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WTTC Study Calculates Global Business Travel ROI Of 10:1

A recent report from the World Travel & Tourism Council presented evidence of a "strong connection between spending on business travel and corporate performance" and a positive influence on international trade. Researchers also found that reducing business travel "poses significant business risks," including losing customers to the competition.

The study calculated an average 10:1 ratio of sales to business travel investment. "In other words," researchers explained, "one unit of new business travel spending produces incremental industry sales of ten units." They concluded that those investing in travel "seem to experience returns that more than warrant the investment."

To calculate ROI, WTTC worked with Oxford Economics to design an "econometric analysis" covering 190 countries.

North America produced an average estimated ROI of 11.5, behind Central/South America (13.3) and European countries outside of the European Union (12.8). With an ROI of 6.9, the European Union had the lowest estimated ROI. North America and Asia/Pacific had the highest "business travel intensity," as such spending accounted for 1.7 percent of gross domestic product, followed by the European Union and Africa (each 1.5 percent). Central/South America had the lowest business travel intensity at 0.9 percent of GDP.

"Differences across regions are partly determined by the industry composition of countries within each region," according to the report. "Historic relationships between business travel and industry-by-industry productivity are also important, reflecting relative spending on business travel across countries, and underlying productivity changes over time. For example, a higher estimated ROI has been determined for the United States than for the European Union, consistent with overall higher productivity response in the United States over the past 20 years but also reflective of different industry compositions."

Researchers also noted "a stronger response to business travel in emerging markets that are receptive to growth in key productivity sectors," and said their analysis "reveals a clear link between international business travel growth and growth in world trade. Countries with a larger outbound business travel market tend to enjoy higher exports, while faster growth in business travel is also linked to more rapid trade growth."

Trade Impact

The WTTC study also sought to measure business travel's role in international trade and global employment. For example, citing macroeconomic analyses, researchers found that "business travel is responsible for about a third of the growth in world exports over the past decade. These benefits have been shared by both developed and developing economies." They also concluded that "a causal relationship exists between a higher level of business travel intensity and higher trade intensity."

They economic model assessed the ramifications of a hypothetical 25 percent cut in worldwide business travel during a two-year period and determined that global GDP over five years would drop 5 percent and 30 million jobs would be lost, representing 1 percent of worldwide employment.

"Given the dividends of productivity, jobs, exports and taxes generated by business travel," WTTC stated, "policies should be designed to foster this catalyst of the global economy."

For individual organizations, respondents to an associated WTTC survey indicated that business travel facilitates sales growth. On average, with in-person meetings, 50 percent of their prospects convert to sales. Without in-person meetings, they estimated 31 percent. Similarly, respondents on average estimated that "38 percent of their customers would switch to a competitor and their companies would lose 37 percent of annual sales without in-person meetings."

The survey included responses from 500 business travelers and executives, 100 from each of Brazil, China, Germany, the United Kingdom and the United States.

Source: Business Travel News

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