Starbucks, McDonald's, and Marriott Have an Edge in This Important Category
Given the nature of the U.S. workforce, there's a good chance that you or someone in your family have to travel for business, or have had to in the past. Regardless of when your business travel occurred, try to think of where you spent the most money on restaurants, airlines, and hotels.
Based on the title of this article, you've probably already guessed that Starbucks , McDonald's , and Marriott benefit greatly from business travel spending. What are the actual numbers? And are these trends likely to continue?
Based on a study conducted by Certify -- a travel and expense report management company -- if you're a business traveler and you're hungry, then you're most likely to spend your money at Starbucks or McDonald's.
According to the study, business travelers are most likely to visit Starbucks for breakfast. This makes sense because Starbucks sells highly caffeinated coffee that gives business travelers an extra kick to complete a day's tasks. Once someone gets hooked on Starbucks coffee, it's unlikely they will ever give it up. It doesn't hurt that caffeine is mildly addictive.
Another positive for Starbucks is that most of its locations offer a comfortable atmosphere and free Wi-Fi service, which gives a business traveler an opportunity to catch up on work prior to an important meeting. Furthermore, it's possible that this business traveler will then order more coffee or a snack while working there. This leads to increased sales for Starbucks.
Based on the Certify study, 14% of business travelers choose Starbucks for breakfast, which gives Starbucks the largest piece of the business-traveler market-share pie for breakfast. These business travelers spend an average of $8.44 on breakfast.
What about lunch and dinner?
Dominating lunch and dinner
Business travelers are more likely to frequent McDonald's than any other restaurant for lunch and dinner. This might surprise you, but remember that McDonald's can be found in almost any city or town, it sells coffee, and it's quick.
The average amount of money business travelers spend at McDonald's for lunch: $7.19. The average for dinner: $7.47.
Given McDonald's presence in almost every city and town across the United States, this trend is likely to continue. According to the Global Business Travel Association, domestic business traveler spending is expected to increase 6.6% to $289.8 billion in 2014. This is a potential sales catalyst for McDonald's. The Global Business Travel Association also expects outbound international business traveler spending to increase 12.5% to $36.7 billion. No problem there, considering McDonald's has such a strong international presence.
Food is the biggest expense for business travelers, making up 25% of spending. You might think airlines or hotels would represent the largest piece of the pie, but not all business travel requires flight, and not all business travel is overnight.
Below are some other interesting numbers to consider.
Other business travel winners
Delta Air Lines is the airline used the most by business travelers. This is a positive for Delta. On the other hand, the average cost for a Delta Air Lines flight slipped to $391 in 2013 from $474 in $2012. Additionally, while business travelers used Delta the most frequently, this wasn't always by choice. Employees may have to use preferred vendors. The airline that received the highest traveler rating from business travelers was actually Southwest Airlines.
As far as hotels go, Hilton saw the most use in 2012, with business travelers spending an average of $271 per night. In 2013, Marriott supplanted Hilton to see the most use by business travelers. The average amount spent per stay at Marriott in 2013: $225. However, Marriott wasn't the hotel rated the highest by business travelers in 2013: That title belongs to Residence Inn. The good news is that Marriott owns Residence Inn.
The bottom line
If business travel is expected to increase in 2014 and the majority of business travelers prefer to visit Starbucks, McDonald's, and Marriott during their travels, then all three companies are likely to benefit from this trend.
Starbucks must contend with Dunkin' Brands adding locations in the Western United States, but this will be a lengthy process, so it should have no immediate impact on Starbucks. McDonald's must contend with Starbucks and Dunkin' Brands in the coffee wars, but McDonald's still offers the most in the way of food, which should keep business travelers coming back. Marriott sees a win-win thanks to its namesake brand seeing the most use and its Residence Inn brand being the most liked.
These are all potential positive sales catalysts for the three companies mentioned above. Therefore, investors should consider digging deeper on these companies as investment options. However, this is only one piece of the puzzle for all three companies, and investors should do their own due diligence prior to making any investment decisions.
Do any of the companies above make this all-important list?
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The article Starbucks, McDonald's, and Marriott Have an Edge in This Important Category originally appeared on Fool.com.
Fool contributor Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of McDonald's and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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