We released our latest U.S. quarterly forecast last week and it is filled with positive news! Business travel spending finished out 2013 with better than expected growth and is poised for even greater growth in 2014.
There has been a great deal of media interest in this report and I found many reporters asking me the question, “why is business travel so important to business success?” The answer is easy really – business travel drives business growth. When companies are able to invest in the future, success follows.
Our GBTA BTI™ Outlook – United States Q4 report showed international outbound travel to be a major driver of the overall spending growth. This should come as no surprise. During the recession when companies couldn’t find opportunities locally, they looked globally to push along their economic recovery.
The report shows U.S. business travel spending is expected to grow 6.6 percent to $289.8 billion in 2014. It also appears our elected officials have finally gotten the message that political uncertainty and brinksmanship stifles economic growth, and if it stays that way, we should be looking at a very healthy year for U.S. business travel.
Is this good news for the economy overall? Absolutely. I’ve already talked about business travel driving business growth, but an increase in business travel spend is also a leading indicator of job growth. In addition, the report showed the healthiest growth outlook for meeting activity since 2011. Meetings are typically larger investments that require advance planning, and companies only make these decisions when they have confidence in the longer term outlook for the economy.
For more on the latest BTI report, check out a sampling of the coverage by CNBC and USAToday pulled by our PR team:
Optimistic the economy will continue to improve, U.S. business travel spending is expected to climb more than earlier forecasts, boosted by an increase in outbound international travel, mainly to Western Europe.
The new Global Business Travel Association quarterly report, released Wednesday, predicts U.S. business travel spending will rise 6.6 percent to $289.8 billion in 2014, up from a 3.8 percent growth rate in 2013. Looking at just international travel spending, the increase is expected to hit 12.5 percent (to $36.7 billion), which followed a 1.8 percent growth rate in 2013 and a mere 0.8 percent rise in 2012.
“International outbound travel is the driver” of the increase, Mike McCormick, the executive director and chief operating officer of the association told CNBC in an interview Tuesday. And because an international traveler tends to spend more on airfare and hotels, on a per-person rate, overall spending goes up.
Overall, the number of business trips will increase, even domestically, but still with an eye on the cost. The uptick in spending doesn’t so much mean a loosening in terms of travel policies, but a willingness to invest in putting more people on the road, McCormick said.
And although spending on business travel is starting to increase, it’s far from a return to three martini lunches and a surf and turf with the clients. “We may not see that again in our lifetime,” he said. “We may have to save that for the ‘Mad Men.’ ”
The full report, the “GBTA BTI™ Outlook – United States 2013 Q4,” comes with a caveat. “If our elected officials have finally gotten the message that political uncertainty and brinksmanship stifles economic growth, we should be looking at a very healthy year for U.S. business travel,” McCormick said in a statement issued with the report.
“Airports and hotels will be busy as American companies gain confidence and invest in travel to drive growth. And because business travel is a leading indicator of employment, this news is also another positive sign for the labor market.”
The longer-term optimistic view is reflected in the strengthening of bookings for group travel, which usually entails a longer lead time. While this sector has been rising for two years, the GBTA now expects group travel spending to rise by 6.5 percent in 2014 to $124.5 billion, with a volume increase of 1.7 percent.
Companies will spend more money on business travel this year, with a renewed focus on foreign destinations, according to a new report out today.
There was stronger-than-expected growth in business travel in 2013. That momentum should continue throughout this year, projects the Global Business Travel Association (GBTA), a trade group for business travel managers.
U.S. business travel spending will jump 6.6% to $289.8 billion in 2014, the group predicts. The total number of trips should also increase, by 1.7%, to 461 million.
Spending on travel from the U.S. to other nations should climb 12.5% this year to $36.7 billion, the first time there’s been double-digit growth in years.
Michael McCormick, executive director and chief operating officer of the GBTA, says the improving economy is encouraging companies to spend more to send their employees off site.
“Companies are certainly feeling more confident that they will make a return on their investment and get results for the bottom line,” he says.
Business travel spending dropped significantly during the recession as companies saw their profits drop. It hit bottom in 2009 and has slowly started picking up since.
The GBTA is estimating that business travel spending grew 3.8% to $272 billion last year. There was, however, a 0.3% decline in the number of trips to 453.3 million.
Many companies are now asking their employees to try to use one trip to accomplish multiple tasks when in the past, they might have spread it out over two trips.
At the same time, they’re sending employees to foreign countries more often than they have in years. While Brazil, Russia, India and China continue to attract business travelers, there have also been an uptick in trips to Europe, McCormick says.
Businesses are also sending employees to more off-site meetings and conferences.
Group travel spending, which has been the slowest to recover because the trips require larger investments and advance planning, should rise by 6.5% to $124.5 billion this year, the group predicts.