Companies can reap a return of more than $15 for every $1 they spend on business travel, according to a new study by IHS Global Insight, which warns that under-spending on travel during the recession could cause companies to lose out on nearly $200 billion in additional gross profits this year.
Conducted on behalf of the National Business Travel Association, the study is part of a report titled "Can We Afford Not to Invest in Business Travel?" that was published by IHS Global Insight last week and previewed at NBTA's annual meeting last month. It examined 10 years of business travel and economic data in order to establish a link between business travel and business performance.
"Face-to-face client meetings and trade shows remain the primary tools for increasing sales, yet many companies view business travel as an expense to be cut rather than the rewarding investment it is," said John Larson, managing director of decision analytics and economic impact analysis at IHS Global Insight.
Among the study's key findings, according to IHS Global Insight:
• Business Travel Contributes to Sales: IHS found that a "significant and measurable" relationship exists between business travel expenditures and sales volumes.
• Sizeable Returns on Investment: IHS reported an average return on business travel investment of 15-to-1.
• Returns on Investment Vary by Industry: IHS studied business travel in 15 different industries and found varying ROI in each.
• $193 Billion in Profits at Stake: IHS calculated that companies in most industries are "not operating at optimal travel expenditure levels" and could therefore miss the boat on $193 billion in potential additional profits.
• Massive Stimulative Effect on the U.S. Economy: IHS determined that increasing travel expenditures to optimal levels could create 5.1 million new jobs and generate more than $101 billion in tax revenue.
"Executives know from experience that travel facilitates the types of exchanges that help keep clients, gain new business and make employees more effective, but making the business case for travel has been challenging without supporting data," NBTA Research Consultant Kenneth McGill said in a statement. "Now for the first time the discussions around travel budgets will be informed with research establishing the link between business travel and profits."