The dawning of the 21st century signals a new era in international business travel both in terms of the number of businesspeople who are increasingly pursuing new ventures abroad and in the volume of business they generate. When combined, the income generated by the travel industry worldwide totals over $2 trillion per year, making it one of the ten largest industries. The competitive nature of hotels, airlines, cruise lines, incentive travel, and related businesses has led to several interesting trends in recent years.
First, the laws that govern business travel have become dramatically less rigid in the wake of the collapse of communism. Today, Americans can travel virtually unrestricted to most countries as long as they have a valid passport (good for ten years) and—for some countries—a visa (obtained through the embassy of the destination country, sometimes for a small fee). The United States has a reciprocal arrangement with most countries so that just as Americans can travel freely to other countries, their nationals can also travel to the United States for business or recreation without bureaucratic delays.
The European Union has further reduced the problems associated with business travel by providing a single passport for citizens of all member states so that travel between the more than 14 member nations is virtually unrestricted. Further enhancements of this nature are expected throughout Asia and in Africa in the years to come.
Business travel is one of the most important aspects of commerce today because with an international economy that is interdependent, businesses are sending sales and marketing personnel, scientists, and executives to learn about research, products, and production techniques both in their own country and abroad. An entire industry serves business travel clientele; the largest players include American Express Travel Services, Carlson Wagonlit Travel, and Rosenbluth, all of which have offices in most major cities.
The impact of business travel is profound; cities throughout the world have collectively spent over a billion dollars since 1980 to enhance their convention and tourism facilities, including Paris, Philadelphia, Boston, Tokyo, Seoul, and Beijing. Visitor and convention bureaus are especially important to business travel; these quasi-public agencies seek to attract major industrial conventions and trade shows to their cities. The resulting economic profit to hotels, restaurants, and other businesses is estimated to grow at about 17 percent in the coming years in the United States and about 4 percent internationally.
According to a study at Penn State University, the number of Americans traveling to the Pacific Rim on business will increase 14 percent by the year 2000, while the number of Pacific Rim residents traveling to the United States will increase by almost 27 percent. Similar numbers exist in Latin America. Due to lower petroleum costs, which affect airfare prices in particular, the actual costs of business travel have been kept reasonable.
Business travel poses as many problems as benefits. Crime against business tourists has increased in recent years, primarily in urban areas. Although the business travel industry is working with law enforcement officials, rental car agencies, and other industry players to reduce the severity and number of crimes against business travelers, security awareness throughout the industry is often high only after a major incident. Many business travel corporations are rushing to sponsor training seminars on how to protect hotel and motel guests, convention attendees, and other business travelers. Other business travel hazards include potential outbreaks of food poisoning at major banquets.
Although one would assume that the rise in teleconferencing, electronic mail, and faxes has diminished the need for business travel, the meteoric growth of the Pacific Rim and parts of Latin America have actually counterbalanced any negative impact from new technologies. Indeed, the costs of business travel often outweigh any other factor. It is not uncommon throughout Asia to have entire departments of leading manufacturers travel to the United States or Canada for a major business tour; often a reciprocal arrangement will follow so that American colleagues will then have the opportunity to visit plants in Asia. Out of such exchanges new partnerships and joint ventures frequently emerge.
While videoconferencing, e-mail, and Internet connections offer alternatives to business travel, companies still spent about $ 175 billion annually on corporate travel in 1998. For most companies it was their third-largest expense. Large companies can spend hundreds of millions of dollars on corporate travel, so it is natural that they can be very cost conscious about business travel. DuPont, for example, spends an estimated $350 million to $400 million a year on travel, while Hewlett-Packard spent $800 million on 30,000 domestic travelers in 1997. In times of economic uncertainty and instability, corporate travel is often one of the first areas to be cut back.
According to a biennial survey published by American Express, the cost of business travel rose more than four times faster than inflation between 1996 and 1998. Despite lower fuel costs, airfares for business travelers (who typically don't qualify for 14-day advance purchase discounts or weekend stays) rose 14 percent. Hotel prices in larger cities were up by 50 percent in some cases. Also affecting corporate travel budgets were increasing car rental rates. Overall business spending on corporate travel rose 12 percent to $175 billion between 1996 and 1998.
[ Laurence Barton
updated by David P Bianco ]
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