Business Travel Set to Hit Pre-Recession Levels by Mid-2012
Business travel is growing again, but with an interesting twist, according to a new survey of the first quarter of 2012. The number of trips is declining, but spending is increasing, according to the latest Business Travel Quarterly Outlook-United States from the Global Business Travel Association (GBTA). That’s in part due to inflation, but it’s also because travelers are trying to make the most of each trip. They are making more stops and taking one trip that’s a little longer than it would have been in the past instead of taking two trips.
Even as business travel seems to be stabilizing, there are some concerns about outbound international travel because of the European debt crisis and rising oil prices. Nonetheless, GBTA said it believes that business travel will reach its pre-recession levels by the middle of 2012. The study, sponsored by Visa, projects that spending on business travel will increase by 4.6 percent in 2012, with a slight (0.8 percent) decline in person-trips. This bodes well for the economy overall, because business travel is a reliable economic indicator for both the economy and job growth.
According to Visa, its cardholders spent 14 percent more on travel-related purchases ($235 billion) last year than in 2010. Total spending on U.S.-initiated business travel hit $251 billion in 2011, up from $234 billion in 2010. This included $111.7 billion spent on transient business travel, $107.7 billion spent on group business travel, and $31.6 billion spent on international outbound travel. Total person-trip volume reached 445 million in 2011, up from 437 million in 2010. This figure will fall slightly to 440.4 million person-trips in 2012.
The number of business trips taking every year has been steadily declining since 2000, while the amount spent on business travel has increased. Inflation accounts for only part of this increase. In 2000, travelers took 576.06 million trips and spent $242.9 billion; in 2011, the number of trips fell to 445.0 million, a 22.7 percent decrease, and spending increased 3.3 percent to $251.0 billion. In 2012, the trend will continue, as the number of trips dips 1 percent while spending increases 3.6 percent. In fact, GBTA research shows that the average amount spent on a trip in 2000 was $422 and in 2011 grew by 33.6 percent to $564. Inflation alone accounts for 64 percent of the increase in average spend, the real increases in spending account for 36 percent of the total increase.
“We're seeing road warriors taking fewer trips, but making the most of them, making more stops and spending more on the road,” said Michael McCormick, GBTA executive director and COO. “The productivity explosion is a huge factor and it's being brought on by better travel management, better technology and making the most of their time on their road. In the past, a road warrior may make two trips rather than just spending an extra night, or three travelers would go out on a trip together, where now it's fewer. This is a remarkable trend that we don't see ceasing."
The GBTA Business Travel Index for the fourth quarter of 2011 was 16, two points lower than the projected value in GBTA's last outlook. The GBTA expects the index to reach its pre-recession high of 120 by the third quarter. The continued uncertainty in the Eurozone, higher global energy prices, and continued slow growth in the domestic economy are keeping the index from increasing more.
International outbound travel grew 8.5 percent last year, but is expected to grow by just 3 percent this year because of weaker demand in Europe and Asia. Transient business travel spending finished 2011 very strongly, ending the year up 6.7 percent after falling 0.4 percent in 2010. But GBTA said this rate will not continue since it expects growth to be far more modest in 2012 and 2013 (up 3.7 percent and 3.9 percent, respectfully), staying in line with the slow-growth pattern of the economic recovery.
For more information on Global Business Travel Association (GBTA)
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