17 September 2009

Study shows business travel generates profits

Ammunition for those who argue that business travel is profitable and not a luxurious waste comes from a new study that shows for every dollar invested in a company meeting, the return is as high as $19.99.

The study by global research firm Oxford Economics shows that every dollar spent at a conference and trade show offers a $4 to $5.99 return.

"This study shows that not all spending cuts are smart cuts," said Adam Sacks, managing director of Oxford Economics. He added:

"When companies cut their travel budgets, there are negative consequences that we can now quantify, in terms of lost revenue and profit growth, and in terms of giving competitors a distinct advantage."

The study, released by the U.S. Travel Association, shows that to achieve the same impact of incentive travel, employee’s base compensation would have to be increased by 8.5 percent.

According to the figures, an incentive trip yields a return of more than four times the investment, not including any broader motivation the opportunity provides to those who do not meet the award criteria.

The study also found that curbing business travel can have a strong negative impact on corporate profits. The average business in the US would forfeit 15 percent of its profits in the first year of eliminating business travel.

By David Wilkening