Annual U.S. business travel spending should climb about 5 percent in 2011 and 6.4 percent in 2012, to $254.5 billion, according to a report issued by the NBTA Foundation. The foundation also projected that the number of business trips this year would surpass 2010 levels, which had fallen from 2009. NBTA determined that domestic business travel spending in 2010 rose 2.3 percent year over year to $227.9 billion, while price inflation was about 2.7 above 2009 levels. It projected smaller annual price inflation growth during each of the next two years.
NBTA predicted U.S. business travel trips would increase about 4 percent, to 113 million, between the fourth quarter 2010 and the fourth quarter of 2012; the report estimated that spending during that two-year period would increase 11.6 percent to $66 billion. "Spending continues to recover at a faster rate than overall volume as premium travel restrictions are removed and the price per business trip rises," according to NBTA.
For last year, NBTA estimated a 4 percent year-over-year increase in the price spent per business trip. "We expect this trend to continue over the next two years as the price per trip is expected to grow by 2 percent and 6 percent for 2011 and 2012, respectively," NBTA predicted.
Although business travel inflation experienced "a sharp decline" between first-quarter 2008 and second-quarter 2009 "due to acute deflation in both airfare and lodging," airfares have recovered, as have hotel rates in "most" markets, according to NBTA. Travel prices in 2011 are expected to inch higher by 1 percent to 2 percent year over year, followed by growth of 2 percent to 4 percent in 2012.
Vantage Strategy developed the econometric model for NBTA and sourced business trip volume and spending from D.K. Shifflet & Associates using figures such as U.S. gross domestic product, U.S. employment and unemployment figures and key travel components of the Consumer Price Index.
International Outlook Similar To Domestic
International outbound trips in 2010 increased 2 percent compared with a sharp decline of 13 percent during 2009. Meanwhile, NBTA predicted international trips in 2011 and 2012 would increase 1.7 percent and 4.5 percent, respectively. Similar to the domestic market, international spending in 2010 increased at a greater pace (17 percent to $29 billion) than trip volume. Moving forward, NBTA predicted international travel spending would grow 3.2 percent in 2011 and 9.5 percent in 2012.
"International outbound business trips dropped off heavily in 2009. The decline in spending was even greater as firms managed travel spending by reducing trips, shortening length of stay, and moving employees out of premium class airfare and higher hotel classes," according to NBTA. "Through the second half of 2009 and the first three quarters of 2010, better corporate earnings and booming export markets saw the return of premium business travel in international outbound. International business travel will increasingly comprise a larger percentage of total business travel through 2012 and beyond as U.S. firms take advantage of growing international economies, especially in Asia and South America."
Tech Impact Mixed On Meetings Travel
Although some corporations are looking to such travel alternatives as remote conferencing, NBTA's report noted that "many executive are still deciding where technology fits in with their firms' philosophies, company culture, and business objectives."
According to NBTA, anecdotal evidence suggests technology could decrease the need for business travel, but could also lead to more face-to-face interaction as colleagues using remote conferencing to connect eventually would require in-person meetings.
Group trip volume dropped 17.5 percent, or 33.7 million trips, between 2007 and 2010, indicating that travel for meetings and conventions was "under siege for nearly three years." In 2010, group trips declined 0.8 percent year over year, following a 2009 annual loss of 11 percent, but NBTA projected group volume would grow 3.2 percent in 2011 and 2.6 in 2012. Group spending increased 5 percent in 2010, to $97.4 billion. For this year, NBTA forecast group spending to rise another 5.5 percent.