Corporate Travel Cuts May Hurt Business Recovery

Business Leader Survey: Companies that Maintain Travel
Spending Could Gain Competitive Advantage

WASHINGTON, D.C. – A new survey of business leaders finds that while corporate travel budgets are often the first target of cost-cutting measures, a majority believe that companies that increase travel budgets during an economic downturn will be better positioned to build competitive advantage.

Nearly three-quarters (72%) of businesses surveyed say that increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships. Half (53%) also believe that companies that reduce their business travel will give an advantage to competitors who maintain their travel commitment.

The findings illustrate the conflict within businesses that are under pressure to quickly identify cost reductions in the economic downturn. When making these reductions businesses may sacrifice longer-term strategic and competitive advantage.

“It’s a classic trade off between short term cost-reductions and long term value,” said Kellogg Business School Professor Daniel Diermeier, a Distinguished Professor of Regulation and Competitive Practice. “During times like these, many companies will go too far, and actually cut back on the activities that would best position them to compete in the future.”

The survey of business executives at companies with more than $50 million in annual sales found that:

82 percent of companies surveyed believe that business travel is important to achieving their business results;
81 percent believe that more client contact is necessary in a slow economy;
A strong majority (59 percent) strongly agree that in-person contact grows their business; and
72 percent of businesses believe that increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships.

“Travel plays an important role in business growth in a down economy, by helping businesses connect with their customers,” said Dr. Suzanne Cook, U.S. Travel’s Senior Vice President of Research. “It’s also clear from our survey results that the old maxim remains true; if you don’t take care of your customers, someone else will.”

The survey was commissioned by the U.S. Travel Association, and conducted by APCO Insight. Telephone and web-based interviews of 401 business executives were conducted from February 3-18, with a margin of error of + 5 percentage points.