The Business Travel Industry Overview Tourism Essay

Tourism is defined by the World Tourism Organization as travel for recreational, leisure or business purposes. In particular, tourists are people who “travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited” (WTO, Ottawa Conference on Travel and Tourism statistics, 1991).

Business tourism is a therefore part of the wider tourism industry, that can be represented as a spectrum, along which the business is at the high quality, high yield end.

The terms “business tourism” and “business travel” are often used interchangeably, but actually a difference exists as stated by Swarbrooke and Horner (2001). The first one, in fact, refers to the all aspects of the experience of the business traveler and is much more focused on those business people behaving as “tourists”, e.g. spending at least one night away from home. At this proposal, Davidson R. (1994) gives the following definition of business tourism: “Business tourism is concerned with people travelling for purposes which are related to their work. As such, it represents one of the oldest forms of tourism, man having travelled for this purpose of trade since very early times”.

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Business travel underlines the movements of business travelers from one place to another one, including also those who make day trips for business purposes. Obviously, the boundaries of these two definitions are not so clear and precise and often there’s a sort of overlap between them.

There are other definitions of business tourism. IMEX [1] , for example, speaks about business tourism as the provision of facilities and services to the exhibitions, business events, incentive travel and corporate hospitality.

Generally speaking, business travel refers to all the travels linked with the traveler’s employment or business interests. There can be various motivations at the base of business travels. They can be necessary in order to perform the work or they can enable the employee to learn how to do their job more effectively; in other cases, they can be a sort of reward for a job well done. The major forms of business travel and tourism are represented in Figure 1.

Figure : Typologies of business travel and tourism

Source: Business Travel and Tourism (J. Swarbrooke, S. Horne)

These categories are not exhaustive, but could be subdivided into other classifications.

In more detail, the sector comprises, as suggested Davidson and Cope (2002):

Individual business travel: refers to the transfers made by those people doing a job that requires travels, such as journalists, politicians, talent-spotters.

Meetings: includes a vast range of events, such as conferences, training seminars, business presentations and product launches, annual meetings, held by companies and associations in order to facilitate communication with and between their employees, customers, stakeholders, etc.

Exhibitions: they can be trade fairs, trade shows and consumer shows and they are events for buyers and sellers in specific trade sectors. In these occasions, businesses take parts with their sales staff in order to display their products to potential customers, who attend to buy and receive expert information about the goods, usually from the manufacturers.

Incentive trips: comprises the trips that employees receive from their companies as a prize for winning a competition related to their job, e.g. productivity bonus and they are used by organizations to motivate their staff. Usually, they are offered in industries with high profit margins such as cars and financial service. Qualification for incentive travel is based on achieving agreed goals (sales targets).

Corporate events: include staff and client entertainment that companies extend to their most valuable customers or prospects at prestigious sporting and cultural events. This is a form of entertainment that companies use as a way of creating goodwill and building relationship with VIP customers and leads. Close links exist between the corporate vent segment and the catering industry.

In the case of individual business travel, the destination is usually fixed, as the traveler must go where the client to be visited is based or where the problem has to be solved, where the contract has to be signed. It’s the only non discretionary sector of business travel because the destination is not chosen, but determined by the object of the work.

All the other cases, that can be named business tourism, are discretionary. This means that the organizers have a choice over the destination of their events. These sectors are “the prime focus of marketing activities by venues and destinations, because decisions about where the events take place are open to influence” (Rogers, 1998). Attendance to these events takes the form of group travel, with colleagues travelling together.

Frequently, an alternative term used to describe the business tourism sector is the MICE industry, the acronym for meeting, incentives, conventions and exhibitions.

There are some key characteristics of the business industry as depicted by Business Tourism Partnership in England, that can be extended to the overall corporate travel, including the following:

business tourism is year-round, peaking in Spring and Autumn but still with high levels of activity in the Summer and Winter months, thus sustaining permanent, full-time employment.

it complements the leisure tourism sector, relying on much of the

same physical infrastructure, and bringing business to destinations such as seaside resorts which would otherwise be dependent upon a relatively short Summer season for their economic health and prosperity;

investments in business tourism facilities lead to the regeneration of urban and inner city areas, many of the investments in a destination’s infrastructure designed primarily for the business tourist (hotels, transport and communications facilities, restaurants, attractions and amenities, even conference auditoria) provide benefits which can also be enjoyed by the leisure tourist and the indigenous population;

it is elastic, being much less affected by economic downturns or

by disasters than leisure tourism and other sectors of the national economy;

business tourism stimulates future inward investment as

business people see the attractions of a destination while travelling on business or to attend a conference, exhibition or incentive, and then return to establish business operations there. They can also become unpaid ‘ambassadors’ for a destination by communicating to colleagues and others their positive impressions and favorable experiences;

the higher quality of personal service demanded by the business tourist requires more labour-intensive service suppliers, which in turn translates into higher levels of job creation;

research suggests that approximately 40% of business travelers will return with their families as leisure visitors to destinations they have enjoyed visiting on business;

business tourism is sustainable, offering higher added value with

fewer negative environmental impacts than mass leisure tourism. Furthermore, conference and incentive visitors are together as a

group, so that it is possible to inform and educate them about

the local community in which their event is being held in order to

maximize the enjoyment of their stay but also to minimize any disruption and possible inconvenience to the local resident

population. It is very much harder to manage, in the same way,

the impact of individual leisure travelers on a destination.

The business travel sector (figure 2 represents the general structure of the industry) depends on a considerable number of stakeholders, providing facilities and services for this market.

Figure : The structure of business travel and tourism

adapted from Swarbrooke and Horner (1996)

Private companies, both small and large, are the main consumers and providers of business travel services, although they are not the only types of organizations active in this market. In fact, representatives and employees of the public administration also need to travel frequently and members of associations are important clients in the conference sector.

Moreover, an important difference exists between business travel and tourism. There are in fact two dimension: the customer and the consumer.

While in the leisure travel market, the purchaser coincides with the end consumer, in the corporate travel market the person who travels is rarely the person who is paying for the trip. This detail is important because players in this industry must address their efforts not only toward the satisfaction of the demand, and so the buyers, but also towards the end consumers. A large percentage of the business travelers is composed by managerial and sale staff who have the power to make decisions or to influence the decisions taken by others. They have the authority to negotiate on behalf of their companies.

The public industry can be considered as both supplier and intermediary. Many conference centres are owned in fact by local authorities and destination marketing organizations are almost always supported through a combination of public and private sector.

As regards the suppliers and intermediaries, there are different players in the industry: destination marketing organizations, transport providers, accommodation and catering operators, suppliers of leisure and recreation facilities.

As many other industries, business travel is influenced by the state of the national economy. At the same time, this sector has an impact on the overall economy of the destinations to which the traveler make their trips.