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Strong relationship between a company's investment in business travel and its profitability
A new study conducted by global research firm Oxford Economics establishes the first clear link between business travel and business growth. The result show a strong relationship between a company's investment in business travel - to meetings, trade shows, conferences, incentive and sales meetings - and its profitability. 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 findings. It is the first time that the ROI of business travel has been successfully measured.

The results come at a time when organizations are planning their 2010 fiscal year and federal policymakers are looking for evidence to support initiatives to stimulate the global economy. The study found that curbing business travel can have a significant negative impact on corporate profits. The average business in the U.S. 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.

"We know that business travel is good for the economy, but this study quantifies the return on investment that businesses experience when they hold exhibitions and events," said IAEE President Steven Hacker, CAE. "The Oxford Study found that more than half of business travelers stated that 5-20 percent of their company's new customers were the result of trade show participation and executives estimate that 28 percent of current business would be lost without face-to-face meetings. These results further underline and reinforces the validity of in-person meetings."

Business travel in the U.S. 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, according to the U.S. Travel Association. In the first six months of 2009, business travel in the United States was 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 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."

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' 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. Theodore Koumelis - Friday, September 18, 2009