study reveals clear link between business travel and business growth
18 September 2009
A new research study conducted by leading global research firm Oxford Economics establishes the first clear link between business travel and business growth. According to the study for every dollar invested in business travel, businesses experience an average of $12.50 in increased revenue and $3.80 in new profits.
It is the first time that the return on investment of business travel has been successfully measured. Two independent analyses were conducted to quantify the return on investment of business travel. Corporate executives were first surveyed and an econometric model was then developed to assess the relationship between business travel spending and company performance.
Key Research Findings include the following:
- For every dollar invested in business travel companies realize $12.50 in incremental revenue.
- Curbing business travel can reduce a company’s profits for years. The average business in the U.S. would forfeit 17% of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover
- Both executives and business travelers estimate that 28% of current business would be lost without in-person meetings
- Both executives and business travelers estimate that roughly 40% of their prospective customers are converted to new customers with an in-person meeting compared to 16% without such a meeting.
- More than half of business travelers stated that 5-20% of their company’s new customers were the result of trade show participation.
- Nearly 80% of executives indicate that incentive travel has a significant impact on employee morale and job satisfaction. More than 70% believe that incentive travel has a real impact on employee performance.
- Executives stated that in order to achieve the same effect of incentive travel, an employee’s total base compensation would need to be increased by 8.5%.
- An increase in government travel spending of $1 million will increase government worker productivity and therefore output by between $4.6 million and $6.3 million.
"This study shows that not all spending cuts are smart cuts," said Adam Sacks, managing director of Oxford Economics. "When companies cut their travel budgets, there are negative consequences that we can now quantify, in terms of lost revenue and profit growth, and in terms of giving competitors a distinct advantage."
"Business travel is economic stimulus," said Roger Dow, president and CEO of the U.S. Travel Association, which commissioned the study. "In order to grow, businesses have to invest. This study shows that face-to-face meetings and incentive awards to top performers are among the smartest investments companies can make."
Download the full study here