LEXINGTON, Mass., September 15, 2009 - Businesses can realize more than $15 in profits for every $1 spent on business travel, according to a study by IHS Global Insight, the world's leading company for economic and financial analysis and forecasting. The groundbreaking research shows that companies are potentially losing out on nearly $200 billion in 2009 in additional gross profits because they are not optimizing their investments in strategic business travel.
The IHS Global Insight study was conducted on behalf of the National Business Travel Association (NBTA), the premier organization representing professionals in the business travel industry including the travel departments of the majority of Fortune 500 companies, and American Express Business Travel. The report, “Can We Afford Not to Invest in Business Travel?,” published today expands upon findings previewed last month at the NBTA International Convention & Exposition and is part of a comprehensive business travel research initiative. The project also includes elements examining the size and scope of the global business travel industry and the industry's economic impact completed in partnership with Egencia™, the corporate travel arm of Expedia Inc.
The analysis shows 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, Managing Director of Decision Analytics and Economic Impact Analysis at IHS Global Insight.
NBTA Research Consultant Kenneth McGill added, "Executives know from experience that travel facilitates the types of exchanges that help keep clients, gain new business, and make employees more effective, but making the business case for travel has been challenging without supporting data. Now for the first time the discussions around travel budgets will be informed with research establishing the link between business travel and profits."
Among the study's key findings:
Business Travel Contributes to Sales: A significant and measurable relationship exists between business travel expenditures and sales volumes.
Sizeable Returns on Investment: An average return on business travel investment of 15-to-1.
Returns on Investment Vary by Industry: Returns on investment vary across each of the 15 industry segments in the study.
$193 billion in Profits at Stake: Companies within most industry segments are not operating at optimal travel expenditure levels and collectively could realize $193 billion in additional profits.
Massive Stimulative Effect on the U.S. Economy: Increasing travel expenditures to optimal levels could create 5.1 million new jobs, generating more than $101 billion in tax revenue.
The study examines 10 years of data for 15 industry sectors covering the U.S. economy, analyzing industry-level data on business travel, business expenses, revenues and profitability in order to establish a link between business travel and corporate profits.
In 2008, U.S. businesses spent $261 billion on travel expenses. Using a model that comprehensively examines both industry sales and cost determinants, including business travel expenditures, the analysis identifies optimal levels of business travel investment for the U.S. economy as a whole and by the 15 industry segments. 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 3.0%, while others would require a more modest increase of 0.5% in order to approach optimal levels.
To obtain the report "Can We Afford Not to Invest in Business Travel?" contact pr@nbta.org or jim.dorsey@ihsglobalinsight.com. Additional data and analysis will be available at the end of the month to NBTA members and from American Express Business Travel eXpert insights research practice.
About IHS Global Insight (www.ihsglobalinsight.com)
IHS Global Insight, an IHS company, provides the most comprehensive economic and financial information available on countries, regions, and industries, using a unique combination of expertise, models, data, and software within a common analytical framework to support planning and decision making. IHS Global Insight founded the modern economic forecasting industry more than 40 years ago, and today the company is recognized as the most consistently accurate economic forecasting company in the world. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS) is a leading global source of critical information and insight, dedicated to providing the most complete and trusted information and expertise. IHS product and service solutions span four areas of information that encompass the most important concerns facing global business today: Energy, Product Lifecycle, Security, and Environment all supported by Macroeconomics. By focusing on customers first, IHS enables innovative and successful decision-making for customers ranging from governments and multinational companies to smaller companies and technical professionals in more than 180 countries. IHS is celebrating its 50th anniversary in 2009 and employs approximately 3,800 people in 20 countries.
IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2009 IHS Inc. All rights reserved.
About NBTA
The National Business Travel Association (NBTA) is the world’s premier business travel and corporate meetings organization. NBTA and its regional affiliates – NBTA Asia Pacific, the Brazilian Business Travel Association (ABGEV), NBTA Canada, NBTA Mexico, and NBTA USA – serve a network of more than 15,000 business travel professionals around the globe with industry-leading events, networking, education & professional development, research, news & information, and advocacy. NBTA members, numbering more than 4,000 in 30 nations, are corporate and government travel and meetings managers, as well as travel service providers. They collectively manage and direct more than US$200 billion of global business travel and meetings expenditures annually on behalf of more than 10 million business travelers within their organizations. For more information, visit www.nbta.org.
