 percent of hotels say they respond to program RFPs within 48 hours, while another 34 percent respond within 96 hours. And DMCs are slower: Just 16 percent are responding to RFPs within 48 hours, while another 31 percent do so within 96 hours. Forty-two percent take as much as two weeks.

Lastly, one responding incentive planner expressed this bottom-line sentiment: “We can’t lower the bar but increase our costs, especially if we are selecting a luxury hotel. The Covid, supply-chain, or staffing-shortage excuses are not something we want to hear if we are paying the same cost or higher as we did before Covid."

The full IRF report can be found here.

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