ALEXANDRIA, Va., July 7, 2015 /PRNewswire-USNewswire/ -- U.S.
business travel spending will increase by 4.9 percent in 2015 to
$302.7 billion, yet ongoing concerns
about the U.S. economy will rein-in what could be even sharper
growth, according to new research from the GBTA Foundation and
Visa.
The 2016 outlook anticipates a surge in economic activity and
confidence, with travel spending projected to increase by 5.4
percent to $318.9 billion.
Total trip volume follows a similar trend for 2015 and 2016. In
2015, U.S. travel volume is expected to increase by 1 percent to
488.1 million person-trips – an average of 1.3 million trips for
every day of the year. Growth will substantially increase in 2016
with business travel volume accelerating by 3 percent to 502.8
million person-trips. That amounts to an average of more than
38,000 additional business trips every day.
These findings are part of the "GBTA BTI™ Outlook –
United States 2015 Q2," a
report by the GBTA Foundation, the education and research arm of
the Global Business Travel Association (GBTA), and sponsored by
Visa, Inc.
"U.S. business travel was poised for significant growth in
2015, but the erratic performance of key economic drivers caused
some to tap the brakes on additional travel spending," said
Michael W. McCormick, Executive
Director and COO of the Global Business Travel Association.
"Yet, economic fundamentals remain strong. Business travel
will continue to have positive momentum as we move toward 2016, a
leading indicator that the overall economy will continue to grow as
well."
Recovery Since the Great Recession
Since the Great
Recession, U.S. business travel has increased significantly,
reflecting and driving improvement in the overall economy.
- After hitting its nadir at the end of 2009, global business
travel spending has increased 38 percent on a nominal level,
according to GBTA's Business Travel Index.
- THE GBTA BTI Outlook forecasts an additional 11 percent
nominal level increase over the two-year span between 2015 and
2016.
- The GBTA BTI Outlook projects that real GDP will advance 2.5
percent in 2015, down from our original estimate of 3 percent, due
mainly to the unexpected extent of Q1 weakness. In 2016, GDP
will grow by 3.1 percent, unchanged from our Q1 outlook.
Economic Outlook
The long-term outlook for U.S.
business travel growth remains bright, but in the near-term the
picture is mixed. Global business travel both drives, and is
driven, by economic activity.
- The U.S. economy continues to forge ahead but growth has
been volatile. GDP growth for 2015Q1 is case in point having
declined by -0.7 percent (Q/Q at annualized rate), down from +5
percent just two quarters before. Real GDP also declined in the
first quarter of 2014 (-2.1 percent) due to severe winter weather.
It then proceeded to quickly snap back. Many analysts are expecting
the same this year.
- Despite the recent challenges, the GBTA BTI Outlook's
expectations for the U.S. economy are largely unchanged from last
quarter. The underlying momentum of job growth, wage gains and
rising confidence will continue to compensate for weak global
growth and postponed oil & gas investment. Consumer spending
and housing are already showing positive reactions to rising
disposable income. Moreover, gradually rising oil prices should
help to re-start postponed energy investment projects.
Additional Business Travel Findings
- Group meeting volume finished 2014 down by -2.0 percent.
Much of this decline is the fallout from an extremely strong 2013 –
a period when group volume surged 8.6 percent. Growth in 2013
was driven by the corporate meeting sector, which finally rebounded
after a few down years. Despite the growth in volume,
spend–per-trip declined in 2013, after growing every year since
2008. Spend per group business trip bounced back in 2014, however,
eclipsing $700 per.
- The GBTA BTI Outlook projects that group trip volume will
advance 0.9 percent in 2015 and surge 3.1 percent in 2016.
Spending, meanwhile, is projected to rise 5.3 percent this year and
another 4.3 percent in 2016.
- Individual business travel had its best year since The Great
Recession in 2014, as volume grew 3.7 percent over 2013. Growth
gained momentum over the latter half of the year and continues into
2015 as the domestic economy picks up steam and businesses send
more workers on the road in support of top-line growth. We expect
individual business travel volume will gain another 1.0 percent
this year on its way to 302 million Person-Trips and spending on
individual business travel will grow 4.9 percent to $134.8 billion.
- Significant challenges to global economy remain, particularly
in parts of Europe, China, Russia
and Brazil. These factors coupled
with a significantly stronger dollar are all weighing on the
prospects for international outbound business travel over the next
six quarters. The GBTA BTI Outlook projects that international
outbound business travel will grow 3.1 percent this year; down from
last quarter's forecast of 5.1 percent.
- Travel price inflation (TPI) is comprised of a number of travel
goods and services including airfare, food away from home and
lodging. Travel prices should only rise 1.7 percent this year
before regaining more robust growth in 2016.
"While we would like to see the overall growth numbers more
consistent, signs are good for a solid end to 2015 and a robust
2016," said Brian Triplett, SVP,
Head of Commercial Product, Visa Inc. "These increases in
business travel will drive the transition to electronic
payments. In turn, this will help companies reduce costs and
track and pay for business-related travel expenses more simply and
more efficiently."
GBTA BTI™ Progresses Upward
- The 2015Q1 GBTA BTI™ index came in at 137, significantly
higher than our projection of 133 in last quarter's forecast
(GBTA BTI™ Outlook – United
States, April 2015).
This higher level is driven primarily by a higher expectation for
prices on travel goods and services, particularly
transportation.
- In total, the index has gained 40 points since bottoming in the
fourth quarter of 2009. The economic recovery continues to gain
momentum and expectations for travel prices continue to put upward
pressure on the index.
- We expect the GBTA BTI™ will experience strong growth over
the forecast horizon. The index will gain another six points
over 2015, finishing the year at 143. Momentum will continue into
2016 as the index gains another six points on its way to 149.
"The BTI forecast consistently correlates with overall GDP
growth," explained Joseph Bates,
GBTA Foundation Vice President of Research. "As business travel
increases, so will growth in the overall economy."
View the full release and charts.
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 pyachnes@gbtafoundation.org. To
view an abstract of this research, please click here.
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