Perhaps signaling a revival in the need to conduct business face-to-face, a Global Business Travel Association forecast finds U.S.-originated business travel grew nearly 3 percent year-over-year, with company spending for business travelers increasing 7.6 percent to $71.2 billion during the first quarter of 2014. This indicates rising management confidence in the economic recovery, which tends to accompany increased travel budgets and fewer travel restrictions. Overall, U.S.-generated business travel spending is expected to increase 6.8 percent to $292.3 billion in 2014.
The GBTA reaffirmed its positive forecast of the U.S. business travel industry with the release of the GBTA BTI Outlook – United States 2014 Q2, sponsored by Visa, Inc. The report highlights the important relationship of business travel to overall U.S. economic growth.
“Business travel spending in the U.S. supports 7.1 million jobs,” said Michael W. McCormick, GBTA executive director and COO. “We continue to see a correlation: growth in business travel is intrinsically linked to jobs development and ultimately growth in the U.S. economy.”
The report’s other key findings include:
“Electronic payments play an integral role in the U.S. business landscape, allowing Visa to help companies and business travelers understand and react to the ever-changing business travel market,” said Tad Fordyce, SVP and head of Global Commercial Solutions, Visa Inc. “The expected growth outlined in the GBTA BTI means for exciting times not only in the business travel market but for our country’s economy as well, and will allow Visa along with GBTA, to continue to create best-in-class solutions for our financial institution customers and their clients.”
In addition, the study identified other key trends that could impact business travel in the coming months, including the price of oil, cost of travel and international outbound business travel.
Volatile Oil Prices and U.S. Business Travel – No Immediate Impact
Oil prices have a direct impact on business travel, causing the price of jet fuel and other travel related expenses to fluctuate. Oil prices also provide future insight into both economic growth and travel inflation. Currently, oil supply is tracking well above demand, suggesting favorable oil prices on the horizon. Geopolitical upheaval — particularly in the Middle East — is always a risk, causing oil spikes and almost immediate downstream increases in airfare and other travel prices.
Travel Prices Expected to Remain Relatively Low Through 2014
GBTA expects travel price growth to remain relatively low at 1.9 percent, before picking up pace in 2015. The low estimate is in large part due to the relatively stable airfare prices, but prices are likely to rise as consolidation in the industry puts more pricing power in the hands of the airlines. Rising food prices, rental car rates and lodging are currently the largest contributors to travel price growth.
International Outbound Business Travel Continues Increasing
International outbound business travel continues to rise, with trip volume expected to grow 6.6 percent and trip spending increasing 10.3 percent in 2014. This data indicates that the global economic recovery is underway. Although things appear to be on the upswing, GBTA continues to be cautious. Lower-than-expected inflation poses risks for advanced economies, there is increased financial volatility in emerging market economies and increases in the cost of capital will likely dampen investment and weigh on growth.
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@example.com.