Business Travel Keeps Growing, But Erratic Economic Drivers Limit Growth
Earlier this week, GBTA released our latest outlook for business travel in the United States. Our forecast shows business travel spending will increase by nearly 5 percent in 2015 to $302.7 billion, yet ongoing concerns about the U.S. economy are reining-in what could be even sharper growth.
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, down from +5 percent just two quarters before. Real GDP also declined in the first quarter of 2014 due to severe winter weather. It then proceeded to quickly snap back. Many analysts are expecting the same this year.
Jobs numbers in May and June were very good after a very disappointing March – due again mostly to severe weather. This has become something of a Jekyll and Hyde economy – one month it’s good and the next, not so much. This makes economic momentum hard to sustain and limits the confidence of those making spending decisions.
Issues like the economic crisis in Greece may not have a direct impact. So far, the crisis appears to be contained. But if the debt crisis in Greece spills over to other European nations causing a domino effect, our data indicates that it could very well drag Europe back into recession, put a damper on the slow progress made over the past few years and increase the already high unemployment rates.
The numerous headlines touting the latest with the Greece crisis do cause companies to take a moment to consider the potential impact. Our global economies are so intrinsically linked in today’s world that it does not take as long for a global impact to be felt. While it may not cause anyone to slow down their company spending, they are not spending more either.
Despite the recent challenges, GBTA’s expectations for the U.S. economy are largely unchanged from last quarter’s forecast. 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.
On the business travel front, trip volume is expected to increase 1 percent this year to 488.1 million person-trips and will substantially accelerate in 2016 by 3 percent adding on average an additional 40,000 business trips every day.
Overall, economic fundamentals do 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.