Businesses can realize more than $15 in profits for every $1 spent on business travel; the research shows that companies are potentially losing out on nearly $200 billion in 2009 in additional gross profits because they are not optimizing their investments in strategic business travel.
The IHS Global Insight study was conducted on behalf of the National Business Travel Association (NBTA), the premier organization representing professionals in the business travel industry including the travel departments of the majority of Fortune 500 companies, and American Express Business Travel.
The report, "Can We Afford Not to Invest in Business Travel?," published today expands upon findings previewed last month at the NBTA International Convention & Exposition and is part of a comprehensive business travel research initiative. The project also includes elements examining the size and scope of the global business travel industry and the industry's economic impact completed in partnership with Egencia™, the corporate travel arm of Expedia Inc.
The analysis shows a clear link between travel spending and corporate profits, with the return on investment varying across the 15 industries examined. The study also illustrates that for each industry there is a point at which increasing business travel spending begins to cut into profits.
"Face-to-face client meetings and trade shows remain the primary tools for increasing sales, yet many companies view business travel as an expense to be cut rather than the rewarding investment it is," said John Larson, Managing Director of Decision Analytics and Economic Impact Analysis at IHS Global Insight.
NBTA Research Consultant Kenneth McGill added, "Executives know from experience that travel facilitates the types of exchanges that help keep clients, gain new business, and make employees more effective, but making the business case for travel has been challenging without supporting data. Now for the first time the discussions around travel budgets will be informed with research establishing the link between business travel and profits."
Among the study's key findings:
Business Travel Contributes to Sales: A significant and measurable relationship exists between business travel expenditures and sales volumes.
Sizeable Returns on Investment: An average return on business travel investment of 15-to-1.
Returns on Investment Vary by Industry: Returns on investment vary across each of the 15 industry segments in the study.
$193 billion in Profits at Stake: Companies within most industry segments are not operating at optimal travel expenditure levels and collectively could realize $193 billion in additional profits.
Massive Stimulative Effect on the U.S. Economy: Increasing travel expenditures to optimal levels could create 5.1 million new jobs, generating more than $101 billion in tax revenue.
The study examines 10 years of data for 15 industry sectors covering the U.S. economy, analyzing industry-level data on business travel, business expenses, revenues and profitability in order to establish a link between business travel and corporate profits.
In 2008, U.S. businesses spent $261 billion on travel expenses. Using a model that comprehensively examines both industry sales and cost determinants, including business travel expenditures, the analysis identifies optimal levels of business travel investment for the U.S. economy as a whole and by the 15 industry segments.
The research found that nearly all industries are currently spending below their optimal threshold for business travel and, on average, some industries could increase travel expenditures by as much as 3.0%, while others would require a more modest increase of 0.5% in order to approach optimal levels.
To obtain the report "Can We Afford Not to Invest in Business Travel?" contact pr@nbta.org or jim.dorsey@ihsglobalinsight.com. Additional data and analysis will be available at the end of the month to NBTA members and from American Express Business Travel eXpert insights research practice. www.ihsglobalinsight.com 
