"Companies that invested the most in business travel tended to grow the fastest," said Adam Sacks, managing director, Oxford Economics.
Washington, D.C. (PRWEB) May 16, 2013
Companies that spent the most on business travel through the last recession are posting higher revenues and profits than others, according to an Oxford Economics report commissioned by the U.S. Travel Association, released this month. In contrast, companies that reduced business travel spending were more likely to see a decline in profits.
“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,” said Adam Sacks, managing director of Oxford Economics, who conducted the analysis as a follow up to a study performed in 2009. “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.”
The 2013 report, titled The Role of Business Travel in the U.S. Economic Recovery, provides details on business travel and performance across 14 business sectors over an 18-year period. Oxford Economics also included a survey of business travelers that looked at the role that business travel plays in their corporate performance. Findings from the analysis and survey include:
- Business travel delivers a measurable return on investment. 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.
- Business travel helps companies obtain new customers and retain existing ones. 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 addition, the report demonstrates that business travel continues to have a positive impact on the U.S. economy:
- Business travel is booming. 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 five percent more than the previous year.
- Business travel translates into jobs, tax revenues and income. 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 follow-up report reinforce the good business sense that face-to-face meetings matter,” said Roger Dow, president and CEO of the U.S. Travel Association, who shared the report in his testimony before the House Energy and Commerce Committee last week. “Business travel is essential for keeping customers and winning new business.”
Though spending on business meetings and conferences has come back, businesses are increasingly focused on measuring the effect of meetings.
"Meetings can't just be a feel good thing anymore," said Larry Luteran, senior vice president group sales and industry relations of Hilton Worldwide. "Businesses are increasingly measuring ROI based on intricate, predetermined metrics – and are laser focused on content and deliverables going into each meeting."
About Travel Effect
Travel Effect is a campaign of the U.S. Travel Association, the national, non-profit organization representing all components of the travel industry that generates $2 trillion in economic output and supports 14.6 million jobs. U.S. Travel's mission is to increase travel to and within the United States. For more information and a copy of the full report, visit http://www.traveleffect.com.
Oxford Economics developed an econometric model to determine both the strength and direction of the relationship between domestic business travel and industry performance over time. The original model was built in 2009. It was updated for this analysis based on 2012 U.S. government data on business travel and its impact on productivity and company profits, as well as U.S. Travel Association’s Travel Economic Impact Model (TEIM), which determined the direct, indirect and induced impacts of business travel. The new model provides detail on business travel and performance across 14 industries over an 18-year period.
In parallel to the statistical analysis, a survey of frequent domestic business travelers (who took at least four trips per year) was conducted online during the ten-day period November 20-29, 2012. The survey of 298 respondents was fielded through GMI (Global Market InSite) of Bellevue, WA, and is projectable to the total population of frequent U.S. business travelers with a margin of error of +/-5.7 pts. and a 95% confidence level.
The findings were reviewed by Dr. Robert S. Mariano, PhD, Professor Emeritus of Economics at the University of Pennsylvania who verified the analysis’ comprehensive use of available data and careful application of time-series econometric modeling techniques.