Incessant snowstorms and a bitterly cold polar vortex that covered much of the Northeast slowed travel for a good portion of the first quarter of 2014...but still, the Global Business Travel Association expects business travel to continue rising for the rest of the year. In a report released today, the GBTA significantly increased its forecast for the year, driven in large part by healthy corporate profits, rising management confidence and increased job development.
U.S. business travel spending is now expected to rise 7.1 percent in 2014 to $293.3 billion, a substantial upgrade from the 6.6 percent growth to $289.8 billion GBTA predicted last quarter. Total person-trip volume is expected to increase 2.0 percent 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 percent to $37.2 billion – up from 12.5 percent growth forecasted in Q4.
- GBTA’s outlook for group travel was also revised to increase 7 percent in 2014 to $126 billion – up from the 6.5 percent growth GBTA predicted last quarter.
In a statement, Michael W. McCormick, GBTA executive director and COO, said that businesses are increasingly confident and eager to get their employees back on the road. “Business travel growth is a leading indicator of job growth," he said, "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.