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November 13, 2014

GBTA: Why 2014 Was the 'Bounce-Back' Year for European Business Travel




The GBTA Foundation, the education and research arm of the Global Business Travel Association, has released the results of its latest GBTA BTI Outlook – Western Europe report, a semi-annual analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy, and Spain

These five markets serve as a good barometer of the health of the entire European business travel market. The report includes the GBTA BTI, a proprietary index of business travel spending that distills market performance over a period of time.
 
Key highlights of the report include:
 
* Business travel spending in the five markets is expected to hit €147.1B ($186.4 billion USD) in 2014, a 4.9 percent growth over 2013. The projected rate of growth is expected to increase by another 6.6 percent in 2015, to €156.8B ($198.7 billion USD), as overall spending picks up.
* 2014 is shaping up to be a true bounce-back year for European travel. Business travel spending in the five European business travel markets advanced by 4.3 percent over the first half of the year -- the largest gain in business travel spending since 2010.
* The UK, Sweden, and even Spain experienced growth, while the economies of Italy, France, and Denmark stalled in the first half of 2014. Despite a weak second quarter, the German economy continues to remain one of the most robust in all of Europe.
* Overall economic conditions throughout Europe continue to be sluggish, however, with only 0.8 percent growth in Euro Area GDP in the first quarter of 2014 and no growth during the second quarter. High unemployment rates persist and household incomes are not yet increasing at confidence-boosting rates. Businesses continue to be reluctant to borrow, hire, and invest.
* Given the region’s continued low levels of inflation, slowly improving domestic demand, and more favorable credit conditions, GBTA anticipates modest economic growth going forward. GBTA anticipates an increase in real Euro Area GDP of 0.9 percent in 2014 and 1.7 percent in 2015, which will contribute to stronger business travel activity.
 
“After experiencing many quarters of decline, Europe appears to be stabilizing and starting to bounce back,” Catherine McGavock, Regional Director for Europe for GBTA, said in a statement. “We still face many hurdles, but it appears the tides are gradually changing for economies all over Europe. This will contribute to a strong 2014 and 2015 for business travel throughout the region.”

Country-Level Business Travel Outlooks

Germany

Spending on business travel totaled €10.4 billion ($14.3 billion USD) in 2014 Q2, a gain of 7.5 percent from the same period in 2013.
GBTA expects business travel to grow by 7.4 percent in 2014 and by 10.8 percent in 2015.

International outbound business travel (IOB) from Germany rebounded in 2013, expanding 5.3 percent over 2012. GBTA expects that spending will grow 6.5 percent in 2014 but will be tested by slower export growth in 2015.

United Kingdom

The UK had the second highest level of spending on business travel in Western Europe in 2013 -- £26.5 billion ($41.3 billion USD). GBTA expects spending to increase nearly 5 percent this year and 6 percent next year.

Domestic spending is poised for strong growth in 2014 and 2015, with projected growth rates of 5.6 percent and 7.7 percent, respectively.

International outbound business travel is projected to grow by 3.7 percent in 2014 and another 12.1 percent in 2015.

France

French business travel spending increased by 1.3 percent during the second quarter of 2014, to €6.6 billion ($9 billion USD).

Despite the sluggish economy, GBTA expects total business travel spending to rise by 3.3 percent in 2014 and by 4.6 percent in 2015.

After significant declines in 2012-13, international outbound spending will grow by 5.4 percent this year and 2.9 percent in 2015.

Spain

The Spanish economy appears to be on the mend, with positive growth for the past few quarters. The IMF forecasts growth of 1.3 percent in 2014 and 1.7 percent in 2015, its highest projections for any advanced European economy.

The improvement in the economy has increased spending in business travel, with a 6.7 percent year-over-year increase in such spending during the second quarter of 2014.

Both domestic and international outbound travel spending are expected to increase significantly (by at least 4.6 percent) in both 2014 and 2015.

Italy

The Italian economy has continued to struggle. The IMF has projected a 0.1 percent decline in GDP in 2014 and a modest 1.1 percent increase in 2015.

After falling in 2013, business travel spending increased by 1.1 percent year-over-year in the second quarter of 2014. GBTA anticipates slow travel growth (1.4 percent and 2 percent) in 2014 and 2015, respectively.

International outbound business travel is expected to increase by 4.7 percent in 2014 and 6.7 percent in 2015, a rate at least 3.7 percentage points higher than projected domestic spending growth.
 
The findings of this research will be presented today at the GBTA Conference 2014- Berlin by Joseph Bates, Vice President, Research GBTA Foundation. Additionally, a webinar will be held on December 2 to discuss these findings.


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