Face-to-Face or Cyberspace: Does business travel get better results?

Author: Jen Amos

Now, more than ever, Canadian businesses are tightening their belts and taking a hard look at their budgets for ways to trim costs. According to a September 2009 study conducted by IHS Global insight on behalf of the National Business Travel Association, travel is now viewed as a cost to be controlled, and businesses are seeing it as an expense rather than an investment. However, business travel seems to remain on our minds. At the time of printing, National Business Travel Association (NBTA) Canada reported that its 6th Annual Conference and Exhibitor Showcase, scheduled for April 2010 in Toronto, was already more than 90% sold out.

W. Scott Selbie is president of HAS-Motion Inc., a research and development company that focuses on interpreting the biomechanics of movement for sports or clinical movement. For the past two years Selbie has logged about 110,000 air miles annually, and added about another 20,000 miles with car travel. This year he travelled close to 50,000 air miles, or travelled for about a week per month. “The recession hurt travel,” Selbie says. “There was a dramatic change at the beginning of the recession. [For us], it started to turn around June, and right now it seems as if this change didn’t happen. But for the first six months of the year, my travel was way down and conference attendance was down. It was a strange time.”

Can you afford not to?

The IHS Global Insight and NBTA report, entitled “Can We Afford Not To Invest in Business Travel?” includes U.S. data, and results show a clear link between travel spending and a company’s profits. The amount does vary from industry to industry, however. Most importantly, the report identifies the point at which increasing business travel spending no longer increases profits, but instead turns into loss. The NBTA calls this “the Goldilocks Effect”, and it urges businesses to consider their travel budgets and ask themselves if they are spending too much, too little, or just the right amount.

Businesses are spending too little:

• If increasing travel expenditures would increase profits and sales over current levels
• If spending is curtailed before it reaches the optimal amount and unrealized profits are not obtained.

Businesses are spending too much:

• If increasing travel beyond the optimal amount also leaves profits below their highest possible amount.
• If businesses keep spending after the optimal point, losses are incurred as travel expenses exceed sales and cut into profits.

Spending just the right amount:

• When travel expenditures are optimized, the most possible profits are realized.
• Most businesses and industries are well below this optimal threshold.

Published in Your Workplace magazine issue 12-1