Business Travel Spending to Rise Nearly 5 Percent in 2015
US Business Travel Spending up 38 Percent Since 2009.
U.S. business travel spending will increase by 4.9 percent in 2015 to $302.7 billion, yet ongoing concerns about the U.S. economy will rein-in what could be even sharper growth, according to new research from the GBTA Foundation and Visa.
The 2016 outlook anticipates a surge in economic activity and confidence, with travel spending projected to increase by 5.4 percent to $318.9 billion.
Total trip volume follows a similar trend for 2015 and 2016. In 2015, U.S. travel volume is expected to increase by 1 percent to 488.1 million person-trips – an average of 1.3 million trips for every day of the year. Growth will substantially increase in 2016 with business travel volume accelerating by 3 percent to 502.8 million person-trips. That amounts to an average of more than 38,000 additional business trips every day.
These findings are part of the“GBTA BTI™ Outlook – United States 2015 Q2,”a report by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), and sponsored by Visa, Inc.
“U.S. business travel was poised for significant growth in 2015, but the erratic performance of key economic drivers caused some to tap the brakes on additional travel spending,”said Michael W. McCormick, Executive Director and COO of the Global Business Travel Association.“Yet, economic fundamentals remain strong. Business travel will continue to have positive momentum as we move toward 2016, a leading indicator that the overall economy will continue to grow as well.”
The long-term outlook for U.S. business travel growth remains bright, but in the near-term the picture is mixed. Global business travel both drives, and is driven, by economic activity.
- The U.S. economy continues to forge ahead but growth has been volatile.GDP growth for 2015Q1 is case in point having declined by -0.7 percent (Q/Q at annualized rate), down from +5 percent just two quarters before. Real GDP also declined in the first quarter of 2014 (-2.1 percent) due to severe winter weather. It then proceeded to quickly snap back. Many analysts are expecting the same this year.
- Despite the recent challenges, the GBTA BTI Outlook’s expectations for the U.S. economy are largely unchanged from last quarter.The underlying momentum of job growth, wage gains and rising confidence will continue to compensate for weak global growth and postponed oil & gas investment. Consumer spending and housing are already showing positive reactions to rising disposable income. Moreover, gradually rising oil prices should help to re-start postponed energy investment projects.
“While we would like to see the overall growth numbers more consistent, signs are good for a solid end to 2015 and a robust 2016,”said Brian Triplett, SVP, Head of Commercial Product, Visa Inc. “These increases in business travel will drive the transition to electronic payments. In turn, this will help companies reduce costs and track and pay for business-related travel expenses more simply and more efficiently.”
“The BTI forecast consistently correlates with overall GDP growth,”explained Joseph Bates, GBTA Foundation Vice President of Research.“As business travel increases, so will growth in the overall economy.”