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Research Comminssioned by the U.S. Travel Association Proves
 Business Travel Drives Revenue, Profit Growth;

50 Page Report Available for FREE



WASHINGTON, D.C. – New research conducted by leading global research firm Oxford Economics establishes the first clear 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. It is the first time that the return on investment of business travel has been successfully measured.

“This study shows that not all spending cuts are smart cuts,” said Adam Sacks, managing director of Oxford Economics. “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 comes at an opportune time for American businesses that are planning their 2010 budgets and for federal policymakers looking to stimulate a struggling American economy. The study found that curbing business travel can have a strong negative impact on corporate profits. The average business in the U.S. would forfeit 15 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 IS economic stimulus,” said Roger Dow, president and CEO of the U.S. Travel Association, which commissioned the study. “In order to grow, businesses have to invest. This study shows that face-to-face meetings and incentive awards to top performers are among the smartest investments companies can make.”

Business travel in the U.S. is responsible for $240 billion in spending and 2.4 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 is down by 12.5 percent. A 10 percent increase in business travel spending would increase multi-factor productivity, leading to a U.S. GDP increase between 1.5 percent and 2.8 percent.

“In tough economic times, many business executives have an understandable short-run focus on managing costs. The report points out the less visible - but significant - long-term benefits resulting from business travel, such as partnership building and new business opportunities,” said Dr. Martin A. Asher, adjunct professor of finance at the Wharton School. “Increased business travel in this economy can actually increase sales and reduce the financial decline companies might otherwise suffer.”

Both executives and business travelers estimate that 28 percent of current business would be lost without in-person meetings. Roughly 40 percent of prospective customers are converted to new customers with an in-person meeting, compared to 16 percent without such a meeting. Executives cited customer meetings as having the greatest returns, approximately $15-$19.99 per dollar invested, with conference and trade show participation returns ranging from $4-$5.99 per dollar invested.

The Oxford Economics Business Travel study is sponsored in part by the Destination & Travel Foundation, a combined effort of the U.S. Travel Association and Destination Marketing Association International. The mission of the Destination & Travel Foundation is to enhance the destination marketing and travel professions through research, education, visioning and development of resources and partnerships for those efforts. For more information, visit www.destinationtravel.org.

Oxford Economics: The Return on Investment of Business Travel Key Messages

First-of-its-Kind Study Proves Business Travel Drives Revenue, Profit Growth
  • For every dollar invested in business travel, Oxford Economics determined that businesses experience an average $12.50 in increased revenue and $3.80 in new profits.
  • Curbing business travel has a negative impact on corporate profits. The average U.S. business would forfeit 15 percent of its profits in the first year of eliminating business travel. It would take over three years for profits to recover.
  • Business travel includes sales trips, meetings, conventions and incentive trips.
  • Executives cited customer meetings as having the greatest returns, in the range of $15-$19.99 per dollar invested.
  • Executives identified the average return on conference and trade show participation to be in the range of $4-$5.99 per dollar invested.
  • Oxford Economics set out to enable businesses to make more informed decisions, particularly during challenging economic times.
Face-to-Face Interaction Strengthens American Business, Economy
  • Both executives and business travelers estimate that 28 percent of current business would be lost without in-person meetings.
  • Both executives and business travelers estimate that roughly 40 percent of their prospective customers are converted to new customers with an in-person meeting compared to 16 percent without such a meeting.
  • More than half of business travelers stated that 5 to 20 percent of their company’s new customers were the result of trade show participation.
  • 85 percent of corporate executives perceive Web meetings and teleconferences to be less effective than in-person meetings with prospective customers, and 63 percent believe virtual meetings are less effective than in-person meetings with current customers.
U.S. Economy Depends on Business Travel
  • U.S. business travel is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and nearly 1 million American jobs are linked directly to meetings and events.
  • In the first six months of 2009, total business travel spending is down 11.9 percent, with a 4.4 percent decline in overall volume.
  • A 10 percent increase in business travel spending will increase multi-factor productivity, and therefore U.S. GDP, by between 1.5 and 2.8 percent.
Meetings and Incentives Are Essential to Development of Human Capital
  • Companies would need to increase an employee’s total base compensation by 8.5 percent in order to achieve the same effect of incentive travel, according to executives.
  • The majority of corporate travelers identified internal company travel as key to professional development (66 percent), job performance (58 percent) and morale (56 percent).
  • Internal meetings receive the highest marks, with 73 percent of executives indicating a significant impact on employee performance and 66 percent confirming the importance of travel to employee morale.
  • Nearly 80 percent of executives indicate that incentive travel has a positive impact on employee morale and job satisfaction; more than 70 percent on employee performance.
Methodology
  • The analysis was comprehensive, covering 14 economic sectors over a span of 13 years. Care was taken to control for other contributing factors to business growth and productivity.
  • The findings were verified through a combination of three separate surveys of corporate executives and business travelers and a broad review of related research.
  • The findings were also reviewed by Dr. Martin A. Asher, adjunct professor of finance at the Wharton School.
  • This approach has been successfully used by Oxford Economics in previous analyses for European travel and has been documented in academic literature.
The 50 page report is FREE and is located at:
http://www.ustravel.org/resources/PDFs/ROI/9-03-09_Oxford_Economics.pdf

The U.S. Travel Association is the national, non-profit organization representing all components of the $770 billion travel industry. U.S. Travel’s mission is to promote and facilitate increased travel to and within the United States. For more information, visit www.ustravel.org.

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Contact:

Kristy Chandler
202-408-2172
kchandler@ustravel.org

Cathy Keefe
202.408.2183
ckeefe@ustravel.org

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Also See: Adam Goldstein of Royal Caribbean, the Late Stevan Porter of Intercontinental Hotel Group and Andrew Taylor of Enterprise Rent-A- Car to be Inducted into U.S. Travel Hall of Leaders / June 2009

Summer Leisure Travel Outlook Remarkably Stable in Down Economy; Research Shows Americans' Travel Intentions, Spending Expectations Same or Better than Last Year / May 2009

Bipartisan Legislation Introduced to Jump-Start U.S. Economy, Attract Millions More International Visitors Travel Promotion Act Estimated to Create $4 Billion in Economic Stimulus; No Money Required from American Taxpayers / May 2009

The 26th Annual National Travel and Tourism Week to Focus on Establishing Travel as a Solution to America's Economic Challenges: This Year's Theme - "Travel Matters" / May 2009

U.S. Travel Association Unleashes Campaign to Defend Business Meetings and Events from Politicized Attacks; Creates a Rapid-response War-room to Counter-act False Accusations Against Legitimate Travel Activities / March 2009

‘AIG Effect’ - Companies Cutting, Scaling Back Meetings to Appear Financially Responsible in Hard Times / Sandi Cain / January 2009
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