The National Business Travel Association (NBTA) and Egencia, the corporate travel arm of Expedia Inc., today released a sample of findings from a landmark study that quantifies global business travel spend and projects business travel growth through 2013. Evaluating 72 countries, the study shows that business travel growth patterns vary dramatically across the globe with North America advancing at an average rate of just over 2 percent per year for the last decade, Western Europe growing 4.6 percent annually and Asia Pacific advancing by 7.2 percent annually over the same period. Emerging Europe and the Middle East/Africa region advanced annually by 12.4 percent and 7.7 percent, respectively, from 1998 to 2008.
“This study is the most comprehensive look at the global business travel industry available today," said Kevin Maguire, CCTE, GLP, NBTA president and CEO. "Corporations can leverage this insight to guide their travel programs and preferred supplier market strategies across the globe for many years to come. We look forward to making the full report available in the coming weeks.”
The study predicts that growth of business travel in China and Japan will exceed U.S. growth over the next five years. In addition, developing nations, like India, Vietnam, Iran and Indonesia will experience significant compound annual growth rates over the same timeframe.
“Developing countries are proving to be fertile business-travel areas,” said Rob Greyber, president of Egencia. “Over the next five years, we’ll see countries like India and China grow at rates of 5.3 and 6.5 percent respectively, versus the U.S. projected growth rate of 0.3 percent.”
Global Business Travel Market & Outlook
The study finds that the North America, Western Europe and Asia Pacific regions each represent about 30 percent of the global business travel market (90 percent combined), estimated to total $929 billion in 2008. This figure includes both domestic and outbound international travel. The remaining 10 percent of global activity takes place in Latin America, Emerging Europe and the Middle East and Africa. The U.S. represents the largest piece of global business travel spend with $261 billion or 28 percent of the world total, followed by China at 10 percent and Japan at 8 percent.
“This study shows that business travel spend has increased by more than 35 percent since 1998, making it an impactful industry in the global economy,” said Kenneth McGill, NBTA research consultant and lead analyst on the IHS Global Insight report. “Most of this growth has been due to an expanding global economy and the rising dispersion of business travel activity around the world.”
Despite the U.S. position as the global leader in business travel spend, Asia Pacific is poised for substantial growth over the next five years, while U.S. growth is expected to stagnate. China’s spend, at $93.8 billion in 2008, has tripled over the past 10 years and is expected to lead market growth between 2008 and 2013, followed by Japan and South Korea. Measured in terms of the dollar increase in business travel spending, the United States is expected to be fourth in terms of growth, just behind India.
Business Travel by Industry Sector
The study examines the highest growth industries for business travel globally, of which the top five include utilities, food processing and services, real estate, social and personal services, and professional and business services. Over the next five years, sectors that directly benefit from both infrastructure development (utilities, government and communications) and economic stimulus packages (education, construction and real estate) will experience the most significant growth in business travel spend.
The research shows that, globally, businesses spend an average of about 1.1 cents of every sales dollar on business travel, though it varies widely by industry. In the equipment and leasing sector, for example, the measure of travel intensity is more than three times higher at 3.7 cents per dollar, while in the mining sector, business travel measures only fractions of a cent per dollar of revenue.
Reflecting the global recession, nearly every industry foresees a decline in business travel outlays in 2009 from 2008 levels, led by steep drops in the transportation services, paper and paper products, construction, chemicals, communication equipment, and rubber and plastic manufacturing sectors. The only anticipated uptick in spending is expected in education with a 2.2 percent projected rise. However, there has been a downward trend in the amount of travel spending businesses require to support their sale and operational activities, which is a clear indication of the rising productivity of business travel.
“The increase in productivity highlights several major shifts within our industry,” said Greyber. “Stronger travel management and greater efficiency when traveling have both contributed to this change, essentially driving down business travel spend per revenue dollar. This development should be a key consideration in program planning, in addition to overall macroeconomic changes and sector trends.”
The full study, conducted by IHS Global Insight, will include a complete profile of U.S. business travelers, as well as a comprehensive forecast of U.S. and global business travel activity. Additional findings will be shared in a public webinar on August 6, 2009 at 12:00 p.m. ET/9:00 a.m. PT and during education sessions at the 2009 NBTA International Convention & Exposition August 23-26 in San Diego. To register for the webinar, please visit http://www.nbta.org/marketsizingstudy.
NBTA/IHS Global Insight used a combination of public, private, and custom survey-based data to compile this exhaustive analysis of global business travel. Demand-side measures collected directly from business travelers were combined with data from travel suppliers and various governments/NGOs in order to create a definitive set of business travel metrics. NBTA/IHS Global Insight also sponsored a survey of a representative sample of U.S. businesses across industry groups seeking an array of questions regarding travel & entertainment expenditures and managed travel activity. Finally, IHS Global Insight created a comprehensive econometric model used to project future business travel performance and related business travel spending to corporate performance.