Sluggish 2012 should yield to better 2013 for business travel

9th Jan 2013
Sluggish 2012 should yield to better 2013 for business travel

Business travel spending growth slowed through the tail end of 2012 as companies postponed critical investment decisions until after the U.S. presidential election and Congressional debate on the fiscal cliff.  However, the business travel forecast for 2013 should be more positive, provided there is continued easing of economic and political uncertainty – presenting an early indication of greater corporate confidence in spending decisions. 

According to the GBTABTI™ Outlook – United States 2012 Q4, a report from the Global Business Travel Association (GBTA) sponsored by Visa, Inc., U.S. business travel spending is expected to rise 4.6% in 2013 to $266.7 billion, on a slight -1.1% decline in trip volume to 431.8 million person-trips for the year.  The key factors in 2013 business travel spending growth are projected to be:
*  Increasing international outbound travel spending – projected to rise 5.9%
*  Increasing group travel spending – projected to rise 5.2%
*  Very modest price inflation – indicating that companies will be spending more real dollars on business trips.
Spending growth in 2013 should begin modestly, at 2.0% in Q1 and 2.9% in Q2, and then pick up the pace with rates of 6.4% in Q3 and 7.2% in Q4.

“Even with an agreement to avert the fiscal cliff in the near-term, there are still many issues that need to be addressed; however, companies should now have somewhat greater confidence in their spending decisions,” said Michael W. McCormick , GBTA executive director and COO.  “While companies will approach the first half of the year with some caution, pent-up demand to get back on the road should hopefully fuel accelerating growth in business travel spending through the end of 2013.”
At the close of 2012, annual U.S. business travel spending is estimated by GBTA to have grown 1.6% to $254.9 billion, on a -1.9% decline in trip volume to 436.5 million person-trips.The spending increase was mainly due to rising travel rates.
This increase in spending for 2012 was also a downgrade from GBTA’s previous forecast of 2.6% last quarter, reflecting the ongoing uncertainty of the fiscal cliff debate and the economic impact of Superstorm Sandy.

International Travel to Strengthen
Previously a strong driver of overall business travel spending growth, international outbound business travel stumbled badly in 2012, growing just 0.7% as challenges in the Eurozone impacted trade and business confidence, causing a ripple effect that reached the shores of the U.S. and Asia.

Although the Eurozone remains troubled, increasing industrial production and retail sales in China signal an improving economy for 2013.  Among other factors, a stronger China will improve U.S. export growth and help act as an engine for international outbound business travel.  As a result, GBTA expects to see a 5.9% rise in international outbound spending for the year.


Group Travel to Rebound
Group travel had a very challenging 2012, with spend rising just 1.3% for the year.  2013 should bring a welcome turnaround to the group travel market.  GBTA forecasts that group travel spending will rebound nicely, with 5.2% growth for the year as the broader economy recovers.

“The projections that we see for both international and group travel are encouraging,” McCormick said.  “Businesses will be looking to capitalize on growth opportunities abroad and spend more on in-person meetings and events as well.  By nature, meetings are longer-lead investments that require greater confidence in the future.”


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