Money is good, but travel is better when it comes to motivating employees to peak performance.

When the U.S. economy faltered last fall from the one-two punch of the subprime mortgage meltdown and high-stakes investment practices on Wall Street, the meetings, events, and incentive travel industry braced for a rough road ahead.

Meeting planners had faced lean economic times before—and endured. But no one could have foreseen that a series of unfortunate remarks would lump group business travel in with high-living hedge fund managers and bailed-out corporate fat cats, thus creating the chilling “AIG effect.”

After all, group business travel is more than simply the lifeblood that drives corporate sales, motivation, and recruitment. It’s also one of America’s trustiest ongoing stimulus packages.

Meetings, events, and incentive trips account for 15 percent of all domestic travel, according to the U.S. Travel Association (USTA). They generate a million jobs, $27 billion in wages, and $16 billion in tax revenue at the federal, state, and local levels. The Incentive Research Foundation estimates that incentive trips alone generate about $13 billion a year, and motivational meetings and special events generate about $64 billion a year.

Group business travel is more than simply the lifeblood that drives corporate sales, motivation, and recruitment. It’s also one of America’s trustiest ongoing stimulus packages.

The recent devastation to the industry began in fall 2008 when the remarks of several politicians echoed the populist outcry over perceived abuses by bailout recipients, especially that of American International Group (AIG) holding a luxury retreat for top sales producers shortly after receiving an $85 billion bailout. Almost overnight, hundreds of companies canceled corporate meetings, events, incentive travel, and executive retreats, lest they be viewed as greedy spendthrifts. Las Vegas alone mlost 30,000 corporate hotel reservations in one month, about a thousand reservations a day.

Chris Gaia, vice president of marketing for Maritz Travel Company, which specializes in incentive travel, responded quickly with a fiery white paper that underscored the enormous economic and business value of meeting and incentive travel. “What spun out of that original conversation about executive compensation and perks was that all meetings are bad,” he says. “We saw a lot of running for cover. There was a decline in programs in general, but incentive programs really
took a hit.”

Several newspapers, including USA Today, ran stories about how scheduled incentive trips were being canceled or converted to cash and other lower-profile rewards in order to avoid problems with public perception.

In March 2009, the USTA launched its Meetings Mean Business initiative to push back against the media’s demonization of meetings and incentives. The USTA effort, along with a March 2009 meeting between President Obama and industry leaders, resulted in a presidential statement of support that helped stem the tide of cancellations.

After seven months of cancellations and diminished new bookings, Gaia says, Maritz finally began to see near-normal proposal activity in May.

The Business Case for Travel
The case for incentive travel has been well documented. A 1995 study by the Society of Incentive & Travel Executives Foundation found that incentive travel programs increased work performance by an average 22 percent. A 2005 Incentive Federation Survey of Motivation & Incentive Applications showed that four out of five respondents believed travel and merchandise awards had a greater impact on performance than cash.

Scott Jeffrey, an assistant professor of management sciences at the University of Waterloo, estimates it would take three times more cash to produce the same business benefit as travel and merchandise.

Maritz’s internal study on the effectiveness of incentive travel lends further support. The company’s ongoing survey asks participants to agree or disagree with the statement: “The opportunity to earn an incentive program encouraged me to increase my efforts.” Through April 2009, agreement totaled 9.1 on a 10-point scale.

“Incentive travel is not a frill,” says Sheila Backman, professor of travel and tourism at Clemson University, “it’s a method of doing business.” Mere cash bonuses or free lunches do not contribute to the kind of coworker cohesiveness and communication that turn ordinary companies into extraordinary companies. Travel incentives do.

“When coworkers travel together, they become friends,” Backman says. “It’s more than just a trip to Puerto Rico or Costa Rica. People traveling together build alliances, so a trip means more to them. It has a longer lasting impact.”

She says that any perceived similarity between lifestyles of the rich and famous and travel for meetings, events, and incentives rose from America’s need for scapegoats to blame for a financial collapse it didn’t understand.

Gaia says that companies that cave in to public misperceptions risk more than political tongue-lashings. They endanger the very real bottom-line benefits of their programs. “Top performers work hard not only for the reward,” he says, “but for the recognition.” If they don’t get what they want, the cost to business can be enormous. “The top performers can always get another job,” he says.

Backman agrees. “It’s human nature. People will do what they’re rewarded for. This is no time to eliminate the carrots.”

Why Travel Works
It says a lot about modern times that increasing numbers of employees want to take their children on travel incentive trips. Maritz’s research reveals that, in the past three years alone, there has been a 40 percent increase in children included in its travel programs.

“Employees get turned on by the notion that they can create a family memory from their business,” Gaia says. “Long hours and hard work come out of heart attachments, not head attachments.”
From the employers’ standpoint, incentive travel allows them to tap into the emotional bond between parent and child.

“On these trips,” Gaia says, “children make friends with coworkers’ children. When they
get home they start texting each other and making plans for the following year. Think about that pressure on the parent! How do you explain to an eight-year-old that you’re not going to make the numbers?”

For all its power, a $100 bill cannot conjure the sights, sounds, smells, and impressions of an exotic locale.

But even without pressure from one’s progeny as a primary motivator, what makes travel so compelling?

Travel psychologist Michael Brein has made answering that question his life’s work.
“When you think about a vacation or trip, it’s larger than life,” he says. “And because it’s larger than life, it has a value that is larger than life.”

Brein cites several factors that make travel uniquely motivating, including:

• Travel boosts self-esteem. Travel allows employees to step outside of their day-to-day lives and into a more adventurous version of themselves. “You become your own superhero in a way,” Brein says. “The person you see yourself as when you travel is not the mundane person in the workaday world.” As the U.S. Marines ad says, we want to “be all that we can be.” Travel, with its heightened sense of awareness, allows us a glimpse into our own potential.
  
  
• Travel satisfies the innate thirst for experience and knowledge. After our lower-order needs are met for food, water, shelter, and so forth, we crave new experiences and knowledge. Travel is the best means to satisfy the inborn curiosity about what’s “on the other side of the hill.” For all its power, a $100 bill cannot conjure the sights, sounds, smells, and impressions of an exotic locale.

“When you travel, you get a chance to try on a new persona that is more like the way you would like to see yourself,” Brein says.

That effect is multiplied when traveling in groups, as in incentive trips. “If everyone in a group is having a larger-than-life experience, it feeds on itself,” he says. “The overall impact will be greater than the sum of its parts. This can’t help but facilitate good working relationships back in the office.” So why do even the best-paid executives respond to incentive travel as a motivator? “Maybe you could easily afford to pay for it yourself, but it means more to win it,” Brein says. “And the harder you work for a reward, the more it takes on a kind of fantasy importance of its own and increases the value to you.”

Show & Tell
We know incentive travel is essential to business. It enables companies to recruit, retain, and reward employees. We even know why its value can’t be measured purely in monetary terms.
But we also know this inconvenient truth: CEOs still fear that the AIG effect is out there, ready to slap the junket label on legitimate meetings, events, and incentives.

What’s the solution? Gaia says the answer can be summed up in one word: transparency. “We have been concerned for three or four years that companies were not paying enough attention to demonstrating the value of these programs,” he says. “Now the environment has changed. Today you have to be able to justify expenditures, both internally and to people like shareholders—or even Congress.”

Gaia hopes the ultimate AIG effect will be to prompt companies to add additional levels of research, metric gathering, and reporting to meetings and incentive programs. He says more facts, transparency, and communication will mitigate any risk to reputation by clearly demonstrating return on objective and return on investment.

“If you really want to use that money more wisely,” Gaia adds, “spend time integrating the views of the people you’re trying to motivate into your decision process.” You want the incentives to line up perfectly with what the employees value most and will work hard to achieve.

Do they want five nights at a four-star kid-friendly hotel in Florida? Or four nights at a five-star adults-only South Pacific resort? Knowing exactly what will motivate peak performance, what speaks to the heart attachments, will lead to the richest return on investment—and a clear case for upholding travel incentive programs.