The ongoing economic
challenges facing Europe prompted the Global Business Travel Association to
generally downgrade from its earlier projections business travel spending
forecasts across five major markets. For Spain and Italy, 2012 spending will
decline at greater rates than GBTA forecast in the spring of this year, and
both countries now are expected to see deeper cutbacks next year than the
association previously projected. In France, meanwhile, business travel
spending this year will be down more than initially expected and next year will
grow at a slower pace than the earlier forecast.
Prospects in United
Kingdom and Germany are mixed. According to GBTA, 2012 U.K. business travel
spending will be flat versus last year, but in 2013 will grow more quickly than
it predicted in the spring. In Germany, where performance has been strongest
among the five examined markets, business travel spending this year will grow
more quickly than GBTA first projected, but more modestly in 2013 than the earlier
forecast.
"As a result of
weaker first-half prospects in Spain, Italy, France and the United Kingdom, our
2012 GDP growth expectation for the entire euro area has been downgraded
slightly in the fall report to -0.4 percent from -0.3 percent," according
to GBTA Europe managing director Paul Tilstone. "With lingering debt
challenges and continued austerity measures, the European economy will likely
continue to be challenged for years to come. The GBTA's fall report therefore
remains cautious."
Among the five covered major
markets, Spain appears most troubling, with an expected business travel
spending decline this year of 7.8 percent—more severe than the 4.1 percent cut
the association previously projected. The forecast calls for a 1.6 percent
decline next year. International outbound business travel will be hardest hit,
down by a projected 14.4 percent this year and 6.2 percent in 2013.
"Much like Spain,
although to a lesser degree, the situation in Italy continues to get worse
rather than better," according to GBTA. "It is expected that
austerity measures will continue to take their toll on the corporate sector and
corporate travel budgets though the rest of 2012." Total Italian business
travel spending now is projected to drop back 6.9 percent this year and 1.2
percent next year.
In France, 2012 spending
is expected to retreat 2.2 percent this year and "will continue to recover
along with the broader European economy in 2013 and will grow an estimated 1.1
percent," GBTA wrote. "Any recovery in French business travel
spending will be driven by domestic travel, which is expected to be flat in
2012 followed by growth of 4.5 percent in 2013."
After not changing much
in 2012, U.K. business travel spending in 2013 will rebound by 2.8 percent,
according to GBTA, driven by 3.9 percent higher international outbound
spending.
The association
projected that Germany—"supported by relatively strong industrial and
service sectors" and "spread across a number of large commercial hubs
including Frankfurt, Munich and Berlin"—would be the only market of the
five to see spending growth this year, rising about 1.6 percent from 2011 to
about $50.8 billion. International outbound, however, is projected to drop 3
percent. For 2013, GBTA predicted total German spending would increase 3.3
percent.
Overall, GBTA's report
pointed to correlations between travel spending and both job growth and exports.
On the former, "domestic business travel spend tends to lead job gains by
about one quarter," according to the report. On the latter, international
outbound business travel "tends to lead exports by a quarter or two."