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In an earlier post, I introduced an exciting new program –GBTA Ladders and told you that you would be hearing from the three finalists beginning today. I am proud to introduce the first blog post from finalist Brian Butler from Radius Travel based loosely on his presentation for Ladders. Over the next three weeks, he and the other two finalists will use this blog to discuss issues pertinent to our industry and members.
In today’s world, whether you’re a travel manager, procurement specialist, hotelier, airline, ground transporter, technologist, or travel management company; globalization is an important consideration for your business.
That is hardly a news flash.
But what may not be quite so obvious is how to make globalization work to your company’s benefit over the long term. This requires not only leveraging those elements of globalization that are most apparent, but also effectively navigating the “hidden” side of globalization.
Let’s start with the items in plain sight. A useful definition of globalization is “growth on a worldwide scale”. The conditions that have made global growth across industries possible have speed as a common denominator: speed of commercialization of technology and speed with which innovation is disseminated and replicated. We see increasing interdependence of economic activities across borders and a global economy that is evolving and refreshing at an unprecedented rate. For your business, these changes can mean economies of scale, easier access to more buyers, less expensive operations, and the opportunity to craft global policies for your workforce.
If that sounds like a generic statement, it is. There are certain constants to globalization, and while not every business may experience them in the same way or to the same degree, they are available to those who wish to take advantage of them.
This is the highly visible side of globalization, and it is all about taking advantage of relative global “sameness.” We all have access to the same technology. We can all communicate instantaneously with each other. Transportation of products, ideas, and people across vast distances is fast and relatively inexpensive.
But making globalization succeed for your business requires more than tapping into what makes the world the same. Anyone embarking on globalization of any kind must also keep a keen eye on what is not the same. This is the hidden side of globalization.
Your business may be able to sell nearly the same exact product in every country around the world, but the way you go about selling it must be different to be successful. The way you market it and appeal to the buyers in that market is going to vary. The meaning and importance of service and other factors vary from culture to culture.
For example, if your company sells an online booking tool and you’re moving it into a new market, you better ensure that all of the local suppliers, including low cost carriers, independent (off-GDS) hotels, and rail providers are available in your tool. You also need connectivity to local GDS systems. You can keep the core of your tool the same, but customization for each local market is an absolute must if you want to gain any kind of share. If the locals can’t access what they want to access at the price available through other vehicles, it simply won’t be used.
The same diligence is required if your multinational corporation is expanding your travel program to 20 countries, or your airline is opening a new route to Latin America, or you’re building 15 new hotels in China, or you’re selling new travel technology into Eastern Europe.
While it is necessary to extract the efficiencies that come from understanding the ‘sameness’ of globalization, it is not sufficient. You must appeal to the nuances of the local markets. Learn as much as you can and don’t make assumptions. Understand each local market and what makes the people there tick. If you can, spend time there. If you can’t, do whatever research you can and talk to locals from your company or partners or suppliers.
At my company, Radius Travel, we experience the importance of the “hidden side” every day in our work designing and supporting global travel programs for our multinational corporate clients. Together with our worldwide network of agencies across 80 markets, we do whatever we can to “make global work” for our clients. It is because of the knowledge and experience of our member agencies, who are leaders on the ground in each of their countries, rather than dropped into them, that we can make sure our clients fully account for what is different as well as what is the same in implementing and sustaining their travel programs.
We all live in a globalized world and we need to embrace it or risk falling behind. Look at globalization as a way to expand your customer base or find efficiencies in your operations, but always keep one eye focused squarely on the local nuances. Here in 2014, in many ways, we are all the same, but the successful businesses will be those that understand and account for the differences that remain.
Brian Butler is the Head of Global Sales and Services for Radius Travel.
Today, the GBTA Foundation released its latest semi-annual business travel forecast for Brazil. It shows Brazil’s business travel industry moved up one spot in the rankings from last year to become the 8th largest business travel market in the world. And, if Brazil can maintain its overall economic growth levels experienced since 2005, GBTA expects it to continue to climb the ranks of the top business travel markets in the world, likely surpassing South Korea and France during the next 10 years.
Despite facing two quarters of weaker economic growth in 2013, GBTA projects total spending on business travel will grow 12.5 percent in 2014 to $37 billion USD, and grow another 5.9 percent in 2015. Annual spending on business travel in Brazil has tripled since 2000; an impressive statistic considering much of the globe was battling a recession for a significant part of this time-frame.
Both domestic and international outbound business travel are looking up for Brazil in the coming years. While domestic business travel spending growth in Brazil has slowed significantly off its aggressive pace earlier in the decade, mostly due to the slowdown in the once-charging domestic economy, GBTA expects it will strengthen in 2014. This should happen as firms and policymakers continue to take strides to boost productivity and competitiveness. The net impact of the World Cup should also inject a spending boost. GBTA expects 12.3 percent growth in 2014 before it moderates to 5.4 percent in 2015.
Due mostly to the external environment, growth in international outbound business travel was hit hard in recent years but the worst appears to be in the past as a recovery in the Euro Area, Brazil’s largest trading partner, is underway. GBTA expects IOB spending will advance 13.1 percent in 2014 followed by another 8.1 percent in 2015 hitting $7.2 billion USD.
I already mentioned the upcoming World Cup, but also looming on the not-so-distant horizon is the 2016 Summer Olympics causing Brazil to continue its race to expand infrastructure, particularly transportation infrastructure. While it will be a challenge to complete these projects in time for the World Cup, these efforts should have significant impacts on trade and business travel in Brazil over the next decade.
GBTA will have the chance to witness first-hand the impact of the World Cup on business travel as we host our GBTA Conference 2014 Brazil just days before the start of this major sporting event.
With the encouraging turnaround for international outbound business travel spending paired with expected domestic growth as well, Brazil is proving to be a key market to be in for businesses expanding globally.
We have been on a roll lately announcing featured speakers for our GBTA Convention 2014 this July in Los Angeles. If you haven’t heard yet, Kevin Spacey (or “President Underwood” if you are a House of Cards fan) will be presenting live in Convention Arena on Monday, July 28. Throughout the week at Center Stage, we will hear from such impressive industry leaders as John Pistole, TSA Administrator; Jeff Smisek, president and CEO of United Airlines and Richard Anderson, CEO of Delta Airlines.
Parker at GBTA Convention 2011 in Denver
Our latest announcement last Thursday added yet another influential leader to our featured speaker list: Doug Parker, CEO of American Airlines Group and American Airlines, Inc. Doug is no stranger to the GBTA Convention. At our 2011 Convention in Denver, Doug was informative and entertaining when he took the stage as the chairman and CEO of the (former) US Airways Group. He talked about the future of the airline industry and how global alliances could change the competitive landscape. Now he is back in his new role as head of the new American Airlines after the merger between US Airways and American Airlines last December. As he undertakes one of the largest mergers in industry history, Doug will provide great insight for attendees navigating the business travel industry.
(Reposting from an email issued on April 20, 2014 to GBTA members)
Dear GBTA Members,
We are writing to tell you about an exciting new program: GBTA Ladders. The Ladders program pairs rising young stars from all parts of the travel industry with superstar industry veterans. Essentially a mentoring program, Ladders gives younger members an opportunity to learn first-hand from some of their more experienced colleagues. As its name suggests, Ladders will help talented young members become the next generation of leaders in the business travel industry.
Please understand, though, that this is not your typical mentor program! Many businesses have wonderful mentor programs of their own where participants learn to build their skills within their company, usually along their area of focus. What makes GBTA Ladders unique is that it – like GBTA – represents all facets of the business travel industry, including airlines, hotels, and ground transportation companies. Participants receive a 360-degree view of the industry and understand how its different components interact.
"For years our members have been challenging the Board to address the gap in talent to fill future key roles in our industry. The GBTA Ladders Program is the first step of many to provide a solution to that challenge.” – Bhart Sarin,GBTA Ladders Board Sponsor.
GBTA Ladders mentees are entrepreneurial travel professionals armed with a strong and innovative spirit, a razor-sharp focus, and a keen understanding of the marketplace. They are well educated, highly versed in technology, and business-oriented. They have a passion for solving some of the major challenges facing business travel today and tomorrow. Combining that kind of talent with C-level expert mentors who have considerable experience and proven track records of success creates an environment that fosters creativity and ideas that can transform the business travel industry.
How does GBTA Ladders work?
For the program’s first year, GBTA selected 36 mentees from a highly competitive group of applicants. We based the selections on the individuals’ merits and qualifications, including their involvement in fast-track executive management or similar management programs within their companies, and endorsements from their peers and superiors. The 36 mentees joined with 14 mentors to form 14 cooperative teams, each representing a different vertical sector within the business travel industry. This approach enabled mentees with diverse talents and characteristics to work together and learn from each other. Each team had to develop a presentation on a certain topic and give that presentation to a set of experts within the industry. These judges rated each team’s presentation. The three teams with the highest scores gave their presentation to the entire group of Ladders participants, who determined the winning team.
“When we formed GBTA Ladders we set out to create an environment that facilitates the exchange of ideas and invigorates interest in the business of travel among the next generation of professionals. I am proud to be part of this innovative program that inspires passion and fosters creativity and ideas that have the ability to transform business today.” – Caitlin Gomez, senior director, Global & Strategic Sales, HRG North America and driving force behind GBTA Ladders.
Beginning April 30, 2014, we will be highlighting the three best teams on the GBTA Blog. Each team will contribute a blog post in each of the next three weeks.
Why is the GBTA Ladders beneficial?
GBTA Ladders facilitates the exchange of ideas and invigorates interest in the business of travel among the next generation of professionals. It seeks out young professionals in the industry not just because they are young, but because they are motivated, engaged, and inspired to elevate the business travel industry. The program provides these emerging leaders with mentors that help them hone their skills; sharpen their problem-solving abilities; and learn to balance work, life, and continuing education. GBTA Ladders also provides these young professionals with invaluable networking opportunities with their peers and colleagues.
“I was excited to work with these young professionals whose perspective and energy helped produce such an insightful and educational presentation on creating global travel products. GBTA is on the right path with its Ladders Program in sponsoring opportunities for the next generation of leaders to be heard and help shape the future of our industry.” – Mat Orrego, CEO and Founder, Cornerstone, Mentor, Team Mat.
GBTA is proud of this innovative program, one that will help develop the passion and skills of new professionals to enable them to solve some of the major challenges facing business travel today and tomorrow.
We personally want to thank Caitlin Gomez and Krissy Herman who have spearheaded this wonderful program. Find a full list of all of the mentors and mentees on gbta.org. And of course, stay tuned to the blog to see for yourself how truly extraordinary GBTA Ladders really is.
Donna Kelliher, GBTA President and CEO
Bhart Sarin, GBTA Board Member
I was very pleased when Delta CEO Richard Anderson accepted our invitation to be a featured speaker at this year’s 2014 GBTA Convention. This will be his first appearance on stage at a GBTA event, and since Richard does not make many appearances like this, we are glad he chose to share his insights with us this July.
On a personal note, over the years I’ve consistently heard from Delta employees how much Richard is respected as a leader. For three of the past four years, Delta topped Fortune Magazine’s “Most Admired Airlines” list, a worldwide ranking based on people management, quality of management, innovation, long-term investment, social responsibility, quality of product and services and global competitiveness.
With his more than 25 years of aviation experience, Richard is a great addition to our growing list of featured industry speakers on Center Stage.
You won’t want to miss it.
It’s Tax Day in the United States – the dreaded day for many on which individual income tax returns are due to the federal government. The Beatles 1966 hit song “Taxman” tells a story of despair at being overtaxed to the breaking point.
If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold, I'll tax the heat
If you take a walk, I'll tax your feet
The GBTA Foundation – the education and research arm of GBTA – annually tracks the tax burden imposed on business travel throughout the country. The study examines hotel lodging, car rentals and restaurant meal taxes in the top 50 U.S. destination cities, which are regularly used to fund local projects unrelated to tourism and business travel.
The 2013 study delved into travel taxes across the United States revealing some bad news: travel taxes are getting worse. In 2013, taxes levied specifically on travel-related services increased the total tax bill for a traveler by 58 percent. More and more, governments think the easiest way to raise money is to penalize business travelers. In fact, 30 cents of every dollar spent on business travel goes to taxes. On a typical $300 round-trip airfare, consumers pay more than $60, or 20 percent, in taxes and fees.
In the travel tax study, the top 50 U.S. markets are ranked by overall travel tax burden, including general sales tax and discriminatory travel taxes.
The top 10 U.S. cities where travelers incur the highest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:
The top 10 U.S. cities where travelers incur the lowest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:
Municipalities are under pressure to raise revenue wherever they can, but imposing too heavy a tax burden on business travel is a shortsighted strategy. With taxes rising in every area of society, companies and travel managers are taking an increasingly hard look at the price they’re being asked to pay to visit any given city or region.
Federal, state and local governments should be applauded when they focus on promoting travel. Road warriors strengthen the economy, create jobs and drive economic security. Yet, governments insist on treating travelers like their ATM. GBTA is very concerned taxes and fees are approaching the tipping point that will ultimately push business travelers to stay at home. We all pay when governments take a short-sighted approach that raises the costs for business travel.
On Friday, we wrote about what President Obama’s proposed 2015 budget means for business travel. Here is a closer look at the four things that are good for business travel and four things that are bad for business travel in the proposed budget – and what they really mean. We’ll start with the positives, albeit they are much harder to find than the negatives.
As we have stated, the proposed budget raises a number of serious concerns and would actually hamper business growth and thus hinder the overall economy. We all pay when policy makers take a short-sighted approach that raises the cost of business travel.
U.S business travel is expected to continue its surge in 2014 despite a record-breaking, seemingly endless winter where the effects of the polar vortex and multiple snowstorms halted travel across much of the country. Despite all of this, for the second quarter in a row, we are increasing our business travel spending forecast for this year in our latest report just released yesterday.
The latest forecast projects U.S. business travel spending to rise 7.1 percent in 2014 to $293.3 billion and total person-trip volume to increase 2 percent to 464.7 million trips.
What is driving this growth?
Healthy corporate profits, rising management confidence and increased job development are all behind it – a very positive sign for the U.S. economy. Business travel growth is a leading indicator of job growth and the private sector has finally regained all of the jobs lost during the recession. Of course, this doesn’t mean all of the same level jobs are back, but today’s forecast suggests this steady improvement should continue.
Strong investment in international outbound travel spending will also fuel the forecast upgrade with expectations for a 12.9 percent increase up to $37.2 billion. GBTA’s outlook for group travel was also revised upward to increase 7 percent in 2014 to $126 billion.
The spring thaw is in full swing and so are U.S. businesses, confidently investing in business travel in 2014.
The White House recently released its proposed fiscal year 2015 Federal Budget. Although there is no chance that Congress will pass the budget in its current form, it does provide us with a sense of the President’s travel-related priorities. But more importantly, it is a cautionary tale about the future without a comprehensive, long-term national travel policy.
Photo Credit: Mark Skrobola
Despite a few bright spots, the proposed budget raises a number of serious concerns. If enacted, some of the proposed measures would actually hamper business growth and thus hinder the overall economy. Specifically, the proposed budget continues an assault on the wallets of road warriors. The President proposes surcharges for air traffic control that undoubtedly will be passed on to business travelers. The proposed budget authorizes airports to impose passenger facility charges of $8.00 per segment – up from the current $4.50 level. Even worse, the budget calls for an increase in the TSA fee, which was just doubled. In total, air travelers would face a 26 percent increase in taxes and fees on a tax burden that already reaches 30 percent of every travel transaction! These increases are clearly meant to solve other budget problems unrelated to travel, since the budget acknowledges cost savings in the hundreds of millions of dollars from efficiencies relating to risk-based security.
There is no doubt that the country’s infrastructure needs updating, and such improvement requires additional resources. Traditional sources of funding are no longer adequate. The Obama budget projects these additional travel-related taxes and fees will raise $4.2 billion, roughly half of which will come from business travelers.
The overarching dilemma is clear. Although we need new sources of funding to pay for these investments, it cannot come from overburdening an already overtaxed travel industry. Travel is already taxed higher than industries such as alcohol, tobacco and firearms. The repercussions on the economy will be significant if we tax more, but also if we cut budgets for needed travel-related investments.
In 2012 alone, U.S. businesses spent $384 billion to send travelers on 452 million business trips. This travel was responsible for about 3 percent ($491 billion) of U.S. GDP. For every 1 percent increase in business travel spending, the U.S. economy gains an additional 71,000 jobs, nearly $5 billion in GDP, $3 billion in wages, and $1.2 billion in tax collections. Business travel is the single most effective form of investment in any economy.
The proposed tax and fee increases would have significant negative effects on this travel. A recent study on demand elasticity in the hospitality industry shows that the proposed 26 percent increase would reduce trip demand by $4.5 billion – and therefore reduce the total federal tax revenue by $1.7 billion. The reduced travel demand would also lead to 86,000 job losses and a $5.8 billion decrease in GDP.
While the overall effect of the President’s budget is negative, there are some positive aspects to highlight. For example, the budget calls for re-investments in Trusted Traveler programs such as Pre-Check. It presses for improvements in the wait times for visa processing and international arrivals. It contains new operational procedures for NextGen, improvements to Amtrak’s heavily traveled Northeast Corridor and a commitment to increased funding for the nation’s infrastructure. These are all positive indicators that the Administration does want business travelers out on the road generating economic opportunities, but these proposed actions do not offer significant, lasting support.
Business travel is critical to the health of the broader economy. We need Congress and the Administration to draft and implement policies to shore up the nation’s transportation infrastructure without placing undue burden on the business travel industry. Asking the industry to bear the burden that is currently proposed ultimately will harm the economy more than it will help by dampening the demand for travel and thus suppressing business growth – the most important part of any economic engine. Our elected leaders are more than capable of crafting a better budget, and GBTA and the entire business travel industry are willing to assist in that process.
Nîn håo! I’m writing this post from Shanghai as we kickoff our 2nd annual GBTA China Conference 2014. The conference promises to offer both local and international participants the opportunity to learn more about the Chinese business travel market – a market that continues to grow at impressive levels according to our latest forecast.
Yesterday, the GBTA Foundation released its latest semi-annual China business travel forecast report, and we project China’s total business travel spend to grow 16.5 percent in 2014. That is more than double the rate of China’s GDP growth – just astounding. China’s business travel market represents roughly 20 percent of the global business travel market, up from 5.1 percent in 2000.
China’s recent announcement of 2013Q4 and full year GDP growth at 7.7 percent paints a picture of slow (by China standards), but steady economic growth. Throughout 2015, GBTA expects business travel spending to continue to pick up the pace, expanding 17.8 percent to $309 billion USD.
As we have said time and again, China is poised to overtake the U.S. as the number one business travel market in the world. Given our current projected growth in business travel in the two markets, this could happen as early as next year.
The surge in Chinese business travel spending is driven by both domestic and international outbound travel with domestic being the main driver though, making up nearly 95 percent of the spending on Chinese business travel. Despite China’s ever-emerging presence as a global commerce juggernaut, domestic business travel will likely continue to pick up ground on international outbound as China grows its middle class, which is likely to spur domestic consumption.
The domestic business travel growth continues even as domestic meetings and events have faced some headwinds of late, however, due to restrictions on spending in the public sector. According to Chinese news sources, spending on conferences by the Ministry of Public Security has fallen 80.9 percent from a year ago. Additionally, these mandates are forcing smaller conference sizes as events with more than 1,000 participants were down 75 percent between 2010 and 2012. Fortunately, this impact has been more than offset by the growth in transient domestic travel as well as expanding private sector meeting and events.
International outbound also shows some promising signs of growth thanks to China’s improving export performance and improved economic performance among China’s key trading partners – the U.S. and Europe.
Another positive we saw in the report is the continuing breakneck speed of infrastructure growth. Over the last decade China’s largest airports have doubled in size and the construction of additional airports continues including Beijing’s second international airport, slated to begin this year and open in 2018. It will house half a dozen civilian runways – double the number at Beijing’s current airport relieving a tremendous amount of pressure on Beijing Capital International Airport, currently the second busiest airport in the world (ranked by passenger volume). In addition to airports, the latest available data from Lodging Econometrics (2013Q2) shows China had 1,695 hotel projects in the pipeline amounting to 435,000 additional rooms, hitting another historical peak.
The principles of inertia tell us an object in motion tends to stay in motion. The unprecedented growth in China’s economy continues to propel the nation’s business travel market, and it will not be surprising when China takes its place as the number one business travel spend market in the world.