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September 29, 2009
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THE CASE FOR FACE-TO-FACE:Inside the latest US research




A new survey of American companies provides a striking insight into the importance of business travel and events to business and the US economy. Ian Whiteling reports…

A recent study by Oxford Economics has produced a powerful series of statistics in support of corporate travel and events, showing the key role they play in business success in the US.

Covering 14 economic sectors over 13 years, the researchers accounted for other factors contributing to business growth and productivity when producing their study. What’s more, the findings were verified through a combination of three separate surveys of corporate executives and business travellers, and a broad review of related research. Meanwhile, the results were also reviewed by an adjunct professor of finance at the celebrated Wharton School, Dr Martin A Asher.

This approach has been successfully used by Oxford Economics in previous analyses for European travel, and has been documented in academic literature.

 

Business imperative: executive travel for meetings and
events is critical to both business and the economy

 

Profiting from travel
Dealing first with business travel, this was defined as “those journeys that include sales trips, meetings, conventions and incentives”, reinforcing the growing connection between travel and events.

The study found that for every dollar invested in this area, businesses experience an average $12.50 in increased revenue and $3.80 in new profits. Furthermore, curbing business travel was found to have a negative impact on corporate profits.

“The average US business would forfeit 15% of its profits in the first year of eliminating business travel,” reveals the study, adding that it would take more than three years for profits to recover.

Executives surveyed cited customer meetings as having the greatest returns, in the region of $15 to $19.99 per dollar invested. Executives also identified the average return on conference and trade show participation to be in the range of $4 to $5.99 per dollar invested.

Up close and personal
“Face-to-face interaction strengthens US business and the economy,” concludes the report. It backs up such claims with findings that both executives and business travellers estimate that 28% of current business would be lost without in-person meetings.

Both executives and business travellers also believe that roughly 40% of their prospective customers are converted to new customers with an in-person meeting compared to 16% without such a meeting.

Furthermore, more than half of business travellers stated that 5% to 20% of their company’s new customers had resulted from trade show participation. Meanwhile, 85% of corporate executives perceive web meetings and teleconferences to be less effective than in-person meetings with prospective customers, with 63% believing virtual meetings are less effective than getting face-to-face.
 
Economic benefits
The Oxford Economics research also demonstrated the importance of business travel to the US economy, stating that the sector is responsible for $246 billion in spending and 2.3 million jobs. Some $100 billion of this spending, and nearly one million jobs, are also linked directly to meetings and events.

In the first six months of 2009, the study reveals that total business travel spending was down 11.9%, with a 4.4% decline in overall volume. Interestingly, it added that “a 10% increase in business travel spending will increase multi-factor productivity, and therefore US gross domestic product by between 1.5% and 2.8%.”
 
Incentives for meetings
“Meetings and incentives are essential to the development of human capital,” states the report, revealing that companies would need to increase an employee’s total base salary by 8.5% in order to achieve the same effect of incentive travel, according to executives.

Most corporate travelers surveyed identified internal company travel as key to professional development (66%), job performance (58%) and morale (56%). Internal meetings received the highest marks, with 73% of executives indicating a significant impact on employee performance and 66% confirming the importance of travel to staff morale.

Finally, almost 80% of executives indicate that incentive travel has a positive impact on employee morale and job satisfaction, with more than 70% saying it improves employee performance.

Although the study focuses on the US, it’s reasonable to assume that the findings are not likely to be restricted to the country, but could equally apply to other jurisdictions. They also show the important part that business travel, meetings, conferences, events and inventives play in modern marketing, both internally and externally, while pouring scorn on the widespread criticism the sector has been subjected to during the recession.

You can download the full report at Meetingsmeanbusiness.com/value-meetings

 


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