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Study: Business Travel Has Proven Long-Term Benefits
September 15, 2009
By Andrea Doyle
A study commissioned by the U.S. Travel Association and conducted by global research firm Oxford Economics establishes the first clear link between business travel and business growth.
According to the study, it was revealed that an employee’s total base compensation would need to be increased by 8.5 percent to achieve the same motivational effect of incentive travel. According to these figures, the incentive trip yields a return of more than four times the investment, not including any broader motivation the incentive opportunity provides to those who do not meet the award criteria.
Other findings indicated that for every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits. While that number refers to broader business travel, such as meetings and conventions, the research model did take into account that such trips often have an incentive component, even if it is just the fact that the meeting takes place in a resort, says Adam Sacks, managing director of Oxford Economics.
"This study shows that not all spending cuts are smart cuts," says Sacks. "When companies cut 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 U.S. would forfeit 15 percent of its profits in the first year of eliminating business travel, and it would take more than three years for profits to recover.
"Business travel is economic stimulus," says Roger Dow, president and CEO of the U.S. Travel Association, which commissioned the study. "In order to grow, businesses have to invest. This study shows that incentive awards to top performers are among the smartest investments companies can make."
For a copy of the full study, visit MeetingsMeanBusiness.com.
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