Business Travel Will Complete a Comeback Year in 2011 - But Faces a Tougher Climb in Turbulent 2012
Slower Growth Due To Ambiguity in U.S. Economic Recovery
ALEXANDRIA, Va., Oct. 11, 2011 /PRNewswire-USNewswire/ -- Business travel will maintain its upward trajectory in 2012, but a stagnant U.S. economy is driving increasing corporate uncertainty and leading to projections of slower U.S. business travel spending growth next year, according to the latest Business Travel Quarterly Outlook – United States from the Global Business Travel Association (GBTA), sponsored by Visa.
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2011 has been a year of resurgence, with business travel spend expected to grow 6.9% compared to 2010, hitting $250.2 billion. However, troubles in the economy are fostering more of a wait-and-see approach among corporations heading into next year, leading to a forecast of 4.3% growth in business travel spend for 2012 (or $260.9 billion).
"Uncertain economic conditions around the world continue to impact companies, which in turn impacts business travel plans and can lead to hesitation in spending. However, business travel spending growth remains vibrant, and the current environment does not portend a dramatic travel slowdown," said Michael W. McCormick, GBTA executive director and COO.
"Companies are still investing in travel because they have become smarter and more conscious about the level of business travel that is critical to driving growth," McCormick added. "They recognize where they cut back too much during the recession and won't make the same mistakes twice, because they know there is great value in personal relationships and business travel is a critical component in sealing those bonds."
GBTA finds that the expected growth in spend for 2012 will be largely spurred by price increases in travel goods and services. But although travel prices are projected to increase in 2012, pressure in the economy will mean that prices will grow more slowly than in 2011. GBTA predicts U.S. business travel price inflation to be 2.4% in 2012, compared to price inflation of 4.3% for 2011.
GBTA Business Travel Index™ Adjusts Accordingly
The GBTA Business Travel Index (BTI™) for Q2 2011 reached 115, higher than previously projected, and is expected to stay the same for Q3 2011. This means 2011 is likely to wrap up as a comeback year for business travel as corporations were resolute about increasing their investment in travel. Looking farther out, the BTI™ has been revised to climb at a slower pace than previously projected in light of difficult economic conditions and anemic economic growth. The Q4 2011 forecast for the BTI is 116, up from 112 at the start of 2011.
The BTI™ provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time.
International Travel Remains a Bright Spot
While the U.S. economy faces challenges, many markets abroad, particularly in Asia, continue to grow at a much faster pace. U.S. companies operating globally are enjoying export booms and gains in their overall competitiveness. GBTA is projecting that corporations are expected to book 3.3% more trips abroad in 2012 and increase their international travel spend 7.7% to $34.3 billion. This follows 2011 growth of 9.1% in international travel spend as currently forecast.
"While international trips are more expensive and time consuming, their reward can be worth every cent as many export-driven companies are in a strong position to weather economic storms," McCormick said. "As international travel continues to expand, corporations are doing more to help their travelers on these journeys. They are investing wisely in their people and allowing for more premium class travel and amenities for these long trips because they know if their executives are well rested and prepared, they can make the maximum impact."
Slowing Group Travel Spend
While spend on group travel such as meetings and conventions bounced back in 2010 and 2011, the uncertainty in the economy will likely lead to a spending slowdown for meetings travel next year. GBTA projects groups and meetings travel spend to grow at 3.5% in 2012, about half as fast as the expected 6.8% growth in 2011.
The Business Travel Quarterly Outlook – United States is free of charge to all GBTA Members (gbta.org/foundation/resourcelibrary). Non-members may purchase the report through the GBTA Foundation at [email protected]. Members of the media seeking report details should contact GBTA Communications at [email protected].
About the Business Travel Quarterly Outlook
The Business Travel Quarterly Outlook – United States projects aggregate business travel trends over the next eight quarters and 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. Business Travel Quarterly Outlook – 2011 Q3 United States is the fourth report in the series with subsequent releases being published on the second Tuesday of each quarter of the Fiscal Year 2012.
The Business Travel Quarterly 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 17,000 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 gbtafoundation.org.
SOURCE Global Business Travel Association
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