Industry Research

Biz Travel Would Survive Oil Price Spike Better Than Thought

Posted on May 4, 2011 by LCT Staff - Also by this author - About the author

STUDY: Higher oil prices would curtail business travel growth, but the number of trips would still grow.

How high would oil prices have to go before businesses cut back on their travel plans?

A recent study by the GLOBAL BUSINESS TRAVEL ASSOCIATION FOUNDATION finds it would need to be very high.

The group looked at the potential impact of oil prices rising to $125, $150 and $200 a barrel in 2011.

"It found that business travel spending and, to a lesser extent, number of trips taken, would continue to grow in all these situations, but also that high oil prices would take a substantial toll on the rate of projected business travel growth over time," the organization reported.

• It said $125-a-barrel oil would mean a reduction of $5.8 billion or 1.5% in U.S. business travel spending, and about 700,000 fewer business trips from 2011 to 2013.

• At $150 a barrel, business travel spending would be $6.9 billion (1.8%) less than forecast, and trip numbers would drop by 1.8 million.

• The effects of $200-a-barrel oil would be a reduction of $9 billion (2.5%) in spending from forecast levels and 2.7 million fewer trips forecast, the group said.

"This research shows business travel is more resilient than the conventional thinking might suggest," GBTA executive director Michael McCormick said. "So although an oil price spike would be very painful for the travel industry, essential travel would clearly go on, and in fact the number of trips taken would continue to increase."

Source: Executive Travel Magazine

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