ANALYSIS – Payback time: Measuring the return on investment in business travel

When business travel halted after 9/11 in 2001, British Airways ran a famous advertising campaign. It featured a British sales executive trying to win a contract by calling an American CEO on the phone. But a sales exec from a rival company flies to the US to meet the CEO face to face and signs the deal instead. The slogan for the ad was “It’s better to be there.”

“In regions like the Middle East and Asia, culturally it has always been essential to meet in person, but we saw that worldwide with the Covid pandemic,” says World Business Travel Federation co-president Sabah Kahoul. “Yes, routine meetings can be conducted through Teams or Zoom. But when people get back in front of each other, we realise there is no substitute for sharing information and inspiration.”

We all know instinctively that business travel is not a cost; it is an investment. But this is where things get complicated. Although we can measure the investment, what is much harder, perhaps impossible, to quantify is the return on that investment.

“If a company stopped all travel permanently it would soon be bankrupt, so empirically travel must have an ROI,” says Kahoul. “However, the many objectives that can be achieved through travel are often hard to calibrate. You might say that you won a contract worth $10 millon because you visited the client four times at a cost of $50,000, but do those numbers really tell you anything?

In many cases there are no numbers at all but the value of business travel is apparent even if it is unquantifiable. Did you retain a client because you visited them twice last year? Did your top research scientist make a breakthrough because of the three weeks they collaborated with colleagues in other countries? How do you evaluate team morale, knowledge development, risk control and relationship building, all of which are nurtured by bring people together in the same room?

Analysis published last year by the Global Business Travel Association and the American Society of Travel Advisors claimed that companies which increase their travel spend by 8 per cent can increase their sales by 6 per cent.

However, there are many variables which make these kinds of numbers uncertain. “We suggest thinking about ROI at individual trip level rather than in terms of total travel budget,” says Kahoul.

“Don’t feel obliged to find numbers. The important priority is to confirm every trip is useful to the business. Travellers and their managers can set an objective for the trip before it is approved and then assess on return whether the objective was achieved. If that kind of assessment is logged every time, you can be confident of making good use of the money you invest in travel – and the fantastic bonus is that it steers employees towards travelling only when they consider it genuinely important to the business.”

The other key success factor is to control the size of the investment. Control is not just about number of trips but also cost per trip. Could you get the same return (such as winning a contract) for a smaller travel investment?

“How much you invest in a trip is not a straightforward question,” says Kahoul. “You could save money by sending an employee in economy class instead of business class. But if they go straight from the airport to a sales pitch and arrive tired, they may perform badly, lose the contract and then there is no ROI.

“It may be better to keep your top sales executive in business class and look at other ways to reduce the investment, like negotiating a better deal with the airline and making sure the traveller books the airline you made the deal with.”