Business Travel ROI

As companies feel greater pressure to grow the bottom line, an obvious cost-cutting measure is to reduce or eliminate business travel. Recent data released by Oxford Economics, US Travel Association and BEA show this could be a short-sighted tactic.

According to the February 2009 survey of 400 corporate executives, 51 percent report that their organization has decreased the amount of business travel in recent months and of those who made cuts, have reduced their budgets by an average of 35 percent. Sounds like smart business moves until you look deeper at some of the respondent level data and econometric modeling to see that the key research findings reveal quite the contrary:

– Curbing business travel can reduce a company’s profits for years. The average business in the US would forfeit 17 percent of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover.

– Econometric analysis and surveyed executives confirmed a similar magnitude of business travel ROI: for every dollar invested in business travel companies realize $12.50 in incremental revenue.

– Corporate executives confirmed what business travelers asserted: 28 percent of their business would be lost without in-person meetings.

– Both executives and business travelers estimate that roughly 40 percent of their prospective customers are converted to new customers with an in-person meeting compared to 16 percent without such a meeting.

From a competitive standpoint, this has significant implications. Three-quarters of all businesses believe that increasing travel, while competitors are reducing it, can build market share and customer relationships. Roughly half or, 53 percent say reducing business travel will give their competition an advantage.