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Travel still great incentive: Shorter trips help firms save
by Angela Bianchi, Globe and Mail - September 14, 1993

Many businesses are still finding that the best way to stimulate sales is to reward top-producing staff with free travel to exotic locales.

But tight budgets and stricter tax enforcement by Revenue Canada have prompted many companies to revamp their incentive programs.

How do you cut costs and still motivate seasoned employees who have seen and done it all?

One option is to reduce a trip's duration, but continue to offer quality, says Tommi Lloyd, president of the Society of Incentive Travel Executives' Canadian chapter. Another is to offer a combination business-pleasure trip.

Very few incentive programs are strictly pleasure these days, Ms.Lloyd says. "People see these combined packages as an opportunity to learn on vacation."

Duff Shaw, president of Incentives International Inc. of Toronto, agrees that pure incentives are no longer affordable for employers or the employees. "Winners of incentive programs want more than the trip. They want to learn something," Mr. Shaw says.

"There's a cost element involved. By being away, they're not earning, so at least make it worth their time by showing them how to increase their income. You can show them the Matterhorn later."

Incentive-bonus winners are able to include a good portion of business-pleasure trips as tax deductions, whereas pleasure-only trips are considered taxable benefits.

"If you file a reasonable amount of taxable benefit from your trip, you won't be questioned by Revenue Canada," Mr. Shaw says. "So even if you have to pay taxes on one day of a five-day trip to London, that's not a bad deal."

Ms. Lloyd says some companies end up paying the tax for their incentive winner.

In Canada, entertainment and travel expenses are 80 per cent deductible, but there is a fear in the incentive industry that if the U.S. government lowers its rate to 50 per cent, Canada will follow suit, Ms Lloyd says.

A recent survey conducted by Meetings and Incentives Travel Magazine (MIT) and the Society of Incentive Travel Executives shows travel is still a great motivational tool, and travel within Canada has become an increasingly attractive prize.

Of 453 companies that offer incentive travel programs, 22.8 per cent chose the U.S. sunbelt for their last incentive destination; 20.4 per cent chose the Caribbean; 12 per cent Europe/Mexico; 8.4 per cent cruising and 13.2 per cent preferred Canada. Only 12.5 per cent of the respondents had considered Canada as an incentive destination previously.

Although the numbers reflect increased interest in Canada, Mike Barber, president of Chateau Travel, a division of Carlson-Marketing Group in Montreal, says there are few spots in Canada that will incite a customer. He considers cruising a top draw, as well as upscale European travel.

"I know the trend has been to scale down incentives, but my clients are spending more, paying big bucks to pull in more business, Mr. Barber says.

"I have a client in the home renovations business that's willing to pay $4,000 per person to take 80 of his best dealers on a Norwegian cruise. He's buying their business, so they'll push his product instead of the competition's."

According to MIT editor Lori Bak, Arizona and Texas will be major incentive hot-spots next year. "The big country-and-western influence has hit us," she says.

One example of what's available is the Wagons Ho program offered by Destinations West in Scottsdale, Ariz. You get to relive the Old West, complete with cowboys and Indians, for about $400 a day a person. You eat in the desert, sleep in covered wagons and ride on horses. No cell phones or cars. To qualify for the "meeting" exemption, you hold several informal sessions in a barn.

For more conservative tastes, Mr. Shaw says, Hong Kong and Singapore are still very attractive just because they know how to market themselves, and Portugal, because it's inexpensive. Africa is less popular because of political instability in places. And few people are going to Brazil, Mr. Shaw says, because it's perceived as being dangerous. And that's not really the case.

"The whole idea behind an incentive trip is to get people to work harder, and maybe a trip to Halifax will do it," Ms Bak says, "but not for the person who's seen it all. They key is still to keep it affordable but creative."