Business travel drives innovation
As the application of video conferencing is on the rise, there are new arguments over the challenge to face-to-face business meetings. Experts term these challenges as real and valid, considering the issues of human resource, profit balance and the global environment. Therefore, important questions arise as to the value of business travel.
‘ Business travel is economic stimulus’. This is established by experts who attempt to put away the alternatives to face- toface meetings. In order to grow, businesses have to invest. In particular, among the smartest business investments that companies make, business travel and incentive awards top the list. Surveys show that business executives prefer face- to- face communication over other means of communication, as it plays a pivotal role in negotiating deals, selling products, and building longterm relationships with clients and co- workers.
Moreover, to counter the opinion of considering business travel as a burdened expense in the wake of corporate collapses, experts take it as an optional expense in hard economic times. This is because the business enterprises are already not in the habit of throwing away money, therefore it does not make sense to cut expenses beyond a certain point. Enterprises invest in their employees traveling because they think it makes the enterprise more productive and more profitable.
Over the past few years, there has been intense exploration of conferencing technologies. But as a growing number of companies implemented demand management strategies and sought to calculate the return on business travel investment, they found that businesses can also raise profits by increasing travel spend, providing the incremental increase in sales is greater than the incremental increase in travel expenses.
Importantly, not all spending cuts are considered smart cuts. When companies reduce their travel budgets, there are negative consequences that can now be quantified in terms of lost revenue and profit growth, and also in terms of giving competitors a distinct advantage.
Reportedly, slightly less than 1 percent of the average company’s revenue is spent on business travel. Salesrelated meetings comprise about one- third ( 34 percent) of business travel expenditures. Work at client offices follows with 22 percent. Internal meetings, conferences, and trade shows each represent about 10 percent of the average corporation’s travel budget.
In the global business scenario, comprising of diverse nationalities, developing personal relationships remains one of the most important elements of doing business and is impossible without face- toface meetings. Moreover, travel can help facilitate exchange of information and transfer of ideas. Specifically, international business travel may link travellers familiar with foreign technology with domestic entrepreneurs and foster domestic innovation.
Intuitively, business and leisure travel is affected by many of these factors ( size of the economy, travel costs between countries, etc.). However, leisure travellers have no business interests and do not convey technological knowledge. Times when a country receives extraordinarily high numbers of business travellers relative to leisure travellers are most likely those when the country experiences information and technological breakthroughs.
Thus, international business travel is not only an important element for a country’s rate of innovation, it also indicates that liberalization of international air travel possibly lead to a higher rate of innovation in the world.