Projected Business Travel Spending Growth is Early Indicator of Rising Business Confidence
Pent-up Demand Expected to Fuel Increasing Growth Rates as Year Progresses
International and Group Travel to Rebound
ALEXANDRIA, Va., Jan. 8, 2013 /PRNewswire-USNewswire/ -- Business travel spending growth slowed through the tail end of 2012 as companies postponed critical investment decisions until after the U.S. presidential election and Congressional debate on the fiscal cliff. However, the business travel forecast for 2013 should be more positive, provided there is continued easing of economic and political uncertainty – presenting an early indication of greater corporate confidence in spending decisions.
According to the GBTABTI™ Outlook – United States 2012 Q4, a report from the Global Business Travel Association (GBTA) sponsored by Visa, Inc., U.S. business travel spending is expected to rise 4.6% in 2013 to $266.7 billion, on a slight -1.1% decline in trip volume to 431.8 million person-trips for the year. The key factors in 2013 business travel spending growth are projected to be:
- Increasing international outbound travel spending – projected to rise 5.9%
- Increasing group travel spending – projected to rise 5.2%
- Very modest price inflation – indicating that companies will be spending more real dollars on business trips.
Spending growth in 2013 should begin modestly, at 2.0% in Q1 and 2.9% in Q2, and then pick up the pace with rates of 6.4% in Q3 and 7.2% in Q4.
"Even with an agreement to avert the fiscal cliff in the near-term, there are still many issues that need to be addressed; however, companies should now have somewhat greater confidence in their spending decisions," said Michael W. McCormick, GBTA executive director and COO. "While companies will approach the first half of the year with some caution, pent-up demand to get back on the road should hopefully fuel accelerating growth in business travel spending through the end of 2013."
At the close of 2012, annual U.S. business travel spending is estimated by GBTA to have grown 1.6% to $254.9 billion, on a -1.9% decline in trip volume to 436.5 million person-trips.The spending increase was mainly due to rising travel rates.
- This increase in spending for 2012 was also a downgrade from GBTA's previous forecast of 2.6% last quarter, reflecting the ongoing uncertainty of the fiscal cliff debate and the economic impact of Superstorm Sandy.
International Travel to Strengthen
Previously a strong driver of overall business travel spending growth, international outbound business travel stumbled badly in 2012, growing just 0.7% as challenges in the Eurozone impacted trade and business confidence, causing a ripple effect that reached the shores of the U.S. and Asia.
Although the Eurozone remains troubled, increasing industrial production and retail sales in China signal an improving economy for 2013. Among other factors, a stronger China will improve U.S. export growth and help act as an engine for international outbound business travel. As a result, GBTA expects to see a 5.9% rise in international outbound spending for the year.
Group Travel to Rebound
Group travel had a very challenging 2012, with spend rising just 1.3% for the year. 2013 should bring a welcome turnaround to the group travel market. GBTA forecasts that group travel spending will rebound nicely, with 5.2% growth for the year as the broader economy recovers.
"The projections that we see for both international and group travel are encouraging," McCormick said. "Businesses will be looking to capitalize on growth opportunities abroad and spend more on in-person meetings and events as well. By nature, meetings are longer-lead investments that require greater confidence in the future."
GBTA BTI™ -- Modest Improvement with Greater Fiscal Clarity
The GBTA BTI™, a proprietary index of business travel activity, is estimated at 117 for Q4 2012, with no movement from the previous quarter. Because of slower-than-expected U.S. economic growth, the BTI never reached its pre-recession high of 120 in 2012. The closest it came was 118 in Q2 2012.
However, the BTI is currently expected to rise steadily through 2013, reaching 119 in Q1 2013 and 125 by the end of the year.
The GBTA BTI™ Outlook – United States 2012 Q4 report is available exclusively to GBTA members by clicking here and non-members may purchase the report through the GBTA Foundation by emailing firstname.lastname@example.org.
About the GBTA BTI™ Outlook – United States
The GBTA BTI™ Outlook – United States projects aggregate business travel trends over the next eight quarters. The report includes key buy-side metrics such as total business travel volume and spending, plus supply-side projections of changes in costs, across both transient and meetings travel. GBTA BTI™ Outlook – United States 2012 Q4 is the tenth report in the series. Releases are published on the second Tuesday of each quarter.
The GBTA BTI™ Outlook uses an econometric model to better inform the forecast process. The model explicitly relates measures of business trip volume and spending, sourced from D.K. Shifflet & Associates to key economic and market drivers of business travel including: U.S. Gross Domestic Product (GDP) and its components, U.S. Corporate Profits and Cash Flow, U.S. Employment & Unemployment, ISM Business Sentiment Index, Key Travel Components of CPI (airfare, lodging, food away from home, rental cars, fuel, transportation), among other components.
About the GBTA Foundation
The GBTA Foundation is the education and research foundation of the Global Business Travel Association (GBTA), the world's premier business travel and corporate meetings organization. Collectively, GBTA's 5,000-plus members manage over $340 billion of global business travel and meetings expenditures annually. GBTA provides its network of 21,000 business and government travel and meetings managers, as well as travel service providers, with networking events, news, education & professional development, research, and advocacy. The foundation was established in 1997 to support GBTA's members and the industry as a whole. As the leading education and research foundation in the business travel industry, the GBTA Foundation seeks to fund initiatives to advance the business travel profession. The GBTA Foundation is a 501(c)(3) nonprofit organization. For more information, see gbta.org and gbta.org/foundation .
SOURCE Global Business Travel Association