A recent report from the World Travel & Tourism Council
presented evidence of a "strong connection between spending on business travel
and corporate performance" and a positive influence on international
trade. Researchers also found that reducing business travel "poses
significant business risks," including losing customers to the
competition.
The
study calculated an average 10:1 ratio of sales to business travel investment.
"In other words," researchers explained, "one unit of new
business travel spending produces incremental industry sales of ten
units." They concluded that those investing in travel "seem to
experience returns that more than warrant the investment."
To
calculate ROI, WTTC worked with Oxford Economics to design an "econometric
analysis" covering 190 countries.
North America produced an average
estimated ROI of 11.5, behind Central/South America (13.3) and European
countries outside of the European Union (12.8). With an ROI of 6.9, the
European Union had the lowest estimated ROI. North America and Asia/Pacific had
the highest "business travel intensity," as such spending accounted
for 1.7 percent of gross domestic product, followed by the European Union and
Africa (each 1.5 percent). Central/South America had the lowest business travel
intensity at 0.9 percent of GDP.
"Differences
across regions are partly determined by the industry composition of countries
within each region," according to the report. "Historic relationships
between business travel and industry-by-industry productivity are also
important, reflecting relative spending on business travel across countries,
and underlying productivity changes over time. For example, a higher estimated
ROI has been determined for the United States than for the European Union,
consistent with overall higher productivity response in the United States over
the past 20 years but also reflective of different industry compositions."
Researchers
also noted "a stronger response to business travel in emerging markets
that are receptive to growth in key productivity sectors," and said their
analysis "reveals a clear link between international business travel
growth and growth in world trade. Countries with a larger outbound business
travel market tend to enjoy higher exports, while faster growth in business
travel is also linked to more rapid trade growth."
Trade impact
The
WTTC study also sought to measure business travel's role in international trade
and global employment. For example, citing macroeconomic analyses, researchers
found that "business travel is responsible for about a third of the growth
in world exports over the past decade. These benefits have been shared by both
developed and developing economies." They also concluded that "a
causal relationship exists between a higher level of business travel intensity
and higher trade intensity."
The economic model assessed the ramifications of a hypothetical 25 percent cut in worldwide
business travel during a two-year period and determined that global GDP over
five years would drop 5 percent and 30 million jobs would be lost, representing
1 percent of worldwide employment.
"Given
the dividends of productivity, jobs, exports and taxes generated by business
travel," WTTC stated, "policies should be designed to foster this
catalyst of the global economy."
For
individual organizations, respondents to an associated WTTC survey indicated
that business travel facilitates sales growth. On average, with in-person meetings,
50 percent of their prospects convert to sales. Without in-person meetings,
they estimated 31 percent. Similarly, respondents on average estimated that
"38 percent of their customers would switch to a competitor and their
companies would lose 37 percent of annual sales without in-person meetings."
The
survey included responses from 500 business travelers and executives, 100 from
each of Brazil, China, Germany, the United Kingdom and the United States.