Companies That Spend More on Travel See Big Boost to Business

Antiquated booking systems, cramped flights, and rushed trips have long plagued the world of business travel, as employees bear the brunt of company cost-cutting measures in order to help the bottom line.

What if all the misery isn’t really worth it?

Companies that spend more on travel reap major rewards, particularly in terms of customer loyalty, employee satisfaction, and market share, according to a new report from Harvard Business Review and travel management company Egencia.

The report surveyed 587 business leaders, mainly in North America and Europe, on their company’s travel culture and the impact it had on their organizations’ business performance over the past year. Nearly half of respondents who reported a strong travel culture, one in which travel was seen as an investment opportunity rather than a cost to be minimized, reported significant business improvements.

“Companies with a strong travel culture had double the rate of improvement in key areas such as customer loyalty and retention (50 percent vs. 21 percent), market share (43 percent vs. 22 percent), and employee satisfaction (35 percent vs. 15 percent), compared to companies with a weak travel culture,” the report states.

This extends to profitability as well: Companies with a strong travel culture reported a 47 percent improvement in profitability, compared to 29 percent improvement for companies with a weak travel culture.

Business Improvements Over the Past Year By Travel Culture

Source: Harvard Business Review

The reasoning behind these numbers is pretty straightforward. Companies that invest more in travel are likely able to maintain stronger relationships with customers, by virtue of seeing them face-to-face more frequently. This, in turn, may translate into higher sales and a larger presence in the market.

This goes for employee relationships as well. International companies may foster a stronger sense of unity by offering more opportunities for employees to meet in person with coworkers based in different geographical areas.

Only about a third of respondents, however, reported working in a company with a strong travel culture, despite the fact that most business leaders surveyed agreed that travel culture is “very important to their organization’s business performance.”

“Most respondents say their organization manages corporate travel not as a strategic investment in its future but as a cost to be minimized,” reads the report. “Not surprisingly, a significant number also reported struggling with such issues as tight travel budgets, clunky travel systems, unclear travel processes, and inflexible travel policies and options.”

This takes a toll on employee satisfaction.

“While you can’t spend your way to success, you can’t cost-cut your way to it either,” Will Tate, partner at GoldSpring Consulting, told researchers. “Finding the right balance is key, and organizations need to look for the optimal way to spend their travel dollars for an optimal return.”

The report also correlates the benefits of higher investment in travel with the use of a single travel management company.

Three-quarters of respondents who said they worked for a company with a strong travel culture reported that their organization used a single travel management company. Half of respondents from companies without a strong travel culture reported the use of a single travel management company.

Simply having a single travel management company does not mean all, or even most, employees at the company will use it. A recent report from the Association of Travel executives and American Express Global Business Travel found that a large number of travelers were reluctant to use company booking tools, even when it was mandated.

Businesses with a higher volume of travelers are more likely to employ travel management companies, and they are also more likely to be larger, two aspects that may increase the incentive and capacity to invest in business travel.

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