
Companies across the country have been using incentive travel for years. Could there be a slow down? Here are a few of the pitfalls of incentive travel. Over the years the cost of travel has been going up and up. In 2003 the average cost for 1 persons trip to a 7 day destination was $2045. In 2008 that exact same trip is $2500. Basically 20% more for the same value. That may not seem to drastic, until you multiply that cost times two. Don’t forget, your winner will also be taking a spouse with them.
During these tough economic times, we see merchandise rewards programs coming out as the big winner. If you had your choice right now to receive a brand new ATV by Polaris or any other piece of merchandise or a trip to Cancun? Over 50% of you would switch. Here is what our clients are telling us.
- While recipients have enjoyed travel over the years, many are challenged in leaving home for an extended period.
- When asked if you would rather receive $3500 in merchandise instead of travel, 55% of the audience opted for merchandise.
- When asked if they would redeem items for themselves or for someone else, 64% said that they would pick items that the whole family would use.
Other benefits include favorable taxation. According to tax code section 274 j, awards programs are not considered as taxable income to an employee if:
- It is a Qualified Program: (this means that it is in writing and is part of a company policy)
- Award Limits are $1600 maximum award for any 1 person, as long as the average awards do not exceed $400 per person. (Qualified program, unqualified program allows max of $400 per person)
- The awards need to be “Merchandise” and can not be Cash, Sports Tickets or other types of rewards.
- The awards are given for 2 types of performance awards: Safety and Service Awards (based on each 5 years of service, beginning on the 5th year)
Other challenges that come up with travel is the size of your group. If your travel program is growing, it becomes harder to find great locations when you have over 600 people. Especially if you have been doing the trip for 20 years.
Will merchandise take over in popularity for travel? I believe that it will during these tough economic times. Will companies continue with travel programs? Absolutely. Corporations still need to have important policy meetings while on location.
Another benefit of
merchandise programs are that almost everyone can be included. Many of our programs include Safety, Recognition, Education, Sales, Referral, Loyalty and Employee Retention.
When it comes time to develop your next merchandise program, be sure to contact Professional Gifting at 800-350-1796 x 101.