GBTA forecasts favourable national outlook, despite weakened global economic state
U.S. business travel ended 2014 on a high note, with record spending expected to reach $292.2 billion. The projection for 2015 also remains strong, as lower oil prices are expected to lead to increased consumer spending, boosting economic projects. This strong domestic economic news comes despite an overall weak global economic outlook, with trouble in Europe, Asia and Russia.
Overall, U.S. business travel spending is expected to advance 6.2 per cent to $310.2 billion in 2015, while total person-trip volume is expected to increase 1.7 per cent to 490.4 million trips for the year, according to the GBTA BTI™ Outlook – United States 2014 Q4, a report from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), and sponsored by Visa, Inc.
“2014 was a stabilizing year for U.S. business travel, with continuous, sustained growth, despite a plethora of external issues internationally that have weighted down economies in Europe, Russia and Asia,” said Michael W. McCormick, GBTA executive director and COO. “This is a significant and encouraging sign of confidence in the strength of the U.S. economy.”
The report’s key findings include:
- An estimated 482.4 million trips were taken in 2014, representing a 1.4 per cent growth over 2013 and higher expectations than the previous quarter, driven by accelerating performance during the second half of the year.
- During Q3, an estimated 121 million trips were taken, spending $73.8 billion. This represents a 1.6 per cent increase in volume and 6.5 per cent increase in spending.
- 2014 proved to be a comeback year for international outbound business travel, growing six per cent in volume year-over-year, after falling 1.0 per cent in 2012 and rising only 1.1 per cent in 2013. This gain in volume amounts to an estimated $35.6 billion for 2014, a growth of 8.9 per cent year-over-year.
- Transient volume performed well in 2014, with an estimated 298.6 million trips taken, representing growth of 3.5 per cent year-over-year. Volume will likely fall off pace slightly in 2015, although spending should continue, increasing from $130.4 billion projected in 2014 to an estimated $137.1 billion in 2015.
- Group trip volume will likely finish down 2.2 per cent year-over-year, stabilizing after extraordinary growth in 2013. Group spend-per-trip, however, is on pace to rise to $715 in 2014, up from $660 in 2013. Both volume and spending are expected to rise in 2015 by 1.5 per cent and 6.7 per cent, respectively.
“With US business travel spending forecast to hit record levels in 2015, corporate travel managers have more need to improve business travel expense reporting and tracking,” said Tad Fordyce, SVP, global commercial solutions, Visa Inc. “Visa helps corporate clients manage and improve business travel reconciliation through reporting and automated solutions.”
Despite weak global climate, U.S. prevails
Global economic growth remains in a weakened state. Europe – especially Russia – is barely treading water, China’s growth is moderating, Japan’s challenges continue and emerging markets are awaiting more robust performance from the developed world. Despite this, the U.S. economy remains healthy with international outbound business travel seeing little to no negative impact.
Plummeting oil prices temper travel price inflation
Oil prices have plunged since June, creating favorable conditions. The effect is particularly impactful on airfares – signified by an expected decline of 0.9 per cent in prices this year, down from an expectation of a four per cent increase in last quarter’s report. Additionally, consumer spending is expected to increase by 2.6 per cent, as lower gas prices often lead to a boost in discretionary income.
GBTA BTI™ progresses upward
The GBTA BTI™, a proprietary index of business travel activity, is estimated to reach 137 to round out 2014, bolstered by a strengthening domestic economy and an increase in spending. This represents a six-point year-over-year gain.
The BTI is expected to continue rising in 2015, reaching 146 by the end of next year. Momentum should continue into 2016 as the index gains another seven points on its way to 153.
“The BTI forecast continues to be a strong indicator of the state of business travel, adept at predicting trouble spots and growth signals,” explained Joseph Bates, GBTA Foundation Vice President of Research. “Based on what we’re seeing, business travel will continuing growing as our road warriors take to the skies and streets in 2015 and beyond.”
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 protected].
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 created by Rockport Analytics 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.