Despite a record-breaking winter where the effects of the polar vortex and back-to-back snowstorms halted travel across much of the U.S., business travel is expected to continue its surge in 2014. The Global Business Travel Association today significantly increased its forecast for the year, driven in large part by healthy corporate profits, rising management confidence and increased job development – a continued positive sign for the U.S. economy.
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 $289.8billion GBTA predicted last quarter. Total person-trip volume is expected to increase 2.0% to 464.7 million trips, according to the GBTA BTI™ Outlook – United States 2014 Q1, a report from the Global Business Travel Association (GBTA) sponsored by Visa, Inc.
- 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.
- GBTA’s outlook for group travel was also revised to increase 7% in 2014 to $126 billion – up from the 6.5% growth GBTA 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 W. McCormick, GBTA executive director and 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.”
Crimean Crisis and U.S. Business Travel – No Immediate Impact
The world is watching the ongoing tensions in the disputed region of Crimea. However, the current crisis in Crimea has had little, if any, impact on the U.S. business travel market to date 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, which 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.”
GBTA BTI™ Progresses Upward
The GBTA BTI™, a proprietary index of business travel activity, is now estimated to reach 132 in Q1 2014, bolstered by a strengthening domestic economy, an improving external environment and slightly higher travel prices.
The BTI is expected to continue rising for the rest of 2014, reaching 137 by the end of the year.
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.
About the GBTA BTI™ Outlook – United States
The GBTA BTI™ Outlook – United States projects aggregate business travel trends over the next eight quarters. The report includes key buy-side metrics such as total business travel volume and spending, plus supply-side projections of changes in costs, across both transient and meetings travel. Releases are published on the second Tuesday of each quarter.
The GBTA BTI™ Outlook uses an econometric model to better inform the forecast process. The model explicitly relates measures of business trip volume and spending, sourced from D.K. Shifflet & Associates to key economic and market drivers of business travel including: U.S. Gross Domestic Product (GDP) and its components, U.S. Corporate Profits and Cash Flow, U.S. Employment & Unemployment, ISM Business Sentiment Index, Key Travel Components of CPI (airfare, lodging, food away from home, rental cars, fuel, transportation), among other components.
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