Today, GBTA released our third quarter outlook for U.S. business travel, and it clearly shows the effects caused by an uncertain global economic environment. U.S. business travel spending will increase by 3.1 percent in 2015 and 3.7 percent in 2016. While this is still positive growth, it is down from our July projections of increased spending by 4.9 percent in 2015 and 5.4 percent in 2016.
This softening in business travel spending can be linked to growing uncertainty and risk associated with the global economy, especially in China, Russia and the Middle East and the global collapse in oil prices. There are three key factors that we can attribute the slower growth rates to:
- U.S. companies are becoming far more selective in authorizing business travel abroad as a result of global economic uncertainty and risk. International outbound (IOB) travel has been the most prominent driver of the recovery since 2009, however, while we expect 5.4 percent growth in International outbound business travel volume this year, spending growth rates will be slashed by more than 50 percent from 2014 (from 8.6 to 3.4 percent).
- Inflation in the business travel sector will be nearly flat (0.5 percent) in 2015 and modest (3.0 percent) in 2016, primarily due to the collapse of global oil prices. While the volume of U.S. originated trips will increase 0.7 percent from 495.8 million in 2014 to 499.2 million in 2015 and 514.8 million in 2016, the total growth rate for spend is actually down. This is especially true in two areas – air travel spending, which will decrease by 3.4 percent in 2015, and ground transportation spending, which will decrease by 7.7 percent.
- Actual (as opposed to projected) business travel figures, which were revised to indicate higher trip numbers and lower spending figures for 2014. Once per year we revise the previous year’s figures as final data comes in.
As we’ve said time and again, business travel drives business growth, so the slowing growth in business travel spending should sound a clear note of caution for the U.S. economy.