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ATLANTIC CITY, N.J. — Foreign regions are growing faster in international business travel activity than the U.S., with much of that growth coming from an accelerating Chinese economy, according to the Global Business Travel Association.
The surge in global business travel was a keynote topic Oct. 28 during LCT Show East in Atlantic City. Limousine operators learned from Mike McCormick, COO and executive director of the GBTA, what to expect in the business travel market.
“In 2016, China will grow past the U.S., which will be No. 2,” McCormick told attendees. “The world order is changing for business travel. You have to think differently about your business.”
The top five markets for business travel in 2012 were: U.S., China, Japan, Germany and the U.K. “China’s growth has been phenomenal. China has grown by four times since 2005, and is expected to grow at double-digit rates,” he said.
Business and corporate travel overall provide 61% of sales revenue for U.S. chauffeured transportation providers, according to the 2013 LCT annual Fact Book survey of limo operators nationwide. The fortunes of the industry are tied to trends in business travel. The GBTA’s Biz Travel Index (BTI) forecast, which assesses the overall size of the global business travel industry, estimates it will reach an index level 64% higher than in 2005. At $1.16 trillion, business travel is one of largest industries in the world.
“2013 will be back to the same level as before the crash in 2009,” McCormick said. “But it’s still harder than it was then; international outbound growth is driving the recovery, not the U.S. Your travelers are going to different parts of the world they didn’t have to go before.”
And while group and meeting travel is growing, much of that increase has been price driven, not the result of more transactions. “We’re probably not feeling the full recovery taking effect, but growth will continue to come. It will just lag a bit.”
2009 was all about looking for recovery outside of the U.S., McCormick said. Business travel is a leading indicator for the economy because companies want to grow topline revenue. “They send people out on the road. They still need one-to-one relationships and human contact.”
That point was underscored by some high-profile GBTA convention speakers: Presidents Bill Clinton and George W. Bush spoke at the 2012 event while First Ladies Barbara Bush and Hillary Clinton, also a former U.S. Senator and Secretary of State, spoke at the event in August. “They all talked about the importance of face-to-face contact in this era of technology,” McCormick said. “Hillary Clinton is the most traveled Secretary of State in U.S. history.”
While the economy recovers and drives demand for such contact, it is doing so at a slower pace and with less lucrative jobs being added when compared to previous recoveries, McCormick said. Nevertheless, 2014 will see more “noticeable” growth in business travel transactions overall, at 7.2%, with a 2.2% rise in actual trips.
The only real wild cards in the economic and business travel equation are the political fights in Washington, D.C., over government shutdowns, budgets and debt ceilings, which can seriously disrupt business travel and stability, McCormick said. In the latest government shutdown in October, 57% of business travel professionals surveyed by the GBTA canceled meetings or business opportunities, 50% cancelled travel bookings, and 48% delayed government business.