Business travel: Investment or Expense?

While virtual meetings have undoubtedly become an integral part of modern business environment, face-to-face interactions via business travel remain invaluable. Despite early predictions of virtual meetings replacing traditional ones post-pandemic, business travel continues to thrive. The Global Business Travel Association (GBTA) projects global spending to rebound to pre-pandemic levels of $1.4 trillion by 2024, with an anticipated growth to nearly $1.8 trillion by 2027, driven by more favorable economic conditions than initially forecasted for 2022 and 2023.

This doesn’t come as a surprise to me. While business travel cost can be high, strategic business travel not only complements cost-saving measures and technology but also drives increased sales, productivity, and significant cost savings. For instance, a study by Oxford Economics reveals a ROI of $12.50 for every $1 spent on business travel, highlighting its effectiveness in client acquisition and relationship-building. Reports from Oxford Economics USA and the World Travel & Tourism Council also emphasize the higher conversion rates and negotiation effectiveness of face-to-face meetings.

In addition to winning new clients, corporate travel offers numerous advantages for businesses:

Maintaining professional connections: The key to business success extends beyond acquiring new customers to nurturing existing relationships through face-to-face communication. Phone calls may not sufficiently address needs like check-ins and conflict resolution. Investing in travel to meet clients in person shows appreciation and respect and is crucial for maintaining partnerships. Studies indicate that cutting travel costs could lead to client loss, with up to 38% possibly switching to competitors, resulting in a substantial decline in annual revenue, up to 37%, for corporations.

Networking opportunities: Business travel facilitates collaboration and relationship building internally within a company and externally within the industry. Professionals attending conferences and trade events stay updated on advancements and network with potential clients or establish new relationships. A report by Oxford Economics USA underscores that attending trade fairs can result in acquiring new clients (up to 20% of respondents) and finding new vendors (48% of respondents), highlighting the diverse benefits of business travel.

Employee development: Sending employees on business trips is an investment in their professional development. Exposure to diverse cultures, business practices, and challenges expands their skills, knowledge, and perspective, which in turn benefits the company. Furthermore, in-person interactions, brainstorming sessions, and team-building activities during business trips can revitalize remote working teams, fostering fresh ideas and energy.

As a CFO, balancing the benefits and costs of business travel is crucial. This involves considering direct expenses, as well as the impact on productivity. Implementing cost-effective travel policies, using technology for virtual meetings, and evaluating the ROI of each trip are key.

While artificial intelligence (AI) is bringing numerous changes to the travel industry, optimizing efficiency, streamlining processes, and enhancing customer experiences, there are situations, such as managing complex itineraries and navigating challenging scenarios, where human intervention remains essential. In 2023, Gartner predicated that decisions made by AI agents without human oversight will cause $100 billion in losses from asset damage by 2030. This is where a Travel Management Company (TMC) plays a crucial role. So how does a TMC support you in every aspect of your travel program? I’ve listed a few benefits below:

Cost savings: A TMC can help companies secure competitive rates on travel expenses like airfare and accommodation through negotiated contracts and bulk pricing, resulting in cost savings for companies.

Policy compliance: A TMC can help enforce travel policies and guidelines, ensuring employees adhere to budgetary restrictions, booking procedures, and preferred suppliers. This ensures consistency, controls costs, and reduces risks from non-compliance.

Efficiency: A TMC streamlines travel booking with online platforms, mobile apps, and 24/7 support, saving time for employees and reducing administrative burden, enabling focus on core business activities.

Duty of care: A TMC provides traveler safety support, including emergency assistance services, travel alerts, and risk management tools, fulfilling companies' obligations and ensuring employee well-being while traveling.

Data analysis and reporting: A TMC provides tools for tracking and analyzing travel expenses, helping companies identify cost-saving opportunities and optimize policies.

Expense Management: A TMC that adopts AI into their expense tool will reduce the manual workload for both employees and finance departments, resulting in quicker reimbursement cycles and enhanced accuracy.

Global expertise: For companies with international operations or frequent international travel, a TMC offers valuable expertise and support in navigating complex travel requirements, visa regulations, currency exchange, and cultural considerations. A TMC with global network can provide on-the-ground support in various locations worldwide.

Supplier relationships and negotiation: A TMC leverages relationships with travel suppliers to secure exclusive deals and ensure the best value for clients.

In conclusion, effective management of business travel and prioritizing travel management as an investment is key to retain global competitiveness but it’s not easy to do it all on your own. By partnering a TMC that harnesses AI to enhance human capabilities and provide exceptional service and value to travelers, you can elevate your employees' travel experience and more effectively attain your business objectives. At BCD, we've been leveraging AI for several years and we are embarking on a broad mix of AI projects in 2024. If you would like to learn more about these or how BCD Travel can optimize your travel program, please get in touch.