Report Finds Strong Correlation Between Job Growth, Exports, and Business Travel Spend
Across Western European Markets
LONDON – September 20th, 2012 – GBTA announces the results of its second GBTA BTI™ Outlook – Western Europe report, a semi-annual analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain. These five markets together form the lion’s share of business travel in Europe, nearly 70%, and provide a barometer for the health of the entire European business travel market. The report, sponsored by Visa Inc., includes the GBTA BTI™, an index of business travel spending that distills market performance over a period of time.
• Germany, France and the UK are expected to see positive GDP growth in 2012, albeit under the 1.0% level
• Interdependencies in trade, banking, and distribution have cast a shadow over the region. As such, 2012 GDP growth expectation for the Euro Area (17 country definition) has been downgraded following the Spring 2012 report to -0.4%
• Italy and Spain are currently in recession and expected to remain so until 2014
• Overall business travel spend among major European markets will fall 2.2% in 2012 to $177 billion USD before bouncing back by 1.4% in 2013
• German business travel spend is expected to rise 1.6% to hit $50.8 billion USD in 2012, before growing 3.3% in 2013
• UK business travel spend is expected to remain flat in 2012 ($40.2 billion USD) before growing 2.8% in 2013
• France business travel spend will fall -2.2% to $35.7 billion USD in 2012, before growing 1.1% in 2013
• Spain business travel spend will decline -7.8% in 2013 to $17.9 billion USD before falling another 1.6% in 2013
• Italian business travel spend will fall -6.9% in 2013 to $32.9 billion USD and will shed another -1.2% in 2013
Paul Tilstone, managing director of GBTA Europe, commented: “Europe has unfolded pretty much as we expected in our inaugural Spring 2012 report. However, as a result of weaker first half prospects in Spain, Italy, France and the UK, our 2012 GDP growth expectation for the entire Euro Area has been downgraded slightly in the Fall report to -0.4%, from -0.3%. We are confident that the second analysis of the region, in our semi-annual report series, continues to provide strong, accurate insights into both short- and long-term trends in domestic and international outbound business travel activity.”
Tilstone continued, “However, with lingering debt challenges and continued austerity measures, the European economy will likely continue to be challenged for years to come. The GBTA’s fall report therefore remains cautious, with overall business travel spend forecast to increase by 1.4% in Western Europe in 2013.”
Domestic Business Travel and Job Growth
European unemployment is arguably one of the Continent’s key social and economic concerns. Only Germany has succeeded in bringing down unemployment since the Great Recession, but even its progress has slowed through 2011 and 2012. Spain’s unemployment rate has risen to nearly 25%, Greece is at 22% and Portugal at 15%. Despite modest GDP growth expectations, even France and the United Kingdom are not expected to make progress on unemployment until 2014 or beyond.
The GBTA report highlights a strong correlation between job growth and travel spend, with correlation analysis over the entire historical period suggesting that domestic business travel spend tends to lead job gains by about one quarter. This correlation holds, to varying degrees, among all five European countries profiled. This trend has also been observed in the US and Brazil. The graph below, for example, shows the strong correlation between French job growth and travel spend:
International Outbound Business Travel and Exports
Export growth logged a welcome surprise in Q2-2012 for Germany and Spain. Germany’s trade position is more globally diversified with larger export proportions going to the world’s most dynamic emerging markets, which is not the case for most other Euro Area countries whose trade is more dependent on intraregional relationships.
The GBTA analysis of international outbound travel found that one of the strongest correlations across European countries is with exports. The graph below demonstrates the correlation between UK international outbound travel and exports. Historically, spending on business travel tends to lead exports by a quarter or two.
Country-Level Business Travel Outlooks
• GBTA forecasts German business travel spending to grow by 1.6% in 2012 to $50.8 billion and 3.3% in 2013 to $52.5 billion
• Domestic business travel spending will grow an estimated 2.8% in 2012
• International outbound spending in Germany will decline -3.0% in 2012
• Business travel spending in Germany has been supported by relatively strong industrial and service sectors and is spread across a number of large commercial hubs including Frankfurt, Munich and Berlin
• The UK has the second highest level of spending on business travel in Western Europe with $40.2 billion in 2011
• The UK maintains a large volume of trade on the European continent resulting in a high proportion of spending on international outbound business travel (35% in 2011)
• The GBTA forecasts total spending on business travel in the UK to remain flat in 2012. International outbound travel from the UK will fall -3.1% and domestic business travel spending will grow 1.6%
• Moving into 2013, GBTA predicts growth to pick up pace (2.8%), with domestic business travel gaining 2.3% and spending on international outbound business travel gaining 3.9%
• Business travel spend in France is expected to suffer a loss of -2.2% in 2012 with total spending on business travel falling to $35.7 billion
• Business travel in France will continue to recover along with the broader European economy in 2013 and will grow an estimated 1.1% to $36.1 billion
• Any recovery in French business travel spending will be driven by domestic travel, which is expected to be flat in 2012 followed by growth of 4.5% in 2013
• GBTA forecasts outbound international travel from France to fall -5.7% in 2012 and another -4.6% in 2013
• Southern Europe will remain in recession until at least late 2013
• GBTA expects spending on Spanish business travel will decrease by -7.8% in 2012, falling to $17.9 billion
• Spending on total domestic business travel in Spain to drop by -5.9% in 2012 followed by a drop of -0.4% in 2013
• International outbound business travel from Spain, which has grown to make up one-fifth of total Spanish business travel, will fall at an even greater rate than domestic, -14.4% in 2012 followed by a drop of -6.2% in 2013
• Outbound international travel will suffer due to a weak domestic economy, slower growth in China and the US and a relatively weaker Euro
• Much like Spain, although to a lesser degree, the situation in Italy continues to get worse rather than better
• It is expected that austerity measures will continue to take their toll on the corporate sector and corporate travel budgets though the rest of 2012 – resulting in business travel spend losses of -6.9% in 2012, followed by -1.2% in 2013
• Spending on domestic business travel in Italy will fall -6.5% in 2012 ,followed by another -0.8% drop in 2013
• Spending on international outbound business travel, which will also suffer from a weaker Euro, will fall -10% in 2012 and -3.9% in 2013
Pelham Bell Pottinger
Victoria Geoghegan / Katie Bergius +44 20 7861 3105
About the GBTA BTI™ Outlook – Western Europe
The GBTA BTI™ Outlook projects aggregate business travel trends over the next eight quarters. The report tracks business travel spending in total and by domestic and outbound segments. It relates unfolding economic events at home and abroad to their resulting impacts on Europe’s business travel market. GBTA BTI™ Outlook – Western Europe – Fall 2012 is the second report in the semiannual series. Releases are planned for April and October.
The GBTA BTI™ Outlook uses an econometric model to better inform the forecast process. The model explicitly relates measures of business travel spending, uniquely sourced from other GBTA Foundation research, to key economic and market drivers of business travel including: Gross Domestic Product (GDP) and its components; employment and unemployment; measures of business and consumer confidence; international trade, foreign direct investment and exchange rates; commodity and oil prices; inflation measures; productivity rates for business travel; International Air Transport Association (IATA) Passenger and Revenue Performance and Smith Travel Research (STR) Global Hotel Performance.
The GBTA BTI™ Outlook – Western Europe is free of charge to all GBTA Members by clicking here. Non-members may purchase the report through the GBTA Foundation by emailing email@example.com.