New York, NY –Our emaciated economy has everyone tightening their belts, at home and in the boardroom. While holiday parties, Christmas bonuses and business travel all top the list of expense culprits, a recent study by IHS Global Insight says that cutting travel costs may actually bruise business profits. The study shows that for every $1 spent on business travel, companies may see a return as high as $15.
Imagine that. A $3,000 business class ticket and a well rested, happy employee, brings back a return of $45,000. Compare that to a disgruntled, cramped worker bee who spends 10 hours subsisting on peanuts and ginger-ale. Who would you rather send to meet new clients?
In this age of instantaneous communication - twitter, facebook and text messages - it seems only logical to arrange virtual meetings at a fraction of the cost of a plane ticket. But contrarian logic may apply: companies could lose much as $193 billion in corporate profits by cutting spending on business travel.
“Companies have the opportunity to choose (their) own ROI,” says Paul Metselaar Chairman and CEO of Ovation Travel Group. “ That means first understanding that travel is as much an investment as expense, and then taking a surgical approach to maximizing the return on that investment by closely monitoring and exploiting all cost –cutting and upgrade options without sending your road warriors through the wringer.”
Not only do face-to-face meetings make for a more credible and successful business relationship, but, as the study proposes, they could translate into 5.1 million new jobs, generating more than $101 billion in tax revenue.
But how much spending is enough, and how do companies get the best deals? According to the study, in 2008, companies spent $261 billion on travel expenses, but this may not have been enough.
“Knowing how much to spend on business travel varies by industry and company size, says Julie Barsamian of Cook Travel, an American Express Travel Representative. “Companies also don’t always have the luxury of planning their business travel six months ahead, but by working with business class consolidators (like us), and using 2 for 1 American Express Promotions, they can still get discounted fares on last minute travel.”
What the study doesn’t address is why face-to-face communication is better for business or how it applies to business that doesn’t rely on client acquisition or maintenance.
“Most communication is non-verbal, it’s nuanced, it’s in body language,” says Barsamian. “As a traveling salesperson you can impart more of a lasting impression by exchanging a smile, than by exchanging e-mails.”
About Cook Travel – An American Express Travel Representative
The 35-year-old New York based company offers discounted insider fares.They have five offices, and generate phone and online sales through their website: www.cookamerican.travel
More information about the IHS Global Insight study can be found here:
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