1st Canadian-Specific Study Reveals Biz Travel’s Economic Impact

Open Jaw
by Bruce Parkinson

Joe Bates V.P. Research
GBTA Foundation

Vision Travel Solutions Sr. V.P. Sales & Account Management Ian Race & COO
Brian Robertson at the GBTA Canada Conference.

Business travel in Canada is big business, but without Canadian-specific research, it has been difficult to accurately assess the full impact of the activity on the Canadian economy. Not anymore.

Business travellers spent $23.5 billion in Canada in 2013, while the multiplier effect (spending by other businesses driven by the initial spend) raised the total economic impact to $27.3 billion, representing about 1.5% of the country's GDP and supporting nearly 450,000 Canadian jobs. Canadian business travellers took 33.3 million domestic business trips, with Ontario and Quebec the focus of nearly 2/3 of them.

The numbers come from a 1st time study released yesterday by the GBTA Foundation, the research arm of the Global Business Travel Association. Co-funded by hotel giant Intercontinental Hotels Group , the research was presented to an audience of over 550 at the GBTA (Canada) Conference 2015, held in Toronto this week.

Brian Robertson, Chief Operating Officer of Vision Travel Solutions, the country's largest privately-owned travel management company, told Open Jaw that it's a big step forward to have a more accurate measurement of the industry's economic impact.

“It's fabulous. One of the problems has always been taking U.S. data and trying to extrapolate it to Canada. When we combine this information with our own Vision Intelligence, it will really help us with benchmarking and assisting clients in evaluating their own spend."

The biggest surprise in the research, both to Robertson and to Joe Bates, V.P. Research for the GBTA Foundation, was the fact that 75% of Canadian business travel trips didn't require an overnight stay.

“There is a tremendous amount of activity when it comes to day trips," said Bates. “There is a very fundamental aspect of business travel in Canada that is tied to day-to-day business operations and isn't long-distance travel. It is a huge piece of the market."

Robertson agreed. “The biggest surprise was the number of day trips. And while most of those trips are done by car, there are a lot of single-day business trips involving air too. Canadians in the Quebec City/Windsor and Calgary/Edmonton/Vancouver corridors often return same-day. And there's a fair bit of cross-border same-day business travel by air too."

Bates says he has been embarrassed in the past to present to a Canadian audience with U.S. research. He says the sharper perspective the research brings is critical and says the perspective created will help the industry reinforce its value to government and other stakeholders.

“There's so much more to business travel than just travelling to a meeting. There's a lot behind that box of travel."
There's a lot of taxes paid out of that box of travel too. Bates says about $8 billion of federal, provincial and local taxes were generated by business travel in 2013 – 1/3 of the total spend.

The report's findings were based on crunching a combination of macroeconomic inputs, demographic information on travellers and Statistics Canada data. It revealed that travellers spend an average of $656 per trip, on lodging, airfare, rental cars, food, drink and entertainment.

All the numbers in the study are based on 2013 statistics, but the GBTA said it expects overall spending will show growth of 2.5% in 2014 and 3-4% in 2015. “It's a sector that is outperforming the economy as a whole," says Bates. “And business travel is a leading indicator for job creation. When business travel is on the rise, job creation follows in its wake."

A clearer picture of the impact of business travel on the economy – and its contribution to government through taxes – is critically important in defending the industry against what Bates calls “discriminatory taxes" on things like air travel, hotels and rental cars.

“In North America travel is taxed at a higher rate than alcohol, tobacco and firearms, despite its importance in stimulating the economy," Bates says.

The researcher says a 1% positive shift in business travel would create 2,600 jobs in Canada and inject $235 million into the economy. “If you cut travel by 1%, you get a similar result in the wrong direction," says Bates.

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