Abstract As the Indian society has started to show


As the Indian society has started to show interest
in international travel, the corporates have started to capitalise this trend
in order to improve the top line of the business. Though it is not a new
strategy, the incentive travel has started to gain momentum only recently. The
decision makers of various large corporates prefer incentive travel as it is a
self-liquidating business development strategy. The study characterises the
outbound incentive travel market from Kerala and tries to isolate its peculiar

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now


Incentive travel,
business tourism, MICE travel, Outbound leisure travel

Tourism – The international scenario

Undoubtedly tourism has experienced
significant growth and improved diversification during the past few decades
mainly because it is a major economic activity in most countries around the
world. The international tourism has become a 1400 billion US Dollar industry
in the year 2016-17 by a strong 1235 million tourists who travelled to
different destinations in the world (UNWTO, 2017). The United Nation’s
World Tourism Organisation (UNWTO) the world’s premiere tourism body has stated
that tourism is one of the fastest growing economic sectors in the world (UNWTO). Travel &
Tourism investment in 2016 was 4.4% of total investment and is expected to rise
by 4.1% in 2017-18, and rise by 4.5% per annum over the next ten years (WTTC, 2017). The total
contribution of travel and tourism sector to the world GDP for the year 2016-17
was estimated to be 10.2% and contributed 9.7% of the total employment in the
same period (WTTC, 2017). It is also notable
that among all the destinations the African continent has witnessed lowest
number of tourist traffic – just 5% of total tourist arrivals (The World
Tourism Organisation, 2017). It is believed that
over the longer term, growth of the travel and tourism sector will continue to
be strong provided there is adequate investment and development programmes by
the governments.

There are three broad segments to
international travel and tourism, the leisure travel, business travel and
Visiting Friends and Relatives popularly known as VFR segment of tourism.
Leisure travel continues to remain as the largest segment of trips (75% share)
and grows by about 4% annually. The next most important segment, business trips
contribute 23.2% of the international tourist spending (ITB, 2016). The number of
business trips rose by about 1% while VFR and other private trips went up by 9%,
observes ITB Berlin.

General trends in Indian tourism

In India, travel and tourism industry was
somewhat slow to develop than in most other places. However, with increasing
worldwide interest in travel, and with the Government’s encouragement of its
activities, travel and tourism industry is undergoing massive expansion and
improvement. At present India is ranked 40th out of 136 countries in terms of
the competitiveness of the industry (The Times of India, 2017). Currently India is
the seventh largest tourism economy in the world in terms of GDP (Goes, 2017). The direct contribution
of travel and tourism to GDP is expected to reach US$ 147.96 billion by 2027 (India Brand
Equity Foundation, 2017).

In India, as of 2016-17, tourism generated
about 9.6% of the country’s GDP along with supporting 40.3 million jobs, which is
about 9.3% of the total employment of the nation (SATTE, 2017). The World Travel
and Tourism Council report says that in India the domestic travelers are
dominating the market with a whopping 88% share of tourism revenue whereas the
international tourists represent just 12 of tourism receipts (Goes, 2017). The five major
cities of India, Delhi, Mumbai, Chennai, Bangalore and Kolkata accounts for
most of inbound tourist traffic. The report further states that Tamil Nadu
among all other states has received most number of foreign tourists, 4,72,1978
which is 19.1% higher compared to previous year (Ministry of
Tourism, 2017).

Outbound travel from India

With a staggering population size, outbound travel
from India offers huge opportunity, especially from the educated middle class.
Recent estimates from the WTTC show that ‘Indian tourism demand will grow at
8.8% over the next ten years, which will place it as the second most rapidly
growing tourism market in the world’ (Davidson, 2006).
According to a report
by Bureau of Immigration, government of India, 21.87 million Indians went for
international travel during 2016-17. This is a 7.3% increase in outbound travel
by Indians compared to the previous year (Ministry of Tourism, 2017).  

Indians have the lowest propensity to travel
internationally among the developed and developing Asia/Pacific markets (Choong &
Wong, 2014).
However the same study discovers that the international travel by Indians is
expected grow at 13 percentage per year and reach 16.5 million by 2020.
Singapore, UAE, United Kingdom and USA are the most aspirational destination
for Indian tourists (Pawgi, 2017). Indian tourists are on the
move, spending $16 billion on international travel in 2015, and averaging
$4,500 on long-haul trips (Integreon, 2017).

It is further stated that India is now among the
fastest growing outbound travel markets, ranked among the top-25 countries on
international tourism expenditures, expected to climb to the top five by 2025.
Indian outbound tourists grow in number and it is the fastest growing outward-bound market after China. (Dasgupta, 2017). Growing Indian outbound
tourism market is a big opportunity for most of the Asian countries as most
Indians preferred these countries due to short-haul and low budget
destinations. For long-haul, Indian prefers to go Europe, United States (US),
Australia, New Zealand etc. India has large middle class population which
attracts most of the countries to design and promote their tourist destination.
For this, almost all major countries have opened their tourist office in India.
Around half of the total worldwide spending by Indian tourist is spent in
United States (TGimes, 2017).

Business tourism

This sector constitutes a ‘special kind of tourism’ in
that the ‘meeting, convention or exhibition serves as the primary purpose for
travel and the focus is a multi-faceted event of a fixed time duration that involves
speakers, seminars, workshops, exhibitions, banquets, association meetings and
social events’ (Hiller, 1995).
Business tourism is not a new phenomenon. From the early days of agricultural
trade between communities and the days of the Egyptian, Persian, Greek and
Roman empires, people have travelled to take their produce to market to trade.
By the medieval period business travel for trade was well established and its
infrastructure included a number of massive trade fairs in strategically
located towns and cities. Historically, the development of the Silk Route was
particularly significant for business tourism as it enabled transportation of
goods and scientific inventions between Asia and Europe, which brought
phenomena as diverse as gunpowder, new religions, knowledge of astronomy and
advances in medicine to Europe and the Middle East, from Asia. The industrial revolution
saw an increase in production volumes leading to increased demand for raw
materials. With the improvement in road and rail facilities, the business
tourism sector did a great performance in terms of its growth figures (Horner, 2001).

MICE Travel segment

tourism is nothing but business tourism. MICE stand for: Meetings, Incentives,
Conferences and Exhibitions. “E” sometimes refers to as Events and
“C” sometimes refers to as Conventions. According to the International
Association of Professional Congress Organizers (IAPCO), Meeting is the coming
together of a number of people in one place, to confer or carry out a
particular activity (Travel Daily News, 2010). This can be on an
ad hoc basis or to a set pattern. For example, annual general meetings,
committee meetings etc. Incentive is part of a program which is offered to its
participants to reward a previous performance. Conference is a participatory
meeting designed for discussion, fact finding, problem solving and
consultation. It is smaller in scale as compared to a congress which is usually
of limited duration with specific objectives. Event is something at which
products and services are displayed; for example, a career fair, an automotive
exhibition etc.

It is a new type of tourism, emerged
with the increase of conventions and exhibitions and the gradual maturity of
tourism in the context of continuous economic development. The per-capita
consumption of a MICE tourist is 4-5 times higher than that of an ordinary
tourist (Express Travel World, 2009). It is a kind of
comprehensive economic activity highly associated with industries, involving
all respects of social life; such as the economic development level of the host
place, city traffic, commercial network, hotel, scenic spot, environment of the
destination etc.

India is the 10th largest
business travel market in the world (Travel and Tour World, 2016).
With nearly 1.5 million Indians traveling only for MICE purposes, it is
emerging as one of the strongest outbound MICE markets in the world.

Concept of Incentive Travel

Travel seems to be emerging as a popular means of rewarding the employees’
achievement and contribution by several multinational companies, insurance
companies, banks etc. Travel incentives are rewarded as an incentive,
recognition or a loyalty program, which is a business tool used to change
behaviour to improve profit, cash flow, employee engagement and customer
engagement. “Incentive travel is one of the fastest growing segments within
India’s outbound MICE movement. Many Indian companies organise annual incentive
travel as a business tool to reward and motivate top-performing employees as
well as external channel partners to drive topline sales” says Chang Chee Pey, Executive Director, South Asia,
Middle East & Africa, Singapore Tourism Board (Business Wire, 2016).

It should be noted that
leisure MICE is nothing but incentive travel. Indian Corporates from
Pharmaceutical, Cement, FMCG, Retail, BFSI and other industries are seeking new
destinations for MICE trips beyond traditional destinations and themes, thereby
providing their employees and distributors unique experiences and are actively
holding regular leisure MICE programs abroad with departments dedicated to take
care of business travel & incentive groups of sizeable proportions. India
is estimated to generate 6.5 Million outbound leisure MICE tourists annually by
2020, reinforcing the country’s influence as a key source market for MICE and
luxury travel (Business Wire, 2016).

Data Analysis and Discussions

The present study focusses on the trends
in the incentive travel business from Kerala, one of the prominent outbound
incentive travel market in India. For the purpose of the study a structured
questionnaire is used to collect data from corporates undertaking incentive
travel to various destinations. The data pertains to the previous two fiscal
years 2015-16 and 2016-17. Overall 54 different companies having operations in
Kerala formed the sample size for the study. These 54 corporates was
responsible for generating 97 incentive trips to various locations around the
world from Kerala. All the 97 trips organised during the two preceding financial
year forms the basis for analysis for the purpose of the study.

The main objective of the study is to profile
the outbound incentive travel operated by various tour operators on behalf of
the corporates undertaking international travel as an incentive programme for
its employees and business associates. The research characterises the outbound
incentive travel in terms of industry participation in incentive travel.

The data is analysed based on the 1)
sectors/industry undertaking incentive trips, and; 2) based on the destinations
that are preferred for the incentive travel.

Industry based

following table shows the sectors/industries undertake incentive trips to
various destinations.

table indicates the dominance of electrical appliances in the incentive travel
market. Close to half of the incentive trips are undertaken by the electrical
appliances companies. Banking & Finance sector also has a reasonable
presence.  The paint industry, the
automobiles sector and pharma sector also makes use of incentive trips to
motivate their employees / dealers. All the other sectors such as food, liquor,
real estates, pesticides, IT, media, etc have only a minimal presence. However,
their presence will improve as the economy starts to looking up from its
present entanglement created by numerous macro-economic issues.

Length of stay:
The analysis based on the length of stay for the short haul incentive trips
averages 5 days across the industry segments while the incentive trips to
Europe averages 9 days and to USA it extends to 11 days. Also, when more than
one country is opted for the trip, the average length of stay of short haul
trip becomes 7 days.

Preferred time of the year:
Very clear patterns emerge out of the quarter opted to conduct the incentive
trips. The electrical appliances industry prefers January – March as the most
preferred period for incentive travel. It is also observed that the industry is
indifferent to the quarter July – September. It is interesting to note that not
even a single incentive trip is organised in the month of December form Kerala.
For obvious reasons Banking & Finance sector do not prefer to conduct the
incentive trips in the month of March. However, the review of the related works
shows that in countries where calendar year and financial year are the same,
the banking & Finance sector organises incentive trips in the month of

Spending capacity:
The incentive trips are said to be self-liquidating. It means that the actual
brunt of incentive travel is not on the shoulders of the companies, rather it
is generated by the participants themselves by way of improved top line for
these companies with their performance. Hence it would be interesting to find
out the approximate amount the companies are willing to spend per pax on
incentive trip as it would project a clear indication to the improved bottom
line of these companies accrued due to the incentive programme.

table clearly indicates that there is a substantial variation in the amount
spent by various companies on the incentive programme. The Pharma and liquor
companies are far ahead in their spending capacity. Also, these companies
conducts the trips to European and American destinations.

of the other organisations spends between 40,000 to 55,000 for the incentive
trips. Automobile and IT are the lowest spenders in this category.

However, the average spending by the
organisations to European destinations is about Rs. 1,16,000 while the average
spending for US trips is about Rs. 2,20,000. The electrical appliances sector
organises incentive trips to Europe and US destinations besides being a strong
presence in low cost South-east Asian destinations.

of pax: There is a substantial industry
wise variation in the number of participants.

one would observe, Cement and Liquor incorporated maximum participants. These
sector operated the incentive trips primarily for the dealers and their
families, while the lower pax size trips were mostly meant for employees.

It could hence
be concluded that if the participants of the incentive trip are dealers and
their families, the pax size exceeds 30 and the upper limit could be as high as
300 pax. In case of employees, the average pax size would be less than 30.

Accommodation preference:
Nearly 82 per cent of the incentive trips opted for the four star classified
hotels across all the destinations in the world. No significant based on
industry or destinations could be observed regarding the room type preference.
Analysis showed no prominent preference over accommodation amongst type of
participants, length of stay and pax size, except the fact that all the three
star accommodations were opted by the electrical appliances sector.

based analysis

of destination: The
available data when analysed from the point of view of destinations revealed
useful informations which may help the destinations to better position the
among the companies incentive opting to adopt incentive programmes. The
following table adequately explains the most popular destinations for the
incentive programmes.

acts as the major motivator for the incentive travellers. The other
destinations that are popular are Malaysia and Singapore. The other South-east
Asian countries such as Hongkong, Vietnam, etc are not demanded by the
incentive travellers, with the exception of Philippines. Only Dubai seems to
excite travellers in the Middle East region.

is notable that Commonwealth of Independent States (CIS) such as Georgia,
Kazakhstan and Kirgizstan is also on the fray for incentive pie from Kerala.

the incentive travellers move westward, European destinations are on demand
compared to US destinations. When there is a need to visit multiple countries,
Philippines and Singapore is the most preferred combination of the
destinations. It could be safely concluded that South East Asia, Europe and CIS
countries are the major regions of the world for incentive trips from Kerala.

length of stay: Among the South-east
Asian countries only Thailand records a length of stay of 5 days. All the other
countries in the same region has a length of stay of 4 days or less. USA has
the highest length of stay of 10 days while Europe has 8 days. The average
length of stay do not show any significant difference when more than one
destination is included in the itinerary. The emerging destination China has an
average length of stay of 6 days, while CIS countries have a length of stay of
5 days.

time of the year: Most of the
incentive trips to South East Asian region is conducted during quarter January
– March. The quarter July – September is also preferred. However, there is a
strong aversion to the month of December for incentive trips to South East
Asia. The incentive trips to Europe and USA do not show any clear patterns of
travel as the number of trips during the period of study was very limited.
However, as in the case of South East Asia and CIS countries, December is not
preferred for travel.

considerations: The cost of
the destinations across the globe shows a considerable amount of variation.
However, on a closer look certain pricing behaviour could be established among
the incentive travellers, even among South East Asian countries.

countries such as Thailand, Singapore, Malaysia could be considered as budget
destinations as their per pax cost is in the range of Rs. 33500 to Rs. 38500. On
the other hand, countries such as Philippines, Hong Kong and Indonesia bargains
a higher per pax cost which ranges from Rs. 55,500 to Rs. 66,000.

The CIS countries has an average per pax cost of Rs.
70,000 and China has an average per pax cost of Rs. 77,350. The European
countries requires a per pax above Rs. 1,00,000 while USA has a per pax cost
above Rs. 2,00,000.

Pax size: The average per pax size for
the entire South East Asian countries is 35.

within the group difference is evident among these destinations and also among
other incentive travel destinations. When the number of participants is large
mostly destinations like, Indonesia, Dubai, Thailand are preferred.

When the
participants are low, destinations like Vietnam, China, and Malaysia are
preferred. The countries in the Commonwealth of Independent States attract
average pax size of 29.

Europe has an average pax size of 25
members while USA attracts a significantly higher pax size of 30. In some
cases, it is noted that the pax size to USA has gone up to 300 members.

table is an indication that per pax cost and pax size do not have any
significant relationship. Budget destinations like Thailand has higher
frequency of visits but the average pax is low whereas Dubai, a mid segment destination
in terms of pricing has a very high pax size.


The outbound leisure travel
from Kerala, especially in incentive business is centered on South East Asian
markets. The cost of travel seems to be the most decisive factor while
selecting the destination for the incentive programme. When this market reaches
a saturation stage, the erstwhile USSR countries such as Kazakhstan, Georgia,
etc (the CIS countries) is being explored by the Kerala based outbound tour
operators for incentive tours. Besides CIS nations, China has also started to
attract the incentive trips from Kerala.