A new report reinforces expectations that business travel emanating from Asia, and China in particular, during the next decade will surge. Meanwhile, business travel from Europe and the United States, while still projected to increase, will account for a shrinking portion of total global growth, according to an Oxford Economics forecast commissioned by Amadeus.
"North East Asia alone will account for 42 percent of the growth in global outbound business travel expenditure over the next decade, with South East Asia accounting for a further 13 percent," according to the report. Meanwhile, "Western business travelers have been slow to recover old spending habits" as corporations have "adjusted to austerity," researchers wrote, projecting Europe to contribute 15 percent of the next decade's global business travel spending growth and North America 7 percent.
Oxford calculated that business travel spending in the United States this year would climb back to the heights recorded before the last global economic recession. In Europe, full recovery is expected by 2018. The business travel growth trend in Asia, however, "was unaffected by the financial crisis."
The report detailed a few factors that have minimized Western business travel growth: a more cost-conscious attitude among U.S. and European companies, and greater use of "sophisticated" expense control tools and such travel alternatives as videoconferencing. Cost-consciousness has manifested itself as shifts from business-class to economy or premium-economy options for air travel (especially on short-haul routes), use of restricted (and therefore cheaper) airfares and shorter hotel stays.
Meanwhile, the Oxford/Amadeus report pointed to "a growing body of evidence that businesses view videoconferencing and business travel for face-to-face meetings as possessing distinctive strengths and weaknesses and as serving different purposes. Firms are increasingly optimizing the two formats, and the choice between the two differs according to the sector and the content of the communication."
When assessing global travel in aggregate across all segments, researchers forecast solid growth. "We expect global overnight visitor flows to grow at 5.4 percent per annum over the next decade, significantly faster than GDP growth of 3.4 percent and more in line with the expected expansion in global trade flows of 5.8 percent," they wrote. That 5.4 percent growth would represent greater momentum for an industry that experienced a total 4.1 percent increase in the metric from 2009 to 2012.
In terms of hotel stays, the report noted that international travelers in aggregate since 2009 have generated a larger volume of room nights than domestic travelers. "Based on current trends, domestic and international accommodation nights are forecast to continue to diverge from 2013 to 2023," according to Oxford, which projected the former to grow at an average rate of 3.4 percent compared to the latter's average growth rate of 5.1 percent.