temp




News Release


NEW RESEARCH EXPLORES LINK BETWEEN BUSINESS TRAVEL AND PROFIT 

 

  

-- Research Also Examines Optimal Level of Business Travel Expenditure for 15 U.S. Industries, Finding Some May Have Reached Max, Others Have Potential to Grow --

 

 

New York, NY and Alexandria, VA. September 3, 2009 - Research conducted by IHS Global Insight   and previewed during the National Business Travel Association (NBTA) International Convention & Exposition held last week in San Diego explores the link between changes in business travel and sales and profits. The research, commissioned by NBTA and American Express Business Travel, used data spanning ten years from 1998 to 2008 and across 15 industries and 9,500 U.S. companies.

 

IHS Global Insight Principal Christopher Pike offered, "For most companies and industries, the pressure to cut business travel is actually counter to the goals of maximizing revenues and profits. Although the findings do vary by industry, in looking at the past 10 years, the study indicates an incremental one percent increase or decrease in travel spend yielded in aggregate a corresponding 1.7 percent increase or decrease in sales.”

 

NBTA Chair and Past President, Kevin Maguire, CCTE, GLP, said, "Having the ability to demonstrate the return on travel investment has increasingly become a focus and a key deliverable of our members to their organizations. We thought it was important to invest in this ground-breaking research to get past the pro-business travel and anti-business travel rhetoric and test the correlation between business travel and sales and profits. This study is a first step in better understanding the value of business travel to corporate top and bottom line performance and offers an important benchmark for companies across a wide industry spectrum."

 

 American Express Business Travel Vice President and General Manager Hervé Sedky added, "Companies often view business travel as a non-essential area of spend, found at the front of the line when spending cuts are being considered. We supported this research to begin to apply the critical ROI business discipline to travel that business leaders need to guide decision making around all expenditures and tie them to business outcomes. Companies not only have to understand the optimal mix of travel for their industries and companies, but they need to know how to best use those dollars by investing in smart travel programs during the downturn so they are in a better position when the economic recovery takes hold.”

 

Kenneth McGill, NBTA Research Consultant, said, “When looking at the 10 years of data and isolating only the influence of business travel, the research suggests that business travel is being underutilized in the U.S, although it does vary by industry. Using 2008 results as a starting point, the study shows that economy-wide corporate profits would be maximized at a point where business travel spending is increased by 5.3 percent or about $14 billion. Using the correlation established over the last 10 years, increasing travel this much could result in increased total industry sales of 3.7 percent or $894 billion. Adding in the additional business travel expense and assuming other costs are proportional, gross operating profits for U.S. business in aggregate would increase by $224 billion or 4.4 percent . However, this correlation does not factor in the current recession of 2009 and the fact that business travel is expected to contract by 14.7 percent this year.” 

 

The research also explored the optimal point of travel for each industry sector. Of the 15 industries studied, IHS Global Insight’s findings indicate that industries such as Chemical Manufacturing (which includes pharmaceutical and medicine) and Retail/Wholesale could have benefited by increasing their average yearly investment in business travel over the last 10 years. Other industries, such as Business Services and Consulting may have reached their maximum return on travel expenditures based on the last 10 years of average spending data, and an increase in business travel is not likely to correlate to increased sales and profit in those industries.

 

Initial findings of this research were unveiled during an educational session at the 2009 NBTA International Convention & Exposition, held last week in San Diego. The full report of this research is expected to be published at the end of September. NBTA members and subscribers to eXpert insights, American Express Business Travel Global Advisory Services research practice, will receive access to the full study once available.

 

IHS Global Insight ROI Travel Methodology

IHS Global Insight developed an approach to statistically correlate the level and change in business travel spending with sales and profit for fifteen industries, comprising 9,500 companies, over the ten-year period 1998-2008. The principal sources of industry performance measures included the US Bureau of Economic Analysis and Compustat®, a Standard & Poors database of individual public company performance. The impact of travel spending was isolated by simultaneously accounting for the influence of other determinants of sales and profit, including demand drivers, supply factors, and inflation for each sector. Travel's influence on sales was modeled with careful consideration of each industry's varying level of travel utilization, as well as the rate of diminishing returns to travel spending. Additionally, a key basis of the research was sizing the business travel market, estimated at $929 billion in 2008.

 

Analysis contained in the IHS report represent the opinions and analysis of IHS and do not represent the opinions or analysis of American Express Company or any of its affiliates, subsidiaries or divisions.

 

 

About American Express Business Travel
American Express Business Travel (www.americanexpress.com/businesstravel), a division of American Express Company, is committed to helping its clients maximize the return on their travel investment through increased cost savings, world-class customer service and greater spending control. With clients ranging from small businesses to multinational corporations, American Express Business Travel provides a combination of industry-leading technology, travel management consulting, strategic sourcing and supplier negotiation support, alongside global customer service available online and offline. The Company also provides a dynamic online community (www.BusinessTravelConneXion.com) harnessing the collective intelligence of those in the business travel industry offering a variety of perspectives, best practices, current research and industry news.

 

American Express operates one of the world’s largest travel agency networks with locations in over 140 countries worldwide. Total travel sales volume in 2008 was $29.1 billion, including proprietary volume, volume processed through joint ventures, and American Express branded volume processed through its partner network.

 

American Express Company (www.americanexpress.com) is a leading global payments, network and travel company founded in 1850.

 

 

 

 

About IHS Global Insight

IHS Global Insight (www.globalinsight.com), an IHS company, provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS) is a leading global source of critical information and insight, dedicated to providing the most complete and trusted information and expertise. IHS product and service solutions span four areas of information that encompass the most important concerns facing global business today: Energy, Product Lifecycle, Security, and Environment supported by Macroeconomics. IHS employs approximately 3,800 people in 20 countries.

 

###

 

 

CONTACT:       

 

NBTA: Nicole Hayes, +1 703-684-0836, ext. 133, nhayes@nbta.org

Sloane & Company for American Express Business Travel: Kristine Nalbone, +1 212-446-1897, knalbone@sloanepr.com  

IHS Global Insight: Jim Dorsey, +1 781-301-9069, jim.dorsey@ihsglobalinsight.com



The National Business Travel Association (NBTA) is the world’s premier business travel and corporate meetings organization. NBTA and its regional affiliates – NBTA Australia / New Zealand, the Brazilian Business Travel Association (ABGEV), NBTA Canada, NBTA Europe, NBTA Mexico, and NBTA USA – serve a network of more than 17,000 business travel professionals around the globe with industry-leading events, networking, education & professional development, research, news & information, and advocacy. NBTA members, numbering more than 5,000 in 30 nations, are corporate and government travel and meetings managers, as well as travel service providers. They collectively manage and direct more than US$340 billion of global business travel and meetings expenditures annually on behalf of more than 13 million business travelers within their organizations. For more information, visit www.nbta.org