Some
Rediscover the Benefits of Business Travel
By TANYA MOHN
Published November 23, 2009 – New York Times
When the economy collapsed last fall, many companies had to make
some quick decisions about travel, typically one of the first areas
they trim when finances are tight. Should they cut back as most
of their competitors were, continue business as usual or spend
even more to get a leg up?
Most companies — about 85 percent — decreased travel
spending, according to the National Business Travel Association,
a trade group. But two recent reports, commissioned independently
by the business travel association and another trade group, the
U.S. Travel Association, found a clear link between business travel
and corporate profit.
While both groups have an interest in promoting business travel,
Henry H. Harteveldt, travel analyst for Forrester Research, agreed
that in-person meetings were important in promoting business. “We
are social beings,” he said. “There are emotional as
well as rational benefits to face-to-face meetings.”
Ultimately, he added, “Nothing replaces two business people
building a professional relationship in person.”
But he said companies should avoid unnecessary expenses and ensure
that travel was purposeful. With forethought, Mr. Harteveldt said, “there
can be enormous benefits.” But companies must be careful
not to overreact. Relying too much on technology or cutting back
too sharply, he said “can be just as harmful as wasting money
on business travel.”
Geoff Freeman, senior vice president for public affairs for the
U.S. Travel Association, said that business travel was unfairly
characterized as an excessive perk in the wake of the taxpayer-financed
bank bailouts last year. “It left the industry terribly exposed,” he
said. “There was anger, there was emotion, but there was
not enough data.”
Adam Sacks, managing director of Oxford Economics, the firm that
prepared the U.S. Travel Association report, said the results confirmed
the bottom-line value of business travel using government data
that covered 14 economic sectors over 13 years, a broad review
of related research and surveys of corporate executives and business
travelers.
To some extent, Mr. Sacks said, the findings confirmed what business
people already knew intuitively: curbing travel may save money
in the short term, but there are significant long-term benefits
from investing in business travel. “Not all cuts are smart
cuts,” he said.
Last fall and spring, Brian Jacobsen, co-president of Madison
Park Greetings, a stationery and gift company in Seattle, said
he carefully weighed how best to ride out the tough economic climate,
and “made a strategic decision to do more travel.” He
made cuts in other areas, and paid almost every bill using credit
cards so the company could earn free tickets. “We have actually
increased our travel budget this year by 20 percent,” he
said. “We saw it as an opportunity to have more of a presence
while our competitors have been cutting back.”
In September, for example, his company provided the featured gift
tote bags for celebrities at a fund-raising luncheon before the
Emmy Awards in Los Angeles. He also sent the designer of the bags
to network there. Her presence was not essential but “led
to all sorts of opportunities,” he said.
The company was asked to provide gifts for similar philanthropic
events preceding the American Music Awards this past weekend and
the Golden Globe Awards in January, Mr. Jacobsen said. “It
was all the result of one travel trip.”
Brian Parish, president of IData, a technology consulting company
for higher education based in Alexandria, Va., said he, too, saw
the direct impact of in-person encounters. Earlier this year, negotiations
for a couple of projects stalled. “They seemed on the fence,” he
recalled. “We braced ourselves.” So he quickly flew
out to meet the prospective clients.
“We got the deal,” in both cases, said Mr. Parish,
who estimated the accounts to be worth a total of well over $400.000. “They
were two clients we probably wouldn’t have had without making
the trip. It showed them we were serious,” he said.
Craig A. Banikowski, president of the National Business Travel
Association, noted in an e-mail message that two separate studies
reached essentially the same conclusion. “When you read either
study,” he said, “you come away with the same questions:
Is my business investing enough in traveling? Are my competitors
going to gain the edge by optimizing their travel? Answering these
questions effectively could mean the difference between surviving
and thriving as we climb out of the recession.”
Brooks C. Holtom, associate professor of management at the McDonough
School of Business at Georgetown University, said he was initially
skeptical of the two reports. After reading both, Professor Holtom
said that “deeper analysis would have benefited organizational
decision makers since the return on investment varies substantially
by type of travel and industry.”
But despite some concerns, “I agree with the broad findings” of
the reports, he said, “In fact, relationships with people
matter. All else equal, people do business with people they like.”
Mitch Mounger, president of Sunrise Identity, a promotional merchandise
agency in the Seattle area, said his company had struggled to maintain
the right balance.
”We certainly have felt the pain of the economic downturn,
and it has impacted our business travel decisions,” Mr. Mounger
said. He no longer has a set travel budget, for example, and each
trip must be justified. “There are less fishing expeditions,” he
said.
The company now uses several strategies to make trips affordable
and productive, like arranging meetings all in one day to avoid
hotel stays, and clustering cities and regions into one trip rather
than making several. Sales representatives even call on colleagues’ clients
if they happen to be in the area, unheard of before.
“We believe in business travel,” Mr. Mounger said. “You
just have to be smart about it.”
He added, “I don’t have data, but every time we do
it, good things happen.”
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