5 Ways Tight Budgets Are Making Their Mark on Incentives


incentives

Skift Take

Among the Incentive Research Foundation’s annual list of 2025 trends, several are driven by continuing flat budgets and rising costs.

Incentive planners will be expected to work their magic again in 2025 to deliver the level of luxury their qualifiers expect despite stagnant budgets and rising prices.

It sounds a lot like 2024.

“The majority of program owners in 2025 will continue to face the same hard choices when it comes to their incentive budgets,” said Stephanie Harris, president of the Incentive Research Foundation (IRF). “Complete clarity on the priorities of both leadership and program participants are critical guides when deciding where to cut.”

The IRF’s new 2025 Incentive Trends Report focuses on 5 trends that are being driven by budgets:

1. Growing Appeal of All-Inclusives and Cruises

According to the IRF’s Attendee Preferences Survey, 75% of qualifiers are excited about cruising and 79% expressed interest in all-inclusive resorts.

Both options give planners more control and certainty over expenses, and some Caribbean cruises offer exceptional value.

“The goal of an incentive is to reward and appreciate top performers, and you want them to have a memorable and carefree experience,” said Kate Postle, business development manager at Bucom International. “All-inclusives accomplish this goal and also eliminate the need for an extra step of dealing with a stipend or reimbursements.”

2. Value Destinations in the Spotlight

The budget dynamic is also leading to more planners seeking value destinations, said Harris. “Domestic U.S. airfare is predicted to be up by 5 to 10% in the first half of 2025, but some air aggregators are seeing some softening in international fares, which will also have an impact on destination choice.”

Two top value destinations for 2025, according to the incentive firm Brightspot, are Portugal and  the quickly expanding Playa Mujeres area of Mexico, along with cruises. Joost de Meyer, CEO, First Incentive Travel, has Mexico and the Caribbean on the top of his list for 2025, especially for shorter trips, because of the the quick flights and affordable accommodations.

3. Shifts in Merchandise Spend

Merchandise is an area that can be easily adjusted when budgets are tight. In the past year, North American programs have cut back on both merchandise incentives and on-site gifting, and are spending more on items in the $50 to $100 range to replace expensive electronics. 

Decreasing spending on event gifting is among the top cost-cutting measures planned again in 2025, according to the 2024 Incentive Travel Index.

4. Gift Card Denominations Drop

Gift cards are popular because of their scalability. In 2024, the average per-person gift card spend in North America decreased to $142, 7% less than in 2023. This decline reflects a shift toward smaller denominations, with $50 and $100 gift cards now accounting for half of all distributions.

5. Nonsales Incentives for Uncertain Times

With shifts in the labor market and increasing layoffs, companies are turning their attention toward points-based programs. “Any time there is uncertainty bubbling up in the job market, there is the potential for disengagement among talent,” said Harris. “Reinforcing their value through rewards and recognition can help keep your valued performers engaged.”   

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