U.S. business travel spending will increase by 3.1 percent in 2015 and 3.7 percent in 2016, yet the global oil price collapse and economic weakness in China, Russia and the Middle East will dampen the outlook for growth this year and next, according to the GBTA BTI Outlook – United States 2015 Q3, a report by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), and sponsored by Visa Inc.
“Growth in U.S. business travel spending is softening as result of the uncertain macro-economic environment,” said Michael W. McCormick, executive director and COO of the Global Business Travel Association. “While the number of trips are up, total spending per trip is down. That can be linked to growing uncertainty and risk associated with the global economy, especially in China, Russia and the Middle East and the global collapse in oil prices. This should sound a clear note of caution for the overall U.S. economy.”
The Outlook represents a downward revision from the one released in July, when growth was projected to grow at 4.9 percent in 2015 and 5.4 percent in 2016. The revision can be attributed to three key factors:
Additionally, the study finds that the collapse in global oil prices is finally beginning to impact consumers, particularly when it comes to air travel spending. In 2015, the average airfare for a domestic roundtrip is $379, compared to $392 in 2014. American consumers will therefore see a small but significant dividend as a result of lower global oil prices.
“According to the U.S. BTI forecast, companies are looking for ways increase business travel while still keeping costs in check,” said David Henstock, V.P. of Global Commercial Solutions, Visa Inc. “As companies look for efficiencies across their organization, electronic payments play a key role in helping both buyers and suppliers in the travel industry manage expenses and drive savings to their bottom line.”
Note on Annual Revision — One major change reflected in the forecast is an annual revision of last year’s final trip volume and spending estimates. This revision occurs once per year as final data for 2014 are collected and vetted. In 2014, GBTA revised the total number of domestic person trips completed in the U.S. to 488.6 million. This is up from the 476.0 million previously reported and represents growth of 4.2 percent over 2013 (annual growth was previously reported at 1.5 percent). While total domestic volume was revised upward for 2014, the final tallies led to a slight downward revision in domestic spending. The 2014 domestic spending total of $252.9 billion was revised down to $248 billion, growing 2.9 percent over 2013.
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.