Business Travel Reaching High Altitudes

Business travel is booming at Northwest Arkansas Regional Airport in Highfill.

In January, the airport announced record passenger numbers, at about 640,000 for 2014, and president and CEO Scott Van Laningham said a lot of the clientele during the last couple years have been business travelers.

“You can tell by looking at the building. People look different when they travel for business,” he said, noting blazers and briefcases and the lack of children’s strollers and car seats among passengers.

“Business travel is back in a big way, and our numbers reflect that,” he said. “We returned to double-digit growth last year in our month-over-month numbers.”

The uptick in business travel is in keeping with a national trend.

The Virginia-based Global Business Travel Association estimates that professionals will take 492 million business trips this year and will spend $296 billion on corporate travel, according to a first-quarter report, released April 14 by the GBTA Foundation, a research arm of the organization.

In the wake of the Great Recession, a 2009 study by travel industry research firm PhoCusWright in New York City showed double-digit declines in U.S. travel revenue, with business travel taking the biggest hit. According to the study, the drop could be attributed, at least in part, to corporations pulling back on business trips in order to cut costs.

At the University of Arkansas in Fayetteville, business travel has been on the rise during the last three years, but media relations manager Steve Voorhies said via email that the university did not deliberately roll back its travel during and after the recession, and he attributes the change to an increase in faculty numbers that resulted in a rise in research-related travel.

“It remained fairly steady if standardized for the number of faculty,” he said. 

The UA faculty has grown by about 14 percent to 1,285 members during the last three years, and the number of travel claims will have increased 17 percent between 2013 and the end of the year, if 2015 estimates prove to be accurate.

Voorhies said 17,244 travel claims were processed in 2013; 19,438 were processed in 2014; and, year to date, the school has processed 15,154 in 2015, with an estimate that 20,205 will be processed by the end of the year.

Most business travel for the UA consisted of faculty members going to and from various conferences, with air travel dominating overwhelmingly, based on where money was spent, Voorhies said.

 

Economic Indicator

While Northwest Arkansas Regional, or XNA, has seen business travel growth, some local businesses reported little change in their travel habits during the last few years.

But GBTA data show, on a national level, that business travel will rise an estimated 3.1 percent year over year in 2015, and it rose 6.7 percent in 2014, 4.7 percent in 2013 and 4.4 percent in 2012.

And experts say that is a good sign for the economy.

According to the report, gains in business travel in 2014 suggest strong job growth ahead, as business travel is a beneficiary to expanding employment.

“The expected increase in U.S. business travel volume is an excellent indicator of how the overall domestic economy is faring, with every sector and consumer spending performing better than we’ve seen since 2009,” Michael McCormick, GBTA executive director and chief operating officer, said in a news release for the report. “Thanks to a healthier domestic economy and a stronger U.S. dollar, companies are putting more travelers on the road not only because they can afford to, but because they continue to see a strong return on their business travel investment.”

According to the GBTA, one of the main drivers for the nationwide overall increase in business travel in 2014 was plummeting oil prices, which created favorable business trip conditions.

The report projects that business travel volume will continue to increase during the next two years, and, although business travelers have yet to see the benefits of lower fares as a result of lower oil prices, the cost of air travel, ground transportation and rental cars will all moderate in 2015. 

 

Renting Method

If gas prices continue to drop, Integrated Solutions Group Inc. president and founder Mark Cloud might decide to change his company’s method of renting cars for all business travel. But, for now, he says the process works well.

Cloud considers Integrated Solutions, based in Springdale, to be a regional, niche company. He and his staff of at least 10 (employee volume is larger depending on the work) provide consultation services to architects, engineers and construction companies in places including Northwest Arkansas, Little Rock, Tulsa, Kansas City and Stilwater, Oklahoma, although jobs have, at times, taken them as far as Dallas or Florida.

The team rents a vehicle from Enterprise Rent-A-Car for each trip, for a minimum of two — and sometimes up to six — times each month. Most travel is within 2 hours of headquarters, Cloud said.

With discounted gas prices and incentives for regular customers, Cloud decided the price to rent from Enterprise is close to what he would pay to use personal vehicles for the trips. When he considered the cost of gas, added to the wear and tear to personal vehicles, Cloud said it made sense to rent.

“When gas prices were almost $4, it was a wash,” he said. “And it also just makes things cleaner with the IRS.”

 

Travel ROI

Companies that did not rein in business travel spending fared better post-recession, showing higher revenues and profits than those who reduced business travel spending, according to a 2013 Oxford Economics report commissioned by the U.S. Travel Association.

In fact, the report, which tracked travel and performance during an 18-year period and is titled “The Role of Business Travel in the U.S. Economic Recovery,” showed some companies that reduced travel saw a decline in profits.

To accompany the report, Oxford Economics also conducted a survey of business travelers, which shows a perceived return on investment for corporate travel.

According to Oxford Economics, U.S. companies gain $9.50 in revenue and $2.90 in profits for every dollar invested in business travel.

The survey also shows in-person meetings matter. Travelers believe face-to-face meetings almost double the likelihood that customers will stay with the company.

Oxford Economics estimates business travel expenditures generated 1.9 million jobs, $59 billion in personal income and $35 billion in tax revenues last year.