LANDMARK STUDY REVEALS ROI OF BUSINESS TRAVEL
New Research Estimates $12.50 is Generated in Corporate Revenue for Business Traveling to New Orleans Each Year
WASHINGTON, DC, September 15, 2009 – A comprehensive study 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 findings. 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 reduce 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 United States 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 New Orleans’ economy, but this study quantifies the return on investment that businesses experience when they hold meetings, conferences and events here,” said Stephen Perry, President and CEO of the New Orleans Metropolitan Convention and Visitors Bureau. “In addition to the $3.80 in corporate profits returned on travel investment to our destination, companies strengthen business relationships, grow employee’s morale and job performance, build industry partnerships and retain customers.”
As a member of the U.S. Travel Association Executive Committee, Perry was in Washington DC today with other national travel industry leaders for the official announcement of the study’s findings.
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. The Hospitality Industry in New Orleans employs approximately 78,000.
“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’ 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
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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.
Consistently recognized as one of the top five convention and visitor bureaus in the United States, The New Orleans Convention & Visitors Bureau is the driving force behind New Orleans' most important industry, tourism. In 2008 New Orleans welcomed 7.6 million visitors, an increase over 2007 visitor levels of 7.1 million people. For more information, visit www.neworleanscvb.com.