Business Travel = More Revenue, More Profit

Earlier this year, business travel became the subject of political criticism in the U.S. While the focus of this criticism was travel by companies that had received emergency federal assistance, the effect was to raise questions about business travel overall - at a time when companies were already cutting back on travel in the face of a global economic recession.

The travel industry argued at the time that business travel is an important stimulus of economic activity that should be encouraged, not discouraged. (See my earlier blog on the subject here.) Now, a new report sponsored by the U.S. Travel Association (USTA) and the Destination & Travel Foundation shows just how important business travel is to growth and productivity.

The study, conducted by the global research firm Oxford Economics, determined that every dollar invested in business travel results, on average, in $12.50 of increased revenue and $3.80 of new profits. This is in addition to the $246 billion in spending and 2.3 million jobs generated annually by business travel in the U.S., according to the USTA.

Researchers found that a 10% increase in business travel spending would increase productivity, driving higher sales and profitability and lead to an increase in U.S. GDP of 1.5-2.8%. Studies in the EU countries and the UK have also found a strong relationship between business travel, productivity and economic activity.

The study reinforced something I think virtually all business and sales executives would agree on - that meeting personally with customers and potential customers makes a big difference in our business success. Executives and business travelers surveyed by Oxford Economics estimated that they have an average 40% conversion rate when they meet in person with prospective customers but only a 16% conversion rate without such a meeting. They also estimated 28% of their current business would be lost without in-person meetings. There’s just no substitute for face-to-face contact.

But business travel has a positive impact beyond keeping customers and converting prospects. It also helps companies build business/vendors relationships (trade shows and conferences, to name a couple of examples). And it’s a way to invest in employees through internal meetings, incentive events and conferences.

The USTA study makes clear that business travel is not just an expense - it’s an important investment in the business and in the relationships we build with our customer, partners and suppliers. Not to mention the economic benefits it has for airlines, hotels, restaurants, rental car companies, taxi drivers and many other businesses - and their employees - who depend on travel and tourism.

I encourage you to read the study, which you can find by clicking here.

Jeff Clarke

Jeff Clarke is Chief Executive Officer and President of Travelport and serves as a Director on the Travelport Board of Directors, appointed in May 2006. He also serves as Chairman of the Board of Directors of Orbitz Worldwide.

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