Travel Trends: "Not All Cuts are Smart" — plus Antarctica — by Lakshman Ratnapala

Not all spending cuts are smart cuts.When companies reduce their travel budgets, there are negative consequences in lost revenue and profit growth and terms of giving competition a distinct advantage.

A new study that for the first time measures the return on investment of business travel finds the average business in the U.S. would forfeit 17 percent of its profits in the first year of eliminating business travel, and it would take more than three years for profits to recover. In the first clear link between business travel and business growth, the research finds that for every dollar invested in business travel, businesses experience an average of $12.50 in increased revenue. The research shows that face-to-face meetings and incentive awards to top performers are among the smartest investments companies can make.

In tough economic times, many business executives have an understandable short-run focus on managing costs. The study points out the less visible — but significant — long term benefits resulting from business travel, such as partnership building and new business opportunities. Increased business travel in a down-economy can actually increase profits and reduce the financial decline companies might otherwise suffer.

It is estimated that 28 percent of current businesses would be lost without in-person meetings. Roughly 40 percent of prospective customers are converted to new customers with an in-person meeting, compared to 16 percent without such a meeting. Corporate executives cited customer meetings as having the greatest returns, approximately $15 – $20 per dollar invested, with conference and trade show participation returns ranging from $4 – $6 per dollar invested.

Business travel in the U.S. is responsible for $246 billion in spending and 2.3 million American jobs. $100 billion of this spending and 1 million jobs are linked directly to meetings and events. In the first six months of 2009 business travel was down by 12.5 percent and business travel volume was down more than 6 percent. This new research study was commissioned by the U.S. Travel Association and conducted by the global research firm Oxford Economics.

Meanwhile, in a separate development, controls are to be placed on cruise ships visiting Antarctica, in order to reduce the growing threat of human and environmental disasters posed by exploding numbers of tourists. Until recently shipping in Antarctica was limited to scientific vessels, but traffic has burgeoned in recent years as tourists flock to see the world’s last great wilderness.

Annual tourist numbers have grown from about 10,000 a decade ago to 45,000 last year. Tourists pay between $3,000 and $24,000 for a two-week trip, ranging in style from basic hotel to all-out luxury. Existing rules bar tour operators from leaving behind anything — like garbage or human waste — and protect animal breeding grounds. But there are no codes on the type of vessels than can use the waters or the types of fuel and other chemicals that they can carry. Heavy fuel oils pose the greatest threat of long-term environmental damage. A proposed code of control now being considered by experts would cover vessel design and construction for polar operations, equipment and new training. It will be presented in May.

Lakshman Ratnapala
BATW International Advisor

(photo of Antarctica © Morton Beebe)

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