With winter now behind us the forecast is clear and warm for business travel, according to projections by the Global Business Travel Association (GBTA). Driven by healthy corporate profits, rising management confidence, increased job development and an effort to reschedule the scores of meetings cancelled this winter because of raging storms, 2014 looks all in all to be an excellent year for business travel.
U.S. business travel spending is now expected to rise 7.1% in 2014 (to $293.3 billion), a substantial upgrade from the 6.6% growth (to $289.8 billion) GBTA predicted last quarter. Total person-trip volume is expected to increase 2% to 464.7 million trips.
GBTA’s forecast upgrade will be fueled by strong investment in international outbound travel spending, which is now expected to increase 12.9% to $37.2 billion – up from 12.5% growth forecasted in Q4. Then there is GBTA’s outlook for group travel, which was also revised and now expected to increase 7% in 2014 to $126 billion – up from the 6.5% predicted last quarter.
“As the spring thaw gets into full swing businesses are feeling more confident, with pent-up demand to get their employees back on the road,” said Michael McCormick, GBTA COO. “Business travel growth is a leading indicator of job growth, and we’ve seen this play out in previous quarters as the private sector has finally regained all of the jobs lost during the recession. Today’s forecast suggests that this measured but steady improvement should continue.”
“According to the BTI forecast, business travel in the U.S. will see strong gains in 2014, fueled by outbound international business travel,” said Tad Fordyce, SVP, Global Commercial Solutions for Visa. “As more employees travel globally, organizations that use electronic payments have a convenient and secure way to pay for business travel expenses no matter where they travel in the world.”
Crimea Effect and Business Travel
While the world is watching the ongoing tensions in the disputed region of Crimea, the current crisis there has had little, if any, impact on the U.S. business travel market due to minimal trade ties between the U.S. and Russia. However, trade ties between Europe and Russia are significant, and a trade embargo could impact European economic growth. Those moves would have an effect on U.S. growth and business travel. In addition, a potential Russian petroleum and oil embargo could have a ripple effect on the travel industry. Oil prices have a direct impact on business travel, causing the price of jet fuel and other travel related expenses to fluctuate.
“The Eurozone is exposed to the Crimean crisis and there is a chance that an ongoing issue could create a slowdown in Europe, negatively impacting international outbound travel from the U.S.,” said McCormick. “We’re poised to finally start seeing stronger business travel spending in the Eurozone, and any political uncertainty could hamper projected growth with our largest trading partner.”
The biggest driver of U.S. business travel spending remains outbound international travel, McCormick said. The GBTA has tracked a 13 percent year-over-year increase in that category.