Global Uncertainty Causing Delays in Business Travel Growth
On Tuesday, GBTA released our quarterly U.S. business travel forecast sponsored by Visa, Inc. According to the GBTA BTI Outlook – United States 2016 Q1 report, U.S. business travel will continue to grow only moderately in 2016 as global uncertainty looms.
While the latest GBTA BTI™ Outlook survey found that 2016 will look very similar to previous years with anemic but steady growth, there is cause for optimism about 2017 as the health of the global economy becomes clearer and a number of factors including the U.S. presidential election to the possible “Brexit” of the United Kingdom from the EU become resolved later this year.
Some key findings from GBTA BTI™ Outlook – United States 2016 Q1 include:
- In the fourth quarter of 2015, 125.1 million person-trips were generated in the United States and $72.4 billion was spent on business travel activity. This represents flat year-over-year growth in trip volume and 0.7 percent growth in business travel spending.
- Financial market volatility has ratcheted up in response to weaker global economic growth and its impact on commodity prices, exchange rates and corporate earnings. And weak supply-driven oil prices continue to add to the state of confusion.
- Faltering share prices and falling bond yields have put many businesses into a cautionary mood. A growing number of business have been re-instituting cost control efforts and revisiting hiring, capital expansion plans and travel budgets.
- Price growth is expected to normalize in 2016, growing 2.5 percent, followed by a more significant gain of 4 percent in 2017.
- Price growth in the hotel market continues to outpace inflation in all other key business travel segments. Average daily rates (ADR) rose an estimated 5.1 percent in 2015 to $115.
- U.S. Business travel spending is expected to increase 1.9 percent in 2016 to $295.7 billion and business travel volume is forecasted to increase 2.1 percent to 508.6 million trips.
Despite the slow year-over-year growth, caution at home and uncertainty in the global economy, the outlook for business travel in the coming months and years remains positive. It is estimated that there will be over 500 million business travel trips taken in 2016 and more than $295 billion spent on business trips this year.
While business travel continues to experience a similar pattern of growth it has endured for the past several years, the overall health of the business travel industry remains one of the strongest barometers of the health of the overall U.S. and global economies as an indicator of business confidence, economic growth, and market stability.