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, according to American Express Global Business Travel.
A new study revealed that travel is a competitive advantage for corporate growth as the economy recovers. Even though T&E (second largest spend category) has increasingly been elevated to a C-level priority, this area of expense is often undervalued and overlooked, the report says. However, Return on Investment Refresh: Travel as a Competitive Advantage exposed the link between travel budgets and top-line growth in businesses throughout various economic climates.
Some key findings:
• To reach optimal revenue potential, keeping all other factors constant, the study indicates U.S. industries could increase business travel spending by an average of just over four percent (4%).
• This translates to an average of just over $70 dollars more per worker.
The new research was conducted by American Express Global Business Travel and the GBTA Foundation (Global Business Travel Association) and benchmarks the travel spending businesses require to help support their growth. The study suggests 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, American Express said.
This new study continues research initiated in 2009 that first explored the link between travel and business growth. "This latest research offers further evidence of travel’s compelling link to corporate growth, and through benchmarking data provides guidance to businesses on the ideal level of travel spending needed to drive revenue in both expansionary and recessionary periods. Additionally it identifies industries in which the optimal level has likely been reached and industries where opportunities remain to reach their potential."
The research analyzed business travel spending from a sample of nearly 900 public companies across the past decade of economic cycles. The findings indicate business travel is a contributing factor in helping companies drive revenue:
• The percentage of under-spend varies when looking at specific industry sectors -- 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.
• 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.
"This study further affirms the link between business travel spending and corporate growth, giving businesses a reason to think about travel as an essential investment and not just a bottom-line expense to incrementally reduce year after year," said Christa Degnan Manning, director of eXpert insights and Research, Advisory Services, American Express Global Business Travel.
"With this research corporations have the ability to take their managed program to the next level and use the benchmarking data to competitively manage their budget, by understanding if they are operating at their optimal level," said Craig Banikowski, president and CEO of the Global Business Travel Association. "Business travel is a key component to the success of a company and business travel buyers must play a role by working directly with the C-level to drive revenue growth."