Global business travel this
year will jump 9.2 percent and surpass $1 trillion, according to a Global
Business Travel Association Foundation study. That increase would follow an 8.4
percent bump during 2010, which more than offset a nearly 8 percent decline in 2009.
Sponsored by Visa and
researched by Vantage Strategy, the study also projected five-year compound
annual growth rate for global business travel of 6.5 percent, but observed the
familiar dual recovery: healthy domestic growth and exports for developing
countries, sluggish growth in developed economies. "The two-speed economic
recovery is mirrored in the recovery of global business travel," according
to the report's authors, who noted double-digit percentage growth in China and
India, and 5 percent or less for the United States and large European countries,
including those dragged down by sovereign debt troubles. "The two-speed
nature of the global recovery will result in a dramatic divergence of business
travel industry growth around the world. This will exacerbate the
already-shifting global business travel market shares."
The study also explored
business travel levels by industry, finding that "service industries that
tend to be much more prevalent in developed economies such as business services
and banking have cut T&E budgets more aggressively over the last few years;
meanwhile, industries such as food processing, plastic manufacturing, paper,
textiles and industrial machinery, more prevalent in the developing world, have
seen strong growth over the last few years."
Overall, business travel
growth, according to the report, has been driven by healthier corporate balance
sheets and profits, global trade recovery that has "boosted international
business trips," and travel price inflation, notably higher airfares and
hotel room rates.
The GBTA Foundation's
measure of global business travel spending, the Business Travel Index, this
year is expected to hit 145. The index uses 2005 as its base year and 100 as
its base measurement. The study predicted BTI would jump to 156 in 2012 and
rise each year through 2015, when it is projected to reach 193.
study characterized global business travel recovery as "particularly fragile," owing to potential oil
price spikes, Europe's sovereign debt crisis, weak employment trends, inflation
in developing economies and "an uncertain demand forecast."
Business Travel Outlook By Country
United States: The United States, for now, remains the world's largest business
travel spender, even after experiencing marginally negative compounded annual
growth between 2000 and 2010 and sluggish growth this year. "The U.S.
recovery has hit a soft patch in 2011 and business travel spending growth has
also slowed accordingly," according to the GBTA Foundation report. "More
robust growth will resume in 2012. By 2013, the U.S. business travel industry
will regain its prior peak. Professional and business services is the largest
sector for travel spend, accounting for over 10 percent of total business
travel spending. Growth stars of the future include health care, education and
construction sectors as re-investment in people and structures gains ground."
Researchers estimated that the five-year U.S. CAGR for business travel through
2015 would be 3.8 percent, while its BTI, currently at 109, would increase to
137 by 2015.
the second-largest business travel market, China's business travel spending is
growing four times more quickly than that of the United States and is on a
trajectory to become the world leader by 2015, according to the report, which
noted that "both domestic and international outbound [travel] are growing
at double-digit [percentages]." The GBTA Foundation pegged China's BTI at
286, five times the 2000 figure, and projected it to soar to 557 in 2015. The
country's business travel spending is powered by infrastructure and
"Struggling" before the earthquake and tsunami this year, Japan in
2011 is projected to show negative business travel spending. International
outbound travel still has "performed well," and construction and
manufacturing will lead business travel spending during the next few years
"due to earthquake recovery and export demand," according to the
United Kingdom: Still "tethered to the challenges of the rest of Europe,"
U.K. business travel spending won't reach its prior peak "until as late as
2015," researchers determined. "Social, business, and transportation
services drive business travel in the United Kingdom. All are expected to
advance slowly through 2015." The current U.K. BTI is 95, below the 2005
"Growth in real estate and the travel-intense transportation services will
aid in Germany's business travel spending bounce back over the next five years,"
according to the report.
Business travel spending will "bounce back slightly" with help from
real estate, and professional and business services sectors, but still will
remain "slowed by European debt woes."
"While much of the world has been struggling with economic recovery,
Brazil has been growing at an aggressive pace over the last two years,"
and business travel spend this year is projected to increase 17 percent from
2010, which saw a 28 percent jump from 2009, according to the study. "This
growth, however, will cool slightly as the more mature Brazilian economy
struggles with higher interest rates and large gaps in infrastructure needs.
Spending on business travel is expected to drop to 7 percent annually over the
next five years."
Australia/New Zealand: "Less susceptible" to the global
recession, business travel spending in Australia and New Zealand will
"stay on a slow but steady growth pattern," according to the report's
is expected to experience "steady" business travel growth during next
five years, with "solid" growth in government and real estate.
"Tremendous growth" driven by a "developed and diversified
economy" has India on track to expand business travel spending by
double-digit percentages and grow its BTI to 365 by 2015, up from the current
level of 197. "The boom in exports, particularly in services, coupled with
a growing domestic consumption has pushed India to the 12th largest business
travel economy in 2010," according to the study.
To compile the report,
researchers used a variety of data sources, including the U.S. Department of
Commerce Office of Travel & Tourism Industries, the U.S. Department of Transportation
Bureau of Transportation Statistics, the U.S. Bureau of Economic Analysis, the
United Nations World Tourism Organization, other government sources including
ministries of transportation, tourism and commerce, Boeing, D.K. Shifflet &
Associates, IHS Global Insight, IPK International, the International Air
Transport Association, the International Monetary Fund, Morgan Stanley, the
Organization of Economic Co-operation and Development, Smith Travel Research, Wells
Fargo Bank and "national input/output accounts for 48 of the 75 countries
analyzed in the study."
Business travel spending
projections considered "trends in travel intensity, productivity and the
impact of business cycles," as well as industry sales projections and
reconciliation with several sources.