Business travel spending among the five key European markets - Germany, the UK, France, Italy and Spain - is expected to hit $183 billion USD, (€144.7 billion) 3.3 percent growth over 2013. This projected gain would be the largest in Western Europe since the great recession, the Global Business Travel Association (GBTA) reports in its latest GBTA BTI Outlook.
These five markets together form the lion’s share of business travel in the region, nearly 70 percent, and act as a good barometer of the health of the entire European business travel market, GBTA says. "While challenges remain, business travel is closely tied to corporate growth, and the findings suggest stabilizing economic health."
· Germany remains the largest business travel market in Europe reaching $50.5 billion USD in 2012. This is expected to increase 5 percent in 2013 to $53 billion USD.
· The UK has the second highest level of spending on business travel in Western Europe - $40.6 billion USD in 2012 – expected to advance 1.6 percent in 2013 to $41.3 billion USD.
· Spain, Italy and France will all see their business travel markets contract in 2013 by -6.7 percent, -3.9 percent and -2.3 percent respectively.
· In 2013, domestic business travel will fare better than international outbound in all five markets except for the UK.
Catherine McGavock, Regional Director for Europe for GBTA, said, “After six consecutive quarters of decline, Europe has finally turned the corner. Challenges remain but we cannot ignore the economic progress that has been made and the impact that this will have on both domestic and international travel across Western Europe. Next year we can expect to see the largest annual growth in business travel spending in more than 6 years.”
“The upsurge in business travel spending, as noted by the BTI, reinforces the fact that the Western Europe economy is stabilizing,” said Tad Fordyce, head of global commercial solutions at Visa Inc.
“Although the recession took a toll on these markets, we are very optimistic this upward movement will continue the momentum into 2014,” McGavock said.
European economic growth remains a two-speed story with the Northern markets showing positive growth that has not yet been enough to compensate for the still-negative performance of the Southern tier, GBTA says in its analysis.
Last year proved to be a challenging one for the Western European economy and for business travel. Business travel policies were tightened and budgets were reduced or frozen. Total travel spend across all five key country markets combined to register a decline of 2.2 percent in 2012, to $177.4 billion USD, GBTA said.
However, while Germany and the UK eked out small positive growth rates for the year, negative performance in Italy, Spain and France overwhelmed the slight growth in the North, GBTA says. The Southern countries are expected to continue to decline for the remainder of the year and into early 2014, but with Germany and the UK gathering momentum, the region will see a return to growth in 2014. The GBTA Foundation said it expects travel spending to be essentially flat in 2013 then rise by 3.4 percent the following year.
Business travel is very closely tied to corporate profit performance, another indicator that is beginning to turn around in Europe. Corporate profits in Northern tier countries are beginning to show positive growth over year-ago levels, GBTA says.
"The expectation for the rest of 2013 and 2014 is for operating surpluses to stabilize and begin to improve, driven finally by some top-line revenue growth to combine with cost-cutting programs that have been in force since 2011. All of this bodes well for both domestic and international overseas business travel," GBTA reports.