Despite ongoing uncertainty caused by the European debt crisis and rising oil prices, the Global Business Travel Association (GBTA) is sticking to its guns: Although economic challenges persist, business travel will reach its pre-recession levels by 2012, with measured growth throughout the year, it predicts in its latest Business Travel Quarterly Outlook – United States
research report, released yesterday.
Sponsored by Visa, the report projects that business travel spend will increase by 4.6 percent in 2012 on a slight (0.8 percent) decline in person-trips. By comparison, spending last year increased 7.2 percent — from $234 billion in 2010 to $251 billion in 2011, including $111.7 billion on transient business travel, $107.7 billion on group business travel and $31.6 billion on international outbound travel — while total person-trip volume grew 1.8 percent, from 437 million in 2010 to 445 million in 2011.
Included in the Business Travel Quarterly Outlook is the Business Travel Index (BTI), a headline measure of the current and projected level of business travel in the United States. At the last industry peak in late 2007, the BTI was 120. Currently at 116 for the fourth quarter of 2011, it's expected to reach the pre-recession high of 120 again in the third quarter of 2012.
"It seems like we can start to breathe a sigh of relief about business travel," said GBTA Executive Director and COO Michael W. McCormick. "The continued stability of business travel bodes well for the economy as a whole and for continued recovery in the employment market as business travel is a leading indicator of both. While the outlook for Europe is cloudy and economic growth in Asia is slowing, things still look much better than they did 12 months ago."
Outlook: Group Travel
Although growth is expected to be strongest for transient business travel — which grew 6.7 percent in 2011 and is predicted to grow another 3.7 percent in 2012 — the outlook also is positive for group travel.
"Group travel will keep pace with transient growth as long as no significant economic shocks take place," GBTA said. "Economic shocks disproportionately impact group travel compared to transient travel. Spending on group business trips in 2011 was up 7.2 percent over 2010. GBTA projects group travel spending will slow to 3.3 percent in 2012 as uncertainty in Europe and higher energy prices continue to impact the overall economy."
Trend Watch: Fewer Trips, Greater Spend
In addition to looking ahead, GBTA looked back: Since 2000, it reported, the number of business trips taken has declined (by 22.7 percent), although the total amount spent on business travel has increased (by 3.3 percent). Spending per trip also increased, despite the decline in trip volume. Per trip, average spending in 2000 was $422; in 2011, it was $564, an increase of 33.6 percent, only 64 percent of which can be attributed to inflation.
"Aside from the boost in 2010 and 2011 when we were starting to get back on track after the worst of the recession, this trend makes perfect sense," McCormick said. "We're seeing road warriors taking fewer trips, but making the most of them, making more stops and spending more on the road. The productivity explosion is a huge factor and it's being brought on by better travel management, better technology and making the most of their time on their road. In the past, a road warrior may make two trips rather than just spending an extra night, or three travelers would go out on a trip together, where now it's fewer. This is a remarkable trend that we don't see ceasing."