Industry Research

BUSINESS TRAVEL READY TO BUMP UP

Posted on August 11, 2010 by LCT Staff - Also by this author - About the author

Global business travel spending dropped by a lower amount in 2009 than in 2001. A new study finds the recovery is better than expected with spending projected to grow this year by 6.2% to $869 billion.

ALEXANDRIA, Va. —The NBTA Foundation, the research arm of the NATIONAL BUSINESS TRAVEL ASSOCIATION (NBTA), today released a comprehensive report analyzing the state of global business travel spend and growth projections over the next five years.

The study, sponsored by Visa, reveals that business travel spend around the world fell 8.8% in 2009 — the largest drop the industry has seen since the recession in 2001 and following the terrorist attacks of Sept. 11, 2011. However, economic recovery to date has surpassed expectations and, as a result, global business travel spending is projected to reach $896 billion this year and grow to $1.2 trillion by 2014.

While the world experienced the worst economic recession in 2008 to 2009 since World War II, the decline in business travel was worse in the recession of 2001, according to the report.

Business travel fell 11.5% in 2001 and strengthened by only 2% in 2002. Most of the 75 countries covered in the study faced worse declines in 2001 than in the “Great Recession” of 2009, including the U.S. (-9.4% vs –9.3%), despite experiencing two consecutive years of business travel spend loss in 2008 (-3.8%) and 2009 (-9.3%).

“Surprisingly and thankfully, while much of the world has just weathered a devastating recession, declines in business travel last year were not as detrimental as expected, positioning the industry to achieve a swifter recovery, which we are already seeing,” said Craig Banikowski, NBTA President & CEO. “Air traffic is rising, along with average fares. Hotel occupancy, particularly in higher tiers, is also on the increase. However, while we believe recovery is sustainable, corporate travel managers and suppliers should be prepared for a bumpy ride.”

The study indicates that business travel recovery will not be uniform across the globe. Asia, Latin America, and the Middle East are expected to grow more rapidly than North America and Europe. China, the only nation that grew business travel last year (8.5%), and other Asian markets add business travel spending at about four times the rate of the U.S.

In fact, China is expected to grow by double digits in 2010 and add nearly $130 billion in new business travel spend by 2014, surpassing the U.S. market in size by as early as 2015.

Industry sectors reacted differently to the Great Recession, according to the study. After several years of double-digit growth because of a booming economy, business travel spend in utilities declined by almost 14% last year but is expected to rebound quickly in 2010. Real Estate, one of the main drivers of the global recession, is predicted to bottom this year and begin to recover slowly. Business travel spending from the government sector, on the other hand, experienced no decline thanks to fiscal stimulus package, but is expected to grow slowly in the coming years.

Those with the largest projected increases in business travel spend over the next five years include: utilities ($38.2 billion), food processing and services ($32.2 billion), real estate ($23.2 billion), rubber and plastic manufacturing ($18.2 billion), and social and personal services ($17.9 billion).

Source: NBTA Foundation

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