Economic turmoil in Europe, slower growth in China and U.S. unemployment are expected to curb business travel growth in the United States through the end of the year, according to the latest GBTA BTI™ Outlook – United States, a report from GBTA sponsored by Visa, Inc. With disappointing job gains and the upcoming Presidential election on the horizon, businesses appear to be taking a cautious approach to their investment in travel until there is greater economic certainty.
GBTA now expects total U.S. business travel spending to grow 2.6% for 2012, reaching $257 billion by the end of the year. While this is a moderate increase since last quarter, when GBTA estimated growth for 2012 at 2.2%, the uptick in spend is largely being driven by rising business travel costs. Total business trip volume is expected to reach 438.1 million for 2012 – a reduction of -1.6% from 2011, when total business trip volume was 445 million.
Looking ahead to 2013, GBTA research forecasts business travel spend will grow 4.9%, reaching $270 billion – which is a slight upgrade from the 4.7% growth in 2013 that GBTA forecast last quarter. Total trip volume is expected to fall -1.1% in 2013.
“Corporations are in a wait-and-see mode and holding back on investment decisions that would help boost the economy,” said Michael W. McCormick, GBTA executive director and COO. “While companies aren’t cutting their business travel spend and we’re still seeing very modest growth, we are cautious about the outlook for the next several quarters. The looming ‘fiscal cliff’ is causing even more uncertainty, which we are monitoring with real concern. This is an economy in need of some good news to shore up business confidence and encourage more travel.”
“While it appears that the current economy is weighing on the minds of travelers, for the first half of this year, we saw U.S. and international travelers increasing their spend on Visa accounts,” said Tad Fordyce, head of global commercial solutions at Visa Inc. “From January to June of 2012, international travelers increased travel spend on their Visa accounts by nine percent in the U.S. to $20.1 billion. U.S. travelers were also active for the first six months, increasing travel spend on their Visa accounts by seven percent to $17 billion. 2012 has the ability to be the year of the traveler if we can continue this momentum of business and leisure travel.”
For 2012, GBTA now forecasts that transient travel spend will advance by 2.9%, group spend by 2.3%, and international outbound business spend – previously a major driver of overall travel spending growth – by 2.5%. These forecasts are expected to remain constrained unless overall economic momentum increases significantly.