ALEXANDRIA, Va. – Global business travel spending topped $1.2 trillion in 2015, growing 5% over 2014, and is forecasted to reach $1.3 trillion in 2016 and $1.6 trillion in 2020, according to the GBTA BTI Outlook – Annual Global Report & Forecast. The report was released this week by the GBTA Foundation
, the education and research arm of the Global Business Travel Association
Despite global uncertainty, cautious optimism rules the forecast, which predicts global business travel spending to advance 5.8% on average during the next five years, reaching $1.6 trillion in 2020.
“Global business travel remains a critical driver of the success of organizations around the globe,” said Michael W. McCormick, GBTA executive director and COO, in a statement. “Business travel has demonstrated a tremendous resiliency as it continues slow and steady progress even in the face of global uncertainty, a weakened global economy, terrorist attacks, world health issues and other obstacles. Companies across the globe clearly understand the return on investment business travel delivers for their bottom line.”
David Henstock, VP of global business solutions at Visa, Inc., sponsor of the study, said, “While overall growth has remained steady despite global uncertainties, signs are good for a solid end to the decade as we approach 2020. Business travel has continued to evolve as the world is becoming more connected, and the transition to electronic payments will help businesses reduce costs and pay for travel expenses more efficiently.”
At $291 billion, China surpassed the U.S. as the largest business travel market in the world in 2015.
Next Five Years: Quest for Growth in an Era of Uncertainty
Sustained economic uncertainty and mixed results among the major business travel markets will drive continued moderate growth, but as GBTA looks ahead towards 2020, we expect a drastic difference in the relative performance of business travel markets worldwide.
India and Indonesia will average double-digit growth in business travel spending during the next five years. China’s economic growth continues to moderate and GBTA forecasts their business travel market will be the fifth fastest growing major market in the world during the next five years – a vast departure from their No. 1 average ranking over the last 15 years. Despite declines in growth, China remains the largest single market opportunity for travel suppliers and marketers as their $291 billion market size coupled with 8.4% average growth will lead to the largest gains in spending of any major market by far.
The annual forecast was compiled before the U.K. voted for Brexit on June 23, but the added uncertainty the vote brings will likely make its mark felt on business travel. The financial upheaval and pending changes to trade and immigration rules will raise management heartburn and cause some managers to postpone or cancel business trips. It may also constrict travel budgets as managers hedge uncertainty. If the U.K. enters a mild recession, domestic and outbound business travel will suffer. But a much weaker pound would make leisure and business travel to the U.K. a real bargain.
Business Travel Evolution: 15 Years of Volatility
With 15 years of business travel spending now tracked by the GBTA Foundation, it is clear business travel has evolved fast. In 2000, $634 billion was spent on global business travel, half of the $1.2 trillion spent in 2015. Growth has been driven by an increasingly connected world and many key business travel markets maturing.
External forces also had big effects as early in the millennium business travel volumes were held back as many developed economies battled recession. By 2004, however, the global economy resurged and business travel prospered between 2003 and 2008. Beginning in late 2008, the Great Recession and financial crisis began and global business travel plummeted over the following 18 months. Business travel clawed its way back over the next few years, outpacing the recovery in the overall global economy. Following the robust recovery period for business travel in 2010 and 2011, global business travel spending growth entered the doldrums only growing in the 3% range. Now we have entered an era of uncertainty marked by moderate growth for the foreseeable future.
U.S. 2016 Q2 Outlook Highlights
The GBTA Foundation also released its GBTA BTI Outlook – U.S. 2016 Q2 report today with slightly downgraded expectations from the previous quarter. GBTA forecasts U.S. business travel spending to grow only 0.9% this year ($292.5 billion) before advancing 4.2% in 2017 ($304.9 billion).
Increasing risks in the domestic and global economies, uncertainty leading up to the U.S. Presidential election, the surprising vote from the U.K. to leave the EU, and continued signs of a weakening global economy have combined to influence the slightly more pessimistic outlook for U.S. business travel during the next six months.
“The slow growth environment of the U.S. and global economies has taken a toll on many fronts leading to this ‘new normal’ of slow, but steady one to two percent progress,” McCormick said. “Favoring dividends, M&A and stock repurchases over investing in capital, people and business travel in this environment could come back to haunt U.S. businesses. When growth does reaccelerate, companies must be ready with the newest technologies, the most productive workforce and the critical customer relationships necessary to take full advantage.”
The GBTA BTI Outlook – Annual Global Report & Forecast and the GBTA BTI™ Outlook – U.S. 2016 Q2 are free of charge to all GBTA Members by clicking here. Non-members may purchase the report through the GBTA Foundation by emailing [email protected]
Source: GBTA Foundation press release