For every dollar invested in business travel, businesses experience an average of $12.50 in increased revenue and $3.80 in new profits, according to a study released yesterday by the U.S. Travel Association. The comprehensive Return on Investment of U.S. Business Travel was conducted by Oxford Economics and is composed of three different methodologies: an econometric analysis of the effect of business travel on U.S. businesses covering 14 industry sectors over a span of 13 years; a study of 300 U.S. executives conducted in May 2009 via LinkedIn, and an online survey of 500 business travelers. The study was sponsored by the Destination & Travel Foundation, a combined effort of the USTA and the Destination Marketing Association International. Among other findings:
• A 10 percent increase in business travel spending would increase multifactor productivity, leading to a U.S. GDP increase of between 1.5 percent and 2.8 percent.
• Both the executives and business travelers polled estimated that 28 percent of current business would be lost without in-person meetings.
• Seventy-nine percent of the executives surveyed said incentive trips had a high impact on employee morale, while 80 percent of business travelers agreed.
"This study shows that not all spending cuts are smart cuts," said Adam Sacks, managing director of Oxford Economics. "When companies reduce their travel budgets, there are negative consequences that we can now quantify, in terms of lost revenue and profit growth, and in terms of giving competitors a distinct advantage." During a press conference yesterday, he said the outlook for business travel in 2010 was “modest growth,” with more robust growth expected in 2011.
IHS Global Insight Releases Study on Business Travel ROI
Similar findings come from IHS Global Insight, which has released new research on the link between business travel and profits. The study, commissioned by the National Business Travel Association and American Express Business Travel, used government data spanning 10 years (1998–2008), across 15 industries and 9,500 U.S. companies. Among the key findings: An incremental 1 percent increase or decrease in travel spend yielded a 1.7 percent increase or decrease in sales. Further, based on 2008 data, corporate profits would be maximized if business travel were increased by 5.3 percent, or about $14 billion. NBTA members and subscribers to American Express eXpert insights will receive access to the full report when it becomes available.
TARP Firms Post Expense Policies
A number of U.S. firms that received bailout money from the government have posted expense policies — including those related to business travel and meetings — on their websites yesterday, in compliance with a Treasury Department requirement for recipients of the Troubled Asset Relief Program funds to make such policies public. Among them is automaker Chrysler, which addressed meetings at the top of the document with the following: “Hosting, sponsorship or other payment for conferences and events: [The policy] requires that the cost to the Chrysler Group company in connection with a conference or event be reasonable and commensurate with the expected benefit to the company.” To see Chrysler’s full expense policy, click here.
Airlines Reaped $10.25 Billion in à la Carte Fees in 2008
According to a report issued last week by consulting firm IdeaWorks, global airlines took in $10.25 billion in "ancillary revenue" in 2008, generated from à la carte pricing of meals, exit-row seating, baggage fees and other previously complimentary services. Ancillary revenue for 2008, a year in which airlines began to un-bundle these services in response to surging jet fuel prices, was 345 percent more than it was in 2006, the last year that IdeaWorks released its study. The five airlines that took in the most ancillary revenue in 2008 were American, United, Delta, Ryanair and Qantas.
Marriott Announces 21 New Asia-Pacific Hotels
Marriott International has signed 21 new management contracts in the Asia-Pacific region. All of the properties are scheduled to open by the end of 2013, representing 7,000 new guest rooms on top of the 37-hotel, 9,400-room pipeline already under development for Marriott in the area. Properties covered under the announcement include two JW Marriotts, two Renaissance Hotels and 10 "upscale Marriott hotels" in China, the Philippines and Thailand, and seven Courtyard by Marriott hotels in Cambodia, China and India. The Cambodia property will be Marriott's first in that country.
United Airlines Adds $50 Second Checked Bag Fee for International Flights
Last week, United Airlines announced that it will begin charging $50 for a second checked bag for economy-class tickets between North America and Europe, Mexico and the Caribbean; the first checked bag will remain free. The fee will take effect for tickets purchased on or after Sept. 30 for travel on or after Dec. 15. Passengers who pay the fees online at united.com will save $5.
U.S. Airlines' On-Time Arrival Rate Inches Upward, to 77.6 Percent
According to the latest Air Travel Consumer Report, published last week by the U.S. Dept. of Transportation's Bureau of Travel Statistics, U.S. airlines had a 77.6 percent on-time arrival rate in July, improving on both June 2009's rate (76.1 percent) and July 2008 (75.7 percent). The top three prompt carriers for July were Hawaiian Airlines (93.6 percent), Alaska Airlines (87.2 percent) and SkyWest Airlines (83.6 percent). The bottom three were Comair (63.6 percent), Atlantic Southeast Airlines (68.3 percent) and AirTran Airways (69.8 percent).
Saratoga Springs Expansion Breaks Ground
On Monday, ground was broken on the 22,000-square-foot expansion of the Saratoga Springs (N.Y.) City Center, which will double the size of the facility. The construction will add a second story to the building, allowing more flexible interior space for breakout sessions and exhibits. The building will remain open during construction, which should finish in 12 to 14 months.
Brussels Convention Center Reopens
Square, the refurbished and reinvented convention center in Brussels, Belgium, will reopen Saturday. The facility was formerly called the Palais des Congrès and was built for the 1958 World Expo. Though the façade and various other key features have been retained, the interior has been completely renovated and upgraded. Included in the 108,000 square feet of meeting space are three auditoriums, 22 meeting rooms, a top-floor event space and the Grand Hall, with 43,000 square feet of exhibit space.
Trump Hotel Collection Launches Trump Express Meetings
The Trump Hotel Collection announced Trump Express Meetings last week, a collection of meetings packages tailored to small groups. Available through April 30, 2010, the Trump Express Day Meeting features two lunch packages that include a happy hour event with a two-hour open bar. Room rental fees have been waived, and individual properties have added additional discounts on services such as spa treatments or food and beverage. The deals apply to groups of up to 15 at the Trump International Hotel & Tower New York, up to 25 at Trump International Hotel & Tower Chicago and Trump International Hotel Las Vegas, and up to 50 at Trump SoHo New York, slated to open in early 2010.
Union Stages Rally at San Diego Hotel
Early last week a crowd of 300 union hotel workers and approximately two dozen local and elected officials staged a rally at the Hotel Del Coronado in San Diego, calling for better health-care coverage and pay for hotel workers. The protest, organized by the San Diego Imperial Counties Labor Council and Unite Here Local 30, the union representing the workers, was a show of support for health-care reform on both a national and local level, said a spokesperson for the SDICLC. In a statement, the hotel countered, “With the hotel industry suffering 30-40 percent revenue drops in the last year, we find the union’s offer for only a two-year contract that calls for wage and benefit increases of over 50 percent to be excessive and unrealistic.” Union workers have been negotiating for a new contract since June.
U.S. Hotel Development Pipeline Slows
The active U.S. hotel development pipeline has decreased to 4,384 projects representing 475,521 rooms, according to the August 2009 STR/TWR/Dodge Construction Pipeline Report. That number is a 2.5 percent decrease from the number of rooms under development in July 2009, and a 27.9 percent drop compared with last year. The steepest year-over-year drop occurred in the East South Central region, with a 56.6 percent decrease.
Dallas HQ Hotel Construction Begins
A groundbreaking was held yesterday for the city-owned Omni Dallas Convention Center Hotel. In August, the city received buyer commitments for all $479.8 million in revenue bonds offered to investors, to cover the cost o construction. The 1,000-room property will open by early 2012 with 100,000 square feet of its own meeting space.
Global Hotel Prices Drop by 17 Percent
According to the latest Hotels.com Hotel Price Index, average hotel rates fell by 17 percent globally in the first six months of the year, and are now the lowest they’ve been in five years. Latin American properties experienced the steepest decline, at 18 percent. North America was down 17 percent, and European properties saw a 16 percent decline.
Meeting Space Expanded at San Antonio Hotel
The Verona room at the 213-room Hotel Valencia Riverwalk has been expanded and renovated. The space is now 2,000 square feet, seating up to 109 people classroom-style. New amenities included additional drop-down screens with state-of-the-art audiovisual components.
In Defense of Meetings
Forbes Study: Executives Prefer Face-to Face Meetings
Surveying more than 750 business executives about their meetings and travel habits, Forbes Insights found that 84 percent of respondents said they preferred in-person, face-to-face meetings over technology-enabled meetings. However, their companies are using more technology to conduct or access business meetings: 59 percent of those surveyed said such use had significantly or somewhat increased. The respondents also indicated they are on the road less often, with 24 percent traveling somewhat less frequently and 34 percent traveling much less frequently. When asked why they preferred face-to-face meetings, 85 percent said the events build stronger, more meaningful business relationships; 77 percent said they like the ability to read body language and facial expressions during in-person meetings; and 75 percent said the extra social interaction gives them the opportunity to bond with co-workers and clients. To see the full Forbes Insights report, click here.
New CIC Project Championing Face-to-Face Meetings
The Convention Industry Council Task Force has launched an effort to articulate the value of face-to-face meetings as a complement to the U.S. Travel Association’s Meetings Mean Business Campaign, founded earlier this year to explain and promote the value of meetings events and incentive travel. The new project, headed by Orlando-based travel marketing company Y Partnership, will develop five to six key messages to be used by organizations within the hospitality, meetings and event industry. Completion is expected this fall.
Smoking Banned in Budget and Avis Rental Cars
According to USA Today, Avis and Budget have banned smoking in their cars in North America, starting Oct. 1. A cleaning fee of up to $250 will be imposed on customers who smoke in their vehicles. Read more about the smoking ban in rental cars here.
Third-Party Planning Firms
TBCD Meetings & Incentives Acquires One World Partners
BCD Meetings & Incentives has acquired meeting and incentive firm One World Partners. One World founder Teri Hollowell will serve as executive director for the Sausalito, Calif., office. BCD has three other U.S. locations in Atlanta, Chicago and Philadelphia.