The current economic situation has forced many companies to make hard financial decisions across the board. In many instances business travel and meeting funds are one of the first to diminish, as many companies look at the expense as nonessential to their day to day operations. Countless news stories have surfaced regarding corporations spending large amounts of money on lavish executive retreats and get a way's, while simultaneously laying off thousands of employees. This negative press has aided in cut back decision making and the hospitality industry has felt the backlash. In early 2009 the U.S Government implemented the Troubled Assets Relief Fund (TARP) in order to "bail out" many corporations that were in need of assistance. With this assistance came stipulations on corporate spending; this included any expenditures that might be viewed as a "luxury" items. In many instances corporate meetings, business travel, and special events were lumped in with the excessive spending notion. This culmination of events spawned many industry related associations to speak up and show law makers and corporate America that business travel is essential to their company's revenue stream, and is not something that can be thrown to the wayside.
In September of 2009 the U.S Travel Association partnered with the Destination & Travel Foundation to sponsor a nationwide study by Oxford Economics USA to examine the relationship between Meetings/Business Travel/Special Events and company performance. This variation in performance could have adverse affects on the national economy as a whole. The results Oxford Economics found were staggering. The population for the study consisted of over 400 corporate executives that on an average reduced their 2009 budgets by 35%, and decreased the travel/meetings budgets by 51% for the year. In many cases the allocated amount for business travel represented less than 1% of the average companies' total revenue.
Key research findings provide incontrovertible evidence to a positive correlation between business travel and a company's revenue stream. For every dollar invested in business travel, companies receive $12.50 in revenue. Research found that if an average corporation were to do away with business travel for a single year they would forfit 17% of their annual profits. Of all the business travel sectors, internal meetings received the highest mark with 73% of the executives seeing a significant impact on employee performance and 66% felt that business travel boosts employee morale. An April 2009 study surveying business travelers states that 75% of their customers prefer in-person meetings, and many require them.
It is evident that the correlation between business travel/meetings and corporation performance is strong, and the majority of the CEO's surveyed agreed with this concept. It will be interesting to see as the economy turns in the positive direction how those companies that decided to keep up with their business travel are performing in comparison to those that significantly cut their budgets.
