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CHAUFFEURED TRICKLE DOWN? Surprisingly strong Q4 results in a $4.2 billion increase in business travel spend over Q3 2010 and sets stage for continued expansion through 2011. Rising investment in business travel is a leading indicator of continued job growth.
Business travel spending and volume grew at stronger-than-expected rates in Q4 2010 and the GLOBAL BUSINESS TRAVEL ASSOCIATION Business Travel Index reached its highest level since the recession began in 2008, offering positive signs for the performance of the U.S. economy going forward.
In fact, GBTA Foundation research shows that increasing business travel spending is a leading indicator of future job growth — meaning more good news may be ahead on the employment front.
The fourth quarter of 2010 showed the strongest seasonally-adjusted quarter-over-quarter business travel growth since the recession began. For the year, total U.S. spending on business travel grew by 3.2% — up substantially from the 2.3% for the year forecast previously. Business travel spending in 2011 is now expected to be even stronger than estimated last quarter, advancing by 6.9% for the year — up from the 5% growth forecast previously.
"These are very heartening signs. Business travel spending is coming back at robust levels, indicating the shape of things to come, namely more travelers on the road, an improving economy, and a positive environment for continued job growth," said Michael W. McCormick, GBTA executive director and COO. "Thanks to increasing corporate confidence, companies are investing more in business travel which will further stimulate business activity and economic growth."
The findings were released Tuesday in the latest Business Travel Quarterly Outlook — United States from the Global Business Travel Association Foundation, the education and research arm of the Global Business Travel Association (GBTA), sponsored by Visa.
GBTA Business Travel Index Snaps Back to Pre-Recession Levels
The GBTA Business Travel Index (BTI) provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time. Initially forecast at 108 for Q4 2010, the BTI has been revised upward to 112 for Q4 2010, its highest point since the beginning of the global recession in Q3 2008.
This revision is equal to $1.9 billion more business travel spend than previously forecast. The increase of nine points over the Q3 2010 BTI, which came in at 103, means there was a total $4.2 billion increase in business travel spending between Q3 2010 and Q4 2010.
The rise in the BTI was driven by stronger economic growth and the expectation of slightly higher prices in following quarters. For Q1 2011 the BTI is projected to fall slightly to 110, a small cyclical reduction from a stronger-than-expected fourth quarter but still well above 106, where the BTI stood in Q1 2010.
Rising Prices as Demand Grows
With economic improvement and more business travelers hitting the road, travel prices also are recovering from their sharp declines during the recession. Rate analysis based on an aggregate of airfare, lodging, meals, ground transportation and car rentals shows travel prices in 2010 increased by 2.5% and are projected to increase between 2% to 4% for 2011.
International Travel Increases; Group Travel Gains
International markets continue to present new opportunities for company growth and remain top of mind for many executives as they look to maximize this potential. Final numbers for 2010 show growth of 17.3% in international travel spend for the year. International outbound travel is expected to continue to grow by 7.9% in 2011, proceeding at a faster rate than overall business travel growth.
Also in line with better-than-expected Q4 results and rising overall business travel levels, group travel spend grew in 2010 by 6.0% and is expected to advance by 7.0% in 2011.
Concluded McCormick, "Group travel, events and conferences are large expenses with long lead times. Companies lacked the confidence and clarity to make these longer-term investments when the economy was struggling, but these increases are further evidence that companies are feeling much better about investing in business travel and face-to-face meetings once again."
About the Business Travel Quarterly Outlook
The Business Travel Quarterly Outlook — United States projects aggregate business travel trends over the next eight quarters and includes key buy-side metrics such as total business travel volume and spending, plus supply-side projections of changes in costs, across both transient and meetings travel. Business Travel Quarterly Outlook — 2011 Q1 United States is the third report in the series with subsequent releases being published on the second Tuesday of each quarter of the Fiscal Year 2011.
The Business Travel Quarterly Outlook uses an econometric model to better inform the forecast process. The model explicitly relates measures of business trip volume and spending, sourced from D.K. Shifflet & Associates to key economic and market drivers of business travel including: U.S. Gross Domestic Product (GDP) and its components, U.S. Corporate Profits and Cash Flow, U.S. Employment & Unemployment, ISM Business Sentiment Index, Key Travel Components of CPI (airfare, lodging, food away from home, rental cars, fuel, transportation), among other components.
About GBTA Foundation
The GBTA Foundation is the education and research foundation of the GLOBAL BUSINESS TRAVEL ASSOCIATION (GBTA), the world's premier business travel and corporate meetings organization. Collectively, GBTA's 5,000-plus members manage over $340 billion of global business travel and meetings expenditures annually.
Information: The Business Travel Quarterly Outlook – United States is free of charge to all GBTA Members (gbta.org/foundation/resourcelibrary). Non-members may purchase the reports through the GBTA Foundation at [email protected] Members of the media seeking report details should contact GBTA Communications at [email protected]
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