Business travel spending growth slowed through the tail end of 2012, but the forecast for 2013 is more positive, provided there is a continued easing of economic and political uncertainty.
A report from the Global Business Travel Association (GBTA) states that business travel spending is expected to rise 4.6 percent in 2013 to $266.7 billion despite an expected slight decline in the number of actual trips taken.
The GBTA Business Travel Outlook states that the key factors contributing to spending growth in business travel are projected to be:
• Increased international outbound travel spending — projected to rise 5.9 percent
• Increased group travel spending — projected to rise 5.2 percent
• Modest price inflation — indicating that companies will be spending more real dollars on business trips.
Spending growth in 2013 should begin modestly and pick up the pace in the third and fourth quarters of the year.
“Even with an agreement to avert the fiscal cliff in the near-term, there are still many issues that need to be addressed; however, companies should now have somewhat greater confidence in their spending decisions,” said Michael W. McCormick, GBTA executive director and COO. “While companies will approach the first half of the year with some caution, pent-up demand to get back on the road should hopefully fuel accelerating growth in business travel spending through the end of 2013.”
At the close of 2012, annual U.S. business travel spending is estimated by GBTA to have grown 1.6 percent to $254.9 billion, on a -1.9 percent decline in trip volume to 436.5 million person-trips. The spending increase was mainly due to rising travel rates.
This increase in spending for 2012 was also a downgrade from GBTA’s previous forecast of 2.6 percent last quarter, reflecting the ongoing uncertainty of the fiscal cliff debate and the economic impact of Hurricane Sandy.
Group travel had a very challenging 2012, with spend rising just 1.3 percent for the year. This year should bring a welcome turnaround to the group travel market. GBTA forecasts that group travel spending will rebound nicely, with 5.2 percent growth for the year as the broader economy recovers.
“The projections that we see for both international and group travel are encouraging,” McCormick said. “Businesses will be looking to capitalize on growth opportunities abroad and spend more on in-person meetings and events as well. By nature, meetings are longer-lead investments that require greater confidence in the future.”
