by Pádraic Gilligan, Managing Partner, SoolNua
SITE Index 2017
I had the distinct pleasure of co-presenting the results of the SITE Index this year at IMEX America with Rhea Stagner, President of the SITE Foundation and DVP Sourcing & Supplier Relations at Maritz. It was particularly pleasing because the capacity audience got very involved in the session posing 28 questions and voting in 5 polls, courtesy of audience engagement platform Sli.do. It was also gratifying because Rhea seamlessly, spontaneously and authoritatively responded to almost all the questions and, serendipitously, I was able to cobble together a plausible answer to a few questions myself when she needed to take a breath. So we had a happy and well informed audience!
Devil in the detail
This is the third year of the SITE Index and, despite the VUCA (Volatile, Uncertain, Complex, Ambiguous) world in which we live, incentive travel is in a good place with budgets stable or increasing and a rather dramatic increase in median programme spend (up a staggering $1000 year on year). But, as the lawyers always tell us, “the devil is in the detail” and when you drill down below the celestial blue surface of the data, sure enough there’s a smoldering inferno there, just waiting to ignite.
Well, not really. That’s just me getting transported away by the opportunity for a clever metaphor! Truth is, there isn’t anything dramatic about the results from this year’s SITE Index other than the conundrum of conflicting outcomes: the SITE Index reports a dramatic increase in median spend per qualifier ($5,000 amongst the corporate cohort up from $3,100 in 2016) but also reports greater efforts than ever amongst buyers to contain the cost of incentives (80% of all buyers state that they’re actively trying to reduce costs in 2017 compared with 73% in 2015).
So way more is being spent on incentives yet folks are more focused than ever on cost containment. How is this possible?
The means used to reduce costs are worth comment too with destination selection (ie, selecting a less expensive destination), overall reduction in number of nights and use of less expensive amenities being the 3 outliers. Interestingly, buyers were far less likely to reduce the number of qualifiers or use a cheaper hotel in their efforts to contain costs.
This resonates with a global trend in Business Events and MICE that favours 2nd and 3rd tier destinations (for a myriad of reasons including safety and cost) but wants the best available accommodation experience in that city or region – so Sevilla gets chosen over Barcelona but we stay at the Alfonso x111 or Memphis gets picked over Miami but we stay at the Peabody.
By the same token companies want to continue touching the same number of employees and avoid creating a super-elite cohort of qualifiers so, like hotel selection, reducing the number of qualifiers is not a hot option for buyers when they want to contain costs – and, at 80%, clearly most of them do!
For this first time this year the SITE Index posed a suite of questions on destination selection, ie, what criteria or considerations influence destination choice. 7 possible criteria was offered and, unsurprisingly, given that this survey is all about incentive or motivational travel, the top consideration was destination appeal.
Lest we ever forget it, or try to convince ourselves to the contrary, if the destination doesn’t scintillate, sparkle and shine it’s not an incentive destination. However, by the same token, let’s not presume to know or understand what constitutes a scintillating, sparkling and shining destination.
While the likes of New York and Miami, Paris and London have the shine factor to infinity and beyond, it’s also true to say that hidden gem destinations and all the mist and mystery that surrounds them are also immensely appealing – particularly to younger incentive qualifiers – for the very reason of the invisibility: so step up Bratislava, come on in Ljubljana, welcome Anaheim, take a seat Calgary …
After destination appeal, buyers list value for money as the 2nd most important consideration in destination selection – another indication that price / cost / investment is very much on the radar. On reflection maybe there’s a pattern here.
Could it be that buyers are finally saying enough is enough and turning from tier 1 destinations that have grown accustomed to charging £900 for a standard 5 star hotel room (this was the price quoted to a SITE party recently on a site inspection of a 5 star hotel in London)? Has the price / value balance finally fallen out of kilter in New York and Hong Kong causing buyers to looks at stunning 5 star properties in Detroit or Kuala Lumpur that are available at a fraction of the price?
Unsurprisingly, given the VUCA context in which we live, safety is the 3rd consideration when selecting a destination although, it should be said, for corporate buyers safety is number 2, ahead of value for money.
What influences choice
A question was also posed around how destination selection is influenced, ie, where or to whom do you go for leads / ideas / suggestions? The overwhelmingly most popular response was “other meetings and events professionals via Professional or trade association”. If ever justification were required around the cost of being part of a MICE association like SITE – or MPI, PCMA or FICP – then here it is. The single most trusted source of knowledge, expertise and information is the membership of an industry association.
Media sources, including industry media, ranked significantly lower with surprisingly low influence exerted by general articles on destinations in travel magazines or on-line travel sites. Clearly MICE professionals make a clear distinction between a destination that might be positioned beautifully in a newspaper article and whether that destination can work within the specific requirements of a successful group incentive programme.
Corporate buyers, too, in the survey, are far more influenced by their peers than by any form of formal promotion. When compared with Third Party buyers they are far less influenced in their destination choice by industry media and social media and, indeed, far less influenced by Third Party buyers themselves. For corporate planners trust resides within their peer cohort or within the industry association to which they belong.
More details on the SITE Index will be released over the coming months.
Pádraic Gilligan, Patrick M Delaney and Aoife McCrum are SoolNua and work with destinations, hotels and venues on strategy, marketing and training for the Business Events industry. Pádraic also serves as VP of Content and Research at the SITE Foundation.