Companies too often overlook travel as a competitive advantage in driving corporate growth.

Updated research by American Express Global Business Travel and the GBTA Foundation (Global Business Travel Association) examined the recession’s impact and provides further evidence of the link between travel and corporate growth:

• The average return on investment (ROI) for business travel spending is about 20-to-1 — for every $1 strategically invested in business travel, businesses see an average of $20 in additional gross profit.

• To reach optimal revenue potential (keeping all other factors constant), U.S. industries could increase business travel spending by an average of just over 4 percent — or $70 more per worker.

• On average, firms are under-spending on business travel in the range of 2 percent to 5 percent. Banking and finance, pharmaceutical, and retail companies could benefit from increased travel spending, while other industry sectors — such as business services, entertainment, and sports — already operate close to optimal levels of spend.

The research did not delineate transient from meeting travel ROI, although that is the next step in the research, said Christa Degnan Manning (in photo), director, research and media, American Express Business Travel Global Advisory Services Innovation group.

“Meetings ROI is a little more advanced than individual travel ROI, because it is a much bigger expense and more discretely tracked,” she said. “People have to go out and connect with customers, prospects, peers and partners to drive business growth.”

The “Great Recession,” according to this report, resulted in a loss of 3.6 percent in U.S. top-line sales, from $25.7 trillion in 2007 to $24.8 trillion in 2009. During the same time, however, U.S. business travel spending dropped much more precipitously — down nearly 13 percent from a peak of $271 billion in 2007 to $237 billion. That’s more than the average 11 percent cut in travel spending generally seen during recessions.

“With the anxiety from the Great Recession, travel and meetings were easy to cut,” said Manning. “It’s more humane than cutting head count, and drops immediately to the bottom line.”

This left what the report calls a “performance gap,” since “rising travel budgets are closely associated with rising sales.” If all sectors were at their optimal business travel spending, corresponding U.S. sales would be about $1 trillion or 3.9 percent higher — more than enough to replace revenues lost in the recession.

Indeed, the report suggests that the severe cut in travel spending 2007 to 2009 may have made the Great Recession worse than it had to be. And the budget conservatism that lingers during the early phases of any recovery held back business travel spending and consequently revenues in 2010.

“The concept of travel as a competitive advantage,” said Manning, “will change the mindset” of corporate leaders. “Every company wants to be most competitive in their industry on innovation, ideas, customer service. Those are all driven by collaboration and relationship-building, which happens when people meet face-to-face. Relationships may be sustained by alternate technologies, but rarely created, initiated or strengthened.” — Maxine Golding