Will Businesses Be Ready to Compete in 2017?
Alexandria, VA (October 20, 2016) – An uncertain upcoming presidential election, sluggish global expansion, low inflation, weak investment and choppy geopolitical conditions continue to shackle business travel volume and spending growth, according to the GBTA Foundation’s latest business travel forecast for the United States.
Total business travel volume is expected to advance 1.0 percent in 2016, while spending is projected to fall by 0.6 percent, according to the GBTA BTI™ Outlook – United States 2016 Q3, a report released today by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA). In 2017, GBTA predicts spending will increase 3.8 percent reaching $293.1 billion, although that will largely be driven by price inflation.
The report also cites three critical macro drivers of business travel that continue to provide mixed signals.
Business confidence: In general, indicators of management confidence remain weak, but narrowly positive suggesting a definitive lack of enthusiasm for the near-term outlook.
Corporate Profits: After-tax profits fell for the fifth consecutive quarter in 2016 Q2, and although they appear poised to return to the plus side during the second half of 2016, expect the continuation of tighter expense controls, lethargic capital spending and constrained business travel growth for at least the rest of the year.
International Trade: Weakness among key U.S. trading partners combined with a strong currency continues to plague export performance.
Indicators point to a better, but still-modest 2017 for the U.S. economy with 2.4 percent GDP growth. American businesses are hiring, the labor market is doing well, consumer confidence is rising, consumption spending is robust and the housing sector is improving, yet capital equipment, bricks and mortar and business travel spending remain low. Rising uncertainty and weak labor productivity are to blame, resulting in more caution and a wait-and-see attitude, particularly with decisions that have longer-term implications.
“Businesses are hiring and paying better wages, but business travel spending is stalled – something we rarely see happen,” said Michael W. McCormick, GBTA Executive Director and COO. “The ongoing global uncertainty and added heartburn from a presidential election unlike any we have ever seen are causing many businesses to stay in a holding pattern, taking an extremely cautious wait-and-see approach bordering on paranoia. This begs the question of whether many of these companies will be ready when growth does re-accelerate. To be prepared for lasting business growth, companies must be ready with the newest technologies, the most productive workforce and the critical customer relationships necessary to take full advantage.”
GBTA Foundation Business Travel Forecast By The Numbers
Total U.S. business travel spending is projected to fall 0.6 percent in 2016 to $282.3 billion with trip volume increasing 1.0 percent to 520.8 million trips.
Total U.S. business travel spending is projected to grow 3.8 percent in 2017 to $293.1 billion with trip volume increasing 2.7 percent to 534.8 million trips.
Real travel spending growth per trip will fall by 3 percent in 2016 and 2.6 percent in 2017 as travel price inflation rises continuing to outpace the growth in spend per business trip.
Group business travel volume will remain positive in 2016, growing 1.3 percent, before accelerating to 2.5 percent in 2017, while spending will fall 2.3 percent this year before picking up 5.3 percent in 2017.
Individual business travel volume will grow by just 0.9 percent in 2016, followed by a more positive growth rate of 2.8 percent in 2017, while spending is projected to grow 1.1 percent and 3.0 percent, respectively, in 2016 and 2017.
International outbound business (IOB) travel continues to be a major weak point for the U.S. business travel market with IOB volume expected to grow by only 0.6 percent this year and another 0.6 percent again in 2017. Spending will barely advance this year growing 0.1 percent in 2016 before gaining 1.7 percent in 2017.
The GBTA BTI™ Outlook – United States 2016 Q3 report is available exclusively to GBTA members by clicking here and non-members may purchase the report through the GBTA Foundation by emailing [email protected] Download a free preview of the research here.
About the 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 meetings trade organization headquartered in the Washington, D.C. area with operations on six continents. Collectively, GBTA’s 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. GBTA provides its growing network of more than 28,000 travel professionals and 125,000 active contacts with world-class education, events, research, advocacy and media. The Foundation was established in 1997 to support GBTA’s members and the industry as a whole. As the leading education and research foundation in the business travel industry, the GBTA Foundation seeks to fund initiatives to advance the business travel profession. The GBTA Foundation is a 501(c)(3) nonprofit organization. For more information, see gbta.org and gbta.org/foundation.