U.S. Business Travel Volume Projected To Rise Over Next Two Years
GBTA Expects Lower Oil Prices and Increasing Demand to Take Industry to New Heights
ALEXANDRIA, Va., April 14, 2015 /PRNewswire-USNewswire/ -- U.S. business travel volume is expected to increase over the next two years, as the U.S. economy moves into higher gear. Meanwhile, lower oil prices are expected to allow more modest pricing growth in air travel, ground transportation and rental cars in 2015.
Overall, U.S. business travel spending is expected to advance 3.1 percent to $295.7 billion in 2015, a lower figure than last quarter's forecast due to lower than expected prices on travel goods and services. Total person-trip volume, on the other hand, is expected to increase, more than previously expected, by 1.7 percent to 492.1 million trips in 2015, according to the GBTA BTI™ Outlook – United States 2015 Q1, a report from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), and sponsored by Visa, Inc. This rise in volume follows three quarters with relatively no change in GBTA's forecast.
"The expected increase in U.S. business travel volume is an excellent indicator of how the overall domestic economy is faring, with every sector and consumer spending performing better than we've seen since 2009," said Michael W. McCormick, GBTA executive director and COO. "Thanks to a healthier domestic economy and a stronger U.S. dollar, companies are putting more travelers on the road not only because they can afford to, but because they continue to see a strong return on their business travel investment."
The report's key findings include:
- Plummeting oil prices are putting downward pressure on travel price inflation, particularly in the transportation segments. Although business travelers have yet to see the benefits of lower fares as a result of lower oil prices, we expect the cost of air travel, ground transportation and rental cars will all moderate in 2015. In aggregate, travel prices should only rise 1.4 percent this year before returning to more normal levels in 2016.
- Gains in business travel in 2014 suggest strong job growth ahead. Business travel is a beneficiary to expanding exployment, and GBTA is seeing gains in travel-prone sector employment.
- Despite the strong domestic figures, we expect volatility in international outbound (IOB) travel over the next seven quarters as uncertainty in the global economy clouds the forecast. Nonetheless, we expect IOB spending to advance 5 percent this year and another 6.9 percent in 2016, but volatility and downside risks remain.
- After falling -1.9 percent in 2014, we expect group trip volume to advance 1.6 percent this year and another 2.5 percent in 2016. Spending, meanwhile, is projected to rise 3.1 percent this year and another 5.2 percent in 2016. Spend per group business trip bounced back to nearly $700 last year after falling to $660 in 2013.
- We expect transient volume will gain another 1.7 percent this year on its way to 304 million Person-Trips while spending on transient business travel will grow 2.7 percent to $131 billion USD.
"We are encouraged to see a higher than expected, uptick in per-person trip volume, indicative of an improving economy, said Tad Fordyce, SVP & Head of Global Commercial Solutions, Visa Inc. "As more organizations continue to increase their business travel, electronic payments will continue to play a leading role in helping companies track and pay for business-related travel expenses."
Despite Shaky Global Climate, U.S. Prevails
Rising US employment, production and consumer activity have continued to lift most headline economic statistics during the past quarter. The global economy remains shaky, however, and, combined with plummeting oil prices and the rising dollar, has ratcheted up both financial market volatility and concerns over the sustainability of global growth. Despite this external uncertainty, the U.S. economy remains on solid ground.
GBTA BTI™ Progresses Upward
The 2015Q1 GBTA BTI™ index, a proprietary index of business travel activity, is estimated to reach 133, lower than our projection from last quarter's forecast. This lower level is driven entirely by lower prices on travel goods and services, particularly transportation.
The BTI is expected to continue rising in 2015, reaching 140 by the end of this year. Momentum should continue into 2016 as the index gains another five points on its way to 145.
"The BTI forecast continues to be a strong indicator of the state of business travel, adept at predicting trouble spots and growth signals," explained Joseph Bates, GBTA Foundation Vice President of Research. "The economic recovery continues to pick up steam but lower prices have kept spending in check."
Key Metrics:
To view the complete release, please visit:
http://www.gbta.org/PressReleases/Pages/RLS_041515_USA.aspx
The GBTA BTI™ Outlook – United States report is available exclusively to GBTA members by clicking here and non-members may purchase the report through the GBTA Foundation by emailing [email protected].
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. Releases are published on the second Tuesday of each quarter.
The GBTA BTI™ Outlook uses an econometric model created by Rockport Analytics 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 meetings trade organization headquartered in the Washington, D.C. area with operations on six continents. Collectively, GBTA's 7,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. GBTA provides its growing network of more than 28,000 travel professionals and 125,000 active contacts with world-class education, events, research, advocacy and media. 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.
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SOURCE Global Business Travel Association
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