• by Jack Loechner , Staff Writer @mp_research, March 4, 2011

New research by American Express Global Business Travel and the GBTA Foundation, Travel as a Competitive Advantage, offers further evidence of travel's compelling link to corporate growth. The report concludes that travel can be an overlooked means to gain competitive advantage, and those companies that regard travel expenditures as indirect costs to be minimized cut into a key established expansion driver.

This new study, Return on Investment Refresh: Travel as a Competitive Advantage, is the continuation of research initiated in 2009 which first explored the link between travel and business growth. The study shows that the economy-wide average return on investment to business travel spending is about 20-to-1, meaning that for every $1 strategically invested in business travel, businesses have seen an average of $20 in additional gross profit.

Christa Degnan Manning, Amex Advisory Services research director, says that "Ten years ago, travel was 1.4 percent of every revenue dollar; now it's 0.9 percent."

To reach optimal revenue potential, says the report, keeping all other factors constant, U.S. industries could increase business travel spending by an average of just over 4%, or an average of just over $70 dollars more per worker.

The research studied 14 different industry sectors to determine that business services, entertainment and sports sectors typically already operate closer to optimal levels, while banking and finance, pharmaceutical and retail companies could likely benefit from greater business travel spending growth.

Amon Cohen, summarizing the study for Business Traavel News, points out that 

the new report attempted to predict how much more companies are likely to spend on travel when they open a new location. A 1% increase in the number of locations was associated with an incremental travel budget increase of 0.17% percent. For example, if a chemical manufacturer with revenue between $500 million to $1 billion, 10 locations, and current air travel expenditures of $466,000 added five new domestic locations, that company could expect to need an additional 8.5% more air spend, or about $40,000.

Manning concludes that "Companies can use this study as a guidepost in evaluating optimal levels of spending... as well as benchmarking themselves relative to their peers... (and) considering virtual meeting solutions is a key component to achieving a balanced, successful program."
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