Business travel spending around the world increased 8.4 percent in 2010, after falling 7.8 percent in 2009 with global spending on business travel projected to grow another 9.2 percent in 2011 to just over $1 trillion. The new data is from the Global Business Travel Association's (GBTA) report analyzing the current state of global business travel spending and growth projections over the next five years. The Global Business Travel Spending Outlook 2011-2015 study is sponsored by Visa.
According to the study the global economic recovery is occurring at two different speeds and that is reflected in the recovery of global business travel. Compound annual growth in business travel spending in Brazil, Russia, India and China is projected to grow two to three times faster than in developed economies like the U.S., France, Germany and the U.K.
“The recovery is happening, it’s just not happening as quickly as most people would like,” said Michael W. McCormick, GBTA executive director and COO. “Several countries are seeing the rebound happen at a much faster and more stable pace, and we’re seeing that in the pace of business travel spending in the economies of China, India, Russia and Brazil. We’re still bullish on business travel and all signs point towards continued growth.”
Taking off are China (11.2 percent), India (10.8 percent), Russia (7. 1 percent) and Brazil (7.0 percent). The countries cruising include the U.K. (5.4 percent) and the U.S. (3.8 percent).
Global business travel has advanced faster and farther than expected a year ago, GBTA says. The industry has benefited by the combination of a number of positive factors that have allowed it to spring out of the recovery gate:
· First, corporate balance sheets and profits have been strong due, in part, to the stringent cost controls put in place during the “Great Recession.” In fact, a 2010 GBTA Foundation study (ROI Refresh: Travel as a Competitive Advantage) actually found that travel budget cuts were more aggressive (relative to sales) during the recession than sales losses would routinely dictate. This contributed to a release of pent-up demand once the recovery got underway.
· Second, the recovery in global trade growth dramatically boosted international business trips.
· Finally, travel inflation, particularly in air fares, is contributing to the rebound in travel spend.
Global business travel spending bounced back 8.4 percent to $924 billion in 2010 after falling 7.8 percent in 2009. Global spending on business travel is projected to grow another 9.2 percent in 2011 to just over $1 trillion.
Rapid growth in the developing world is juxtaposed with troubles with debt, real estate, and a slowdown in consumption in the developed world, GBTA says. New patterns of consumption, a relative change in the volume of major trade routes and industrial innovation have begun to shape a new world order in the patterns, volume, and regional distribution of global business travel.
Another key determinant of global business travel that should be a focal point of both global travel managers and suppliers is the volume and pattern of international trade, GBTA says.
Historically, business travel and the volume of global trade have been very tightly correlated. Currently global trade is increasing at a rate of 9 percent per year, the same rate that we expect spending on global business travel to increase in 2011. As certain trade routes evolve and others simmer down, the landscape for global travel will continue its shift.
GBTA reports it has constructed a headline measure of the current and projected level of business travel –a Business Travel Index. The Global BTI has been derived from total Business Travel Spending and has been indexed on a base year of 2005. The Global BTI currently sits at 133 (2010). It is forecast to grow to 145 through 2011 and should reach 193 by 2015. As a point of comparison, the U.S. BTI was 109 in 2010, whereas in China, India and the U.K. it was 286, 197 and 95 respectively.
McCormick commented, “Our BTI offers a snapshot of where business travel is and where we think it will be going. Business travel is closely correlated to the overall state of the economy. Based on our research, we can say that the global economy is going to steadily, although likely, slowly improve over the next few years, with these countries leading the charge, which we see reflected in the Global BTI.”
Global business travel’s better-than-expected growth in 2010 was largely fueled by improved international trade, GBTA reports. International outbound business travel has moved in lockstep with export performance. In the U.S. both exports and international outbound business travel are expected to achieve 10 percent year over year growth for at least the next eight quarters.
“People precede and follow goods and services, and as the economies in developing countries grow at a faster pace, more business travelers are traveling to and from these places,” concluded McCormick.