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January 13, 2015

GBTA Expects U.S. Business Travel Spending to Top $310 Billion in 2015




The Global Business Travel Association is reporting that U.S. business travel ended 2014 on a high note, with record spending expected to reach $292.2 billion. The projection for 2015 also remains strong, as lower oil prices are expected to lead to increased consumer spending, boosting economic projects. This strong domestic economic news comes despite an overall weak global economic outlook, with trouble in Europe, Asia and Russia.
 
Overall, U.S. business travel spending is expected to advance 6.2 percent to $310.2 billion in 2015, while total person-trip volume is expected to increase 1.7 percent to 490.4 million trips for the year, according to the GBTA BTI Outlook – United States 2014 Q4, a report from the GBTA Foundation, the education and research arm of the GBTA.
 
“2014 was a stabilizing year for U.S. business travel, with continuous, sustained growth, despite a plethora of external issues internationally that have weighted down economies in Europe, Russia and Asia,” Michael W. McCormick, GBTA executive director and COO, said in a statement. “This is a significant and encouraging sign of confidence in the strength of the U.S. economy.”


 
The report’s key findings include:
-          An estimated 482.4 million trips were taken in 2014, representing a 1.4 percent growth over 2013 and higher expectations than the previous quarter, driven by accelerating performance during the second half of the year.
-          During Q3, an estimated 121 million trips were taken, spending $73.8 billion. This represents a 1.6 percent increase in volume and 6.5 percent increase in spending.
-          2014 proved to be a comeback year for international outbound business travel, growing 6 percent in volume year-over-year, after falling 1.0 percent in 2012 and rising only 1.1 percent in 2013. This gain in volume amounts to an estimated $35.6 billion for 2014, a growth of 8.9 percent year-over-year.
-          Transient volume performed well in 2014, with an estimated 298.6 million trips taken, representing growth of 3.5 percent year-over-year. Volume will likely fall off pace slightly in 2015, although spending should continue, increasing from $130.4 billion projected in 2014 to an estimated $137.1 billion in 2015. 
-          Group trip volume will likely finish down 2.2 percent year-over-year, stabilizing after extraordinary growth in 2013. Group spend-per-trip, however, is on pace to rise to $715 in 2014, up from $660 in 2013. Both volume and spending are expected to rise in 2015 by 1.5 percent and 6.7 percent, respectively.

Despite Weak Global Climate, U.S. Prevails

Global economic growth remains in a weakened state. Europe – especially Russia – is barely treading water, China’s growth is moderating, Japan’s challenges continue and emerging markets are awaiting more robust performance from the developed world. Despite this, the U.S. economy remains healthy with international outbound business travel seeing little to no negative impact.

Plummeting Oil Prices Temper Travel Price Inflation

Oil prices have plunged since June, creating favorable conditions. The effect is particularly impactful on airfares – signified by an expected decline of 0.9 percent in prices this year, down from an expectation of a four percent increase in last quarter’s report. Additionally, consumer spending is expected to increase by 2.6 percent, as lower gas prices often lead to a boost in discretionary income.

GBTA BTI Progresses Upward

The GBTA BTI, a proprietary index of business travel activity, is estimated to reach 137 to round out 2014, bolstered by a strengthening domestic economy and an increase in spending. This represents a six-point year-over-year gain.

The BTI is expected to continue rising in 2015, reaching 146 by the end of next year. Momentum should continue into 2016 as the index gains another seven points on its way to 153.
 
Based on these results, Joseph Bates, GBTA Foundation vice president of research, said in a statement, “business travel will continuing growing...in 2015 and beyond.”


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