Businesses can realise more than $15 in profits for every $1 spent on business travel, according to a study.

Published: 16 Sep 2009

Businesses can realise more than $15 in profits for every $1 spent on business travel, according to a study.

According to a study conducted by IHS Global Insight on behalf of the National Business Travel Association (NBTA), there is a clear link between travel spending and corporate profits, with the return on investment varying across the 15 industries examined. The study also illustrates that for each industry there is a point at which increasing business travel spending begins to cut into profits.

“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, MD of decision analytics and economic impact analysis at IHS Global Insight.

The research found that nearly all industries are currently spending below their optimal threshold for business travel and, on average, some industries could increase travel expenditures by as much as three percent, while others would require a more modest increase of 0.5 percent in order to approach optimal levels.

In 2008, US businesses spent $261 billion on travel expenses.

Another study

Another study, initiated by research firm Oxford Economics, has established a link between business travel and business growth. For every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits, according to the study.

The study found that curbing business travel can have a strong negative impact on corporate profits. The average business in the US would forfeit 17 percent of its profits in the first year of eliminating business travel, and it would take more than three years for profits to recover.

Business travel in the US is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and 1 million American jobs are linked directly to meetings and events. In the first six months of 2009, business travel spending is down by 12.5 percent and business travel volume is down more than 6 percent. A 10 percent increase in business travel spending would increase multi-factor productivity, leading to a US GDP increase between 1.5 percent and 2.8 percent.