Although many companies cut spending on business travel during the downturn, those that didn’t are today reporting higher revenues and profits, according to a new study by Oxford Economics, the results of which were published this week.
Commissioned by the U.S. Travel Association, the study examined business travel and performance across 14 business sectors over an 18-year period. Its findings showed that profits tended to grow when companies invested in business travel and decline when they didn’t.
“When we analyzed data from the Great Recession and recovery, we learned that companies that invested the most in business travel tended to grow the fastest,” says Adam Sacks, managing director of Oxford Economics, who conducted the analysis. “After a dip in 2009-2010, domestic business travel spending has recovered and is projected to reach a new peak of $225 billion in 2012.”
Other key findings:
• For every dollar invested in business travel, U.S. companies have experienced a $9.50 return in terms of revenue and $2.90 in profits.
• In-person meetings double the likelihood of “prospect conversion.” Business travelers believe that 42 percent of customers would eventually be lost without in-person meetings.
• In 2011, U.S. businesses spent $214 billion on domestic travel, surpassing a historic peak from 2007. For 2012, businesses are estimated to have spent $225 billion on U.S. domestic travel, about 5 percent more than the previous year.
• Business travel expenditures generated 1.9 million jobs, $59 billion in personal income and $35 billion in tax revenues last year.
“The findings from this … report reinforce the good business sense that face-to-face meetings matter,” says U.S. Travel Association President and CEO Roger Dow. “Business travel is essential for keeping customers and winning new business.”
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