Alexandria, U.S.A. — The GBTA Foundation, the research and education arm of the Global Business Travel Association (GBTA), released on July 23 the 4th annual comprehensive report analyzing the current state of global business travel spend and growth projections for the next five years. The GBTA BTI Outlook – Annual Global Report and Forecast, Prospects for Global Business Travel 2012-2016, sponsored by Visa Inc., found that business travel spending growth in developed economies is slowing compared to previous forecasts, but emerging markets continue to grow rapidly.

In 2011, emerging markets such as Brazil, Russia, India and China all experienced growth rates over 15% in business travel spending, more than making up for the substantially slower growth rates of the U.S. and Western Europe. The outlook for 2012 is for global business travel spending to grow at 4.6% to $1.07 trillion, followed by significant growth in 2013, advancing another 8.1%.

Notably, China will surpass the U.S. in total business travel spending by 2014 – a year earlier than previously forecast. This is due to slower U.S. spending growth and continued robust spending in China.

“These are complicated economic times,” noted Michael W. McCormick, GBTA executive director and COO. “Our projections last year suggested that the economic recovery was affecting certain types of countries and markets very differently than others, and the data we have this year reinforce those trends. The continued growth in emerging markets should continue to generate significant expansion in business travel, as more people will need to meet face-to-face to make deals benefiting their companies. Conditions are more uncertain in the developed markets, in part due to the ongoing European debt crisis. Until that crisis is resolved, business travel is unlikely to grow at its pre-recession rate.”

“Emerging markets are proving to be a big draw for business and leisure travelers alike,”said Tad Fordyce, head of global commercial solutions at Visa Inc. “For example, in 2011, we saw Brazilian Visa account holders increase international tourism spend by 32 percent to $6.3 billion and inbound travel increased 10 percent to $2.3 billion.”

In the more developed regions of the world, such as the United States and Western Europe, important drivers of domestic and international outbound business travel have slowed. Corporate profit growth and business equipment spending have both slowed markedly since last fall.  Along with them, business confidence has dropped back from levels achieved earlier this year. This has ushered in a more cautious stance on hiring, equipment purchases and business travel. Companies are still dispatching their road warriors, but are doing so at a more cautious pace.

A tale of two economies

Inertia will play a major role in the rise and fall in business travel markets over the next few years. It is becoming increasingly clear that short-run economic growth will be sluggish in the developed world. Countries like the U.S., Germany, the U.K. and Japan are all expected to see sub-3% growth in the near-term. In such a scenario, spending growth on business travel in the developed world will also be sluggish.

Since the turn of the millennium, spending on global business travel has grown at an annual rate of 4.5% to a 2011 level of $1.02 trillion USD. Average annual growth has swung wildly – from a loss of -11.4% in 2001 as the 9/11 attacks compounded the downward pressure from the early-2000s recession – to 15.9% in 2007, the peak of a global expansion. Corporate spending on business travel hit the brakes in 2009, falling 7.5% as a result of the Great Recession.

In 2012 the business travel market continues to be dominated by a few major players – over two-thirds of global spending stems from the U.S., China and Western Europe. Spending on business travel is projected to hit $1.07 trillion this year, 4.6% growth over 2011. GBTA expects spending to advance another 8.1% in 2013 as the economy works through its current doldrums. By 2016, GBTA projects total spending on business travel will hit $1.4 trillion, representing a compound annual growth of 7.7%. However, the downside risks to the outlook for global business travel are abnormally high, hinging on the direction and severity of the crisis in the Euro-zone.

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