1. PULSE SURVEY The Incentive Industry Trends 2011 June 2011

2. Background and Survey Purpose Beginning in August 2008 it was decided that an appropriate topic for the 2008 Pulse Survey would be an incentive industry trends outlook for 2009 and with the continued economic conditions, also an appropriate topic for the trends outlook for 2011/2012. Given that the Incentive Research Foundation (IRF) is charged with advancing the science of incentives, it surveyed industry professionals to obtain their opinions about the more salient trends affecting the industry during 2011/2012. To this end, the IRF asked these professionals questions on trends with regard to incentive travel programs, merchandise non-cash programs, and budget changes forecast for 2012. In addition to the current topic on industry trends, the IRF tracks core issues of continuing interest to the industry: The extent to which company financial forecasts influence incentive programs; The effect of competitor reactions on company incentive programs; and Sensitivity to others perceptions of company incentive programs. 2

3. Research Methods Invitations to participate in this online survey were sent to 1910 incentive providers, suppliers to the industry and corporate incentive travel buyers. The 134 survey participants can be categorized as follows… Provider (e.g., Incentive company) (41%) Supplier (e.g., hotelier, DMC, Airlines) (17.9%) Meeting/Event Planner (14.2%) Other (11.2%) Corporate Incentive Travel Buyer (9.7%) Corporate Merchandise and Travel Incentive Buyer (4.5%) Corporate Merchandise Incentive Buyer (1.5%) Data collection was conducted May 11 th through May 27 th, 2011. 3

4. Highlights: Core Issues 4 Findings indicate that the trends have declined this period compared to the previous four survey periods which indicated a strong positive upward trend for each of the core issues beginning in July 2009 – October 2010. The overall trends remain lower than reported in 2008. The positive trend with respect to the perceptions of program extravagance is declined less in this survey period when compared with the other two core issues.

5. Current Topic Industry Trends for 2011/2012 5 Incentive Travel Programs Merchandise Non-Cash Programs ROI – Budget Considerations

6. Perceived Impact of the Economy on Ability to Plan and Implement Incentive Travel Programs 6 Respondents in the current survey (May2011) indicate they are more optimistic and consider the economy as having a more positive impact on their ability to plan and implement incentive travel programs when compared with the 2009 results. However, the results from the current survey show a slight decline compared to the 2011 results. Strongly negative 4% October 2010 vs. 5% October 2010 All negative impacts 27% October 2010 vs. 25% May 2011. In your opinion in 2009, what impact will the economy have on your ability to plan and implement travel incentive programs? (N=134) Note: The response categories were modified in the May 2011 and the historical data was adjusted to reflect these changes.

7. Techniques Used In 2012 To Enhance The Air Transportation Portion Of Incentive Travel Programs, What Component? Approximately one-third (35%, 32%) of respondents anticipate that Roundtrip airport transfers and Only tickets will be provided will, are included components of Incentive Travel Programs in 2012. 22% indicate that All costs for air transportation-related expenses will be included 7% indicate that airline club passes will be included. 3% indicate that seating upgrades will be included. With regard to the air transportation portion of incentive travel programs, what techniques will be used in 2012 to enhance this component? Check all that apply. (n=130) 7

8. Anticipated Changes In 2011 With Regards To Incentive Travel Program Destinations The majority (53%) of respondents anticipate no change with respect to the program destinations for Incentive Travel Programs in 2012. 26% indicate that they anticipate a change from International to Domestic with regards to the travel program destinations. 8 In 2011, do you anticipate any of the following changes will be made with regard to incentive travel program destinations? Check all that apply. (n=111)

9. Anticipated Changes In 2012 With Regards To Incentive Travel Accommodations Twenty-eight percent of respondents anticipate reducing the total number of days/nights for the accommodations portion of Incentive Travel Programs in 2012. 25% indicate No Change 19% indicate that: On-site inclusions per participant will be decreased. Number of rooms will be reduced Change to all inclusive pricing options 9 With regard to accommodations for incentive travel programs in 2011 what changes, if any, will be made? Check all that apply.(n=134)

10. Anticipated Changes In Coming Year With Regards To Sponsored Non-Meal Related Components Most (43%) of respondents anticipate No Change with regards to Sponsored Non-Meal Related Components for Incentive Travel Programs in the coming year. 35% indicate that Sponsored Non- Meal related components will be Reduced to some degree, and an 22% indicated some degree of Increase 10 With regard to the sponsored (paid by your company) non- meal related components such as airline tickets, transfers, gifts, etc for incentive travel programs, what changes will be made in the coming year? (n=103)

11. Anticipated Changes With The Involvement Of Procurement And Purchasing In Travel Incentive Programs While many (43%) of the respondents anticipate No Change with regards to involvement of procurement and purchasing for Incentive Travel Programs in 2011, 47% agree that procurement involvement will increase by some degree in the coming year. 34% indicate that procurement and purchasing involvement will Slightly Increase in the coming year. 13% indicate that procurement and purchasing involvement will Significantly Increase in the coming year. 11 In the coming year, do you anticipate the involvement of procurement and purchasing with regard to your incentive programs to…(n=105)

12. Anticipated Changes In Incentive Travel Program Budgets for This Year Fourty-one percent (41%) of the respondents anticipate budgets for Incentive Travel Programs to Slightly Increase this year. 38% indicate that budgets for Incentive Travel Programs this year to Remain Unchanged. Only a combined 44% indicate that that budgets for Incentive Travel Programs to increase this year. 12 year, do you anticipate budgets for incentive travel programs in general to… (n=116)

13. Trend Strategy For The Consideration Of Award Strategy Moving (Either Temporarily Or Permanently) From "Group Trips" To "Individual Travel Packages" The majority (65%) of the respondents do not anticipate changing (either temporarily or permanently) from "group trips" to "individual travel packages" in the coming year. A combined 7% indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages in coming year to decrease. While 29% indicate that the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages to increase in the coming year. 13 With regard to planning and implementing incentive travel award programs, do you anticipate the consideration of award strategy moving (either temporarily or permanently) from "group trips" to "individual travel packages" to…n=116)

14. Perceived Impact of the Economy on Ability to Plan and Implement Merchandise Non-Cash Incentive Programs 14 In May 2011, less respondents anticipate the economic downturn to have a continued negative effect on their ability to plan and implement merchandise non-cash incentive programs than in 2009. Negative impact 14% in May 2011 vs. 24% in October 2011. No impact 20% in May 2011 vs. 19% in October 2010. Positive impact 42% in May 2011 vs. 46% in October 2010. Do you anticipate budgets for merchandise non-cash incentive programs in the coming year to…(n=134) Note: 2008 vs. 2009 percentages not comparable because not involved response category added in 2009 survey. Note: The response categories were modified in the May 2011 and the historical data was adjusted to reflect these changes.

15. Anticipated Changes This Year With Regards To Merchandise Non-cash Incentive Programs Award Selections 22% of respondents anticipated Increased use of debit/gift cards as an award selection with regards to Merchandise Non-Cash Incentive programs this year. 23% indicate no change to the merchandise non-cash incentive program this year. 16% indicate including individual travel as an option. 13% indicated that the following will be added this year: Added merchandise. Increased merchandise award value. 15 With regard to merchandise non-cash incentive programs, what changes,, will be made this year with award selections? (n=134)

16. Anticipated Changes In Merchandise Non-Cash Incentive Program Budgets for the Coming Year Of note, a combined 40% indicate that budgets for Merchandise Non- Cash Incentive Programs to increase by some degree in the coming year. Only 13% indicate that budgets for Merchandise Non-Cash Incentive Programs to Slightly Decrease in the coming year. 42% of respondents anticipate budgets for Merchandise Non-Cash Incentive Programs to Remain Unchanged in the coming year. 16 In 2010, do you anticipate budgets for merchandise non- cash incentive programs in general to…(n=113)

17. General Issues Of Interest to the Industry 17 Budget Changes for Incentive Program Elements

18. Anticipated Changes Incentive Program Elements In general, respondents indicated that they anticipate most incentive program elements to remain the same in the coming year. The following elements received ratings of Increase of greater than 20% for 2011: Number of total qualifiers (29%) Awards budget (27%) 18 This year, do you anticipate the following incentive program elements will increase, decrease or remain the same? (n=134)

19. Impact on Incentive Program As A Result Of The Current Economic Conditions 59% of the respondents anticipate no changes to the budget for Incentive Travel Programs in the coming year as a result of the recent economic conditions. 14% indicate that that budgets for Incentive Travel Programs have been reduced as a result of the recent economic conditions. 10% indicate that that budgets for Incentive Travel Programs have increased as a result of the recent economic conditions. 4% indicate that no budget change, but replaced the travel incentive, while 10% indicate no budget change, but replaced the travel component and added or increased a merchandise incentive program component. 3% indicate the program has been eliminated entirely as a result of the recent economic conditions. 19 As a result of the recent economic conditions, have you made a change to your upcoming incentive program, and if so have you… (n=134)

20. Impact of Budget Changes on Employee Morale In general, respondents indicated that changes to their Incentive travel program will have either a decreased impact or remain the same on Employee morale. 20 You indicated that you have [inserted response on change to their program], what impact has this has on…

21. Impact of Budget Changes on Sales Results With the exception for those few respondents that eliminated the program entirely, most respondents indicated that changes to their Incentive travel program will have no impact on Sales Results. 21 You indicated that you have [inserted response on change to their program], what impact has this has on…

22. Impact of Budget Changes on Profitability Results With the exception of the few respondents that eliminated their program entirely, respondents indicated that changes to their 2011 Incentive travel program will have no impact on Profitability Results. 22 You indicated that you have [inserted response on change to their program], what impact has this has on…

23. Use of Enhancement Tools/Techniques for Incentive Programs Many of the respondents (44%) indicate they dont use any of the tools/techniques to enhance their incentive program. 25% indicate that they use a CSR component. 19% indicate that they use Integration with Sales Management Tools 17% indicate that they use Virtual elements, and 16% use Gaming techniques. 23 Are you using any of the following to enhance your programs? (Check all that apply) …(n=134)