Travel Industry Leads Economic Recovery
According to a recent report from Roger Dow, President of the U.S. Travel Association, on how tourism benefits the U.S. economy, direct travel spending in the United States totaled $855 billion in 2012, generating $2 trillion in economic output and more than $129 billion in tax revenue. Travel directly employed 7.7 million Americans and was among the top 10 employers in 48 U.S. states and the District of Columbia.
The most lucrative segment of this sector is “long-haul” or overseas travel, says the report. The overseas traveler stays longer and spends more, for an average of 18 nights and nearly $4,500 per visitor per trip. Millions of global citizens are now traveling abroad and for every 33 overseas travelers who decide to visit the U.S. an additional American job is created.
Since 2010 the travel industry has helped lead the economic recovery by restoring 85% of the jobs lost during the downturn compared to just 69% of the rest of the economy. Today, travel is our nation’s number one service export. In 2012, travel exports totaled $168.1 billion (including traveler spending and international passenger fare payments to U.S. carriers), yielding a record $50 billion travel trade surplus.
While “travel” frequently connotes tourism, acknowledges the report, business travel accounts for nearly a third of all travel spending. In 2012, domestic business travel generated an estimated $225 billion in direct spending, 5% higher than the previous year and above the all-time high reached in 2007. Business travel directly created nearly two million American jobs. Totaling the deals done, products sold and opportunities created at industry conferences and trade shows that also employed scores of hospitality workers, the total number of jobs supported was 3.7 million.
The report says that U.S. business travel is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and nearly 1 million American jobs are linked directly to meetings and events.
An Oxford Economics study, recently released, shows that every dollar invested in business travel generates an average $9.50 in increased revenue and $2.90 in new profits. In addition, the study found that companies that invested the most in business travel during the recession have grown faster than those that cut back on travel. Data from 2007-2011 for 61 industries shows sectors that spent the most on business travel throughout the recession posted higher profit growth.
The study by Oxford Economics is summarized by the U.S. Travel Association showing that business travel drives revenue and profits:
- For every dollar invested in business travel, Oxford Economics determined that businesses experience an average $12.50 in increased revenue and $3.80 in new profits
- Curbing business travel has a negative impact on corporate profits. The average U.S. business would forfeit 15% of its profits in the first year of eliminating business travel. It would take over three years for profits to recover
- Business travel includes sales trips, meetings, conventions and incentive trips.
- Executives cited customer meetings as having the greatest returns, in the range of $15-$19.99 per dollar invested
- Executives identified the average return on conference and trade show participation to be in the range of $4-$5.99 per dollar invested
- Oxford Economics set out to enable businesses to make more informed decisions, particularly during challenging economic times
The report included a survey of American business travelers who support these findings:
- 60% found that virtual meetings are less effective for meetings with prospects than in-person meetings
- Business travelers reported that they are twice as likely to convert prospects into customers with an in-person meeting than without one
- 74% reported that in-person meetings with clients deliver a high impact on customer retention
- 42% of executives stated that they would lose their customers without face-to-face meetings
Both executives and business travelers estimate that 28% of current business would be lost without in-person meetings
- Both executives and business travelers estimate that roughly 40% of their prospective customers are converted to new customers with an in-person meeting compared to 16% without such a meeting
- More than half of business travelers stated that 5 to 20% of their company’s new customers were the result of trade show participation
- 85% of corporate executives perceive Web meetings and teleconferences to be less effective than in-person meetings with prospective customers, and 63% believe virtual meetings are less effective than in-person meetings with current customers