Cuts in corporate travel spend over the last two years exacerbated the recession, according to a leading industry analyst in the United States.
Ken McGill, executive vice president of research services for Vantage Strategy, said corporations made a huge oversight by cutting travel and entertainment spend (T&E) when the economy began to capitulate in the third quarter of 2008.
McGill, who was addressing delegates at the National Business Travel Association (NBTA) convention in Houston during a session entitled The Case for Business Travel During a Recession, said chief financial officers and chief executives were guilty of taking "the easy option" by targeting T&E.
McGill has worked in partnership with American Express Business Travel (Amex BT) for the last two years to collate business travel research for NBTA members.
"Business travel supports four million jobs and generates some $80 million annually in tax receipts," he said.
"When you examine the correlation between T&E spend and sales revenue and profits you see that most US companies under-spend on business travel."
McGill claimed that companies, in general, would generate $20 more in gross profit for every $1 more spent on T&E.
"Travel cuts exacerbated the recession. The economy can only be driven by companies getting out and making sales. T&E should not just be considered a cost of business as it is also an important part of profit generation.
"The problem is that it's easy to cut T&E. You don't have to sit and work out the cost and benefit to each department within the corporation."
McGill said his research with Amex BT found that total travel spend in the US would increase by $13 billion of all sectors of industry were to move to their optimum T&E (the point at which it would generate most revenue).