Predicting strong improvements in international outbound travel to help drive overall spending growth, a new report from the Global Business Travel Association (GBTA) sees opportunity in 2014.
GBTA says business travel finished 2013 with stronger than expected growth and heads into 2014 with a robust outlook, propelled in part by strong investment in international outbound travel, a poorly performing sector over the previous two years.
U.S. spending on international outbound travel should jump a hefty 12.5 percent in 2014 to $36.7 billion, after just 1.8 percent growth in 2013 and an anemic 0.8 percent expansion in 2012. This revival will be helped in particular by steady improvements in the Euro-zone, the U.S.’s largest trading partner, GBTA says. Overall, U.S. business travel spending is expected to advance 6.6 percent to $289.8 billion in 2014, while total person-trip volume is expected to increase 1.7 percent to 461 million trips for the year, according to the GBTA BTI Outlook – United States 2013 Q4, a report from the GBTA sponsored by Visa, Inc.
“If our elected officials have finally gotten the message that political uncertainty and brinksmanship stifles economic growth, we should be looking at a very healthy year for U.S. business travel,” said Michael W. McCormick, GBTA executive director and COO. “Airports and hotels will be busy as American companies gain confidence and invest in travel to drive growth. And because business travel is a leading indicator of employment, this news is also another positive sign for the labor market.”
At the close of 2013, annual U.S. business travel spending is estimated by GBTA to have grown 3.8 percent to $272 billion, on a slight -0.3 percent decline in trip volume to 453.3 million person-trips. Notably, despite the Federal government shutdown in 2013, the private sector delivered a stronger third quarter than expected, which boosted business travel spending, GBTA says.
“With the close of 2013 bringing stronger than expected growth in the U.S. business travel market, 2014 is poised to see even more growth,” said Tad Fordyce, head of global commercial solutions at Visa Inc. “After two years of tepid growth in outbound international business travel, GBTA projects this segment will see double digit growth in 2014 as more U.S. businesses increase travel spending.”
Group Travel Accelerates in 2014: The meetings business has been on an upward swing for the past two years and this trend should continue in 2014. GBTA expects group travel spending to rise by 6.5 percent to $124.5 billion based on a volume increase of 1.7 percent.
“This is the healthiest growth outlook for meetings activity since 2011,” said McCormick. “Meetings are typically larger investments that require advance planning, and companies only make these decisions when they have confidence in the longer-term outlook for the economy.”
The GBTA BTI, a proprietary index of business travel activity, is estimated at 128 for Q4 2013 and 130 for Q1 2014. The BTI regained its pre-recession peak of 120 in the first quarter of 2012, but muddled through a sluggish 2012 and beginning of 2013. However, with economic momentum increasing, the BTI is now projected to reach 136 by the end of 2014.
“The BTI forecast has proven to be quite accurate over the past four years, and is getting even better as we gain more experience,” explained Joseph Bates, GBTA Foundation vice president of Research. “We think of the BTI as a way to take the business travel industry’s temperature, and based on what we’re seeing, business travel should enjoy increasingly good health in the coming quarters.”