A new study underscores the way business travel generates “profit” for companies that make the investment.

The past year has been understandably hard on the tourism and travel industry, both locally in Central Florida and domestically across the country. Within the leisure travel space, economic uncertainty — combined with consumers’ limited access to credit lines and their high unemployment rates — has forced many American families to cancel or curtail vacation plans.

This was a somewhat foreseeable result of the national and subsequent global recession. What was not initially clear was the way business travel would be affected by events, perceptions and changing attitudes.

Call it the “AIG effect.” Call it politics. Call it perception. Or call it media scrutiny. But business travel made headlines this year, and much of it concerned its relative value in the wake of the financial sector’s near collapse. Should companies spend money, taxpayer subsidized or not, to send employees to face-to-face meetings, conventions and trade shows held in cities throughout the country?

Some in the debate have been especially critical of locations perceived as leisure destinations, mainly Las Vegas and Orlando. The controversy reached a peak when it was suggested during the spring that numerous federal government agencies were prohibiting travel to certain destinations. Again, Las Vegas and Orlando.

With many industry leaders increasingly being forced to defend business travel, which represents a sizable chunk of the local economy in many destinations, including Orlando, a study to quantify its value was commissioned by the U.S. Travel Association. The research brief, entitled “The Return on Investment of U.S. Business Travel,” prepared by Oxford Economics USA, underscored the direct revenues that business meetings generate.

Big revenues.

According to the study, for every dollar a company spends on business travel, it receives an average of $12.50 in increased revenue and $3.80 in new profits. The results of this collective analysis show a robust and irrefutable relationship between a company’s investment in business travel — including internal meetings, trade shows, conferences, incentive trips and sales — and its profitability.

“Locally, more than 400,000 jobs are supported by the travel industry, with $30 billion of visitor spending impacting the Orlando community, of which $6 billion is contributed by business travel,” says Gary Sain, president and CEO of the Orlando/Orange County Convention & Visitors Bureau Inc. “However, until now there has never been a study demonstrating the clear correlation between business travel and profitability.”

The study also highlighted the tangible, negative consequences that directly affect the bottom line of organizations that tightly restrict travel.

Curbing business travel can actually reduce a company’s profits for years. The average American business would forfeit 17 percent of its profits in the first year of eliminating business travel, and would take more than three years for profits to recover. Both executives and business travelers estimated that 28 percent of current business would be lost without in-person meetings.

Among the study’s other chief findings:

• More than half of business travelers stated that 5 to 20 percent of their company’s new customers had come as the result of trade show participation.
• Executives stated that in order to achieve the same effect as incentive travel, an employee’s total base compensation would need to be increased by 8.5 percent.
• Executives and business travelers estimate that in-person meetings convert roughly 40 percent of prospective customers to new customers, compared to 16 percent without such meetings.
• A $1 million increase in government travel spending will increase government worker productivity, and therefore output, between $4.6 million and $6.3 million.

“If we don’t use the facts to tell our story, it could mean not only the loss of meetings for our destination, but jobs too,” says Sain. “This is especially important to Orlando because the recently expanded meetings and convention infrastructure, like some of the new hotel properties, require meeting attendees to keep our economy moving. Meeting face to face is a critical economic stimulus, both nationally and locally.”

Despite some of these challenges, the Orlando CVB has been successful at booking meetings into the destination: 44 future conventions and shows were recently confirmed at the Orange County Convention Center. These shows, which were booked from March through June of this year, represent an estimated 478,000 attendees with an approximate economic impact of more than $569 million.

Although 2010 is predicted to be a continued struggle for business travel, as the global economy begins to stabilize, Orlando is intent on snagging a disproportionate share of meetings and conventions.

Editor’s note: To learn more about the way business travel assists in revenue generation, visit www.orlandoinfo.com/cvb.