News for the Hospitality Executive
LONDON, June 12, 2012- The Global Business Travel Association (GBTA), the world's premier business travel and corporate meetings organization, announces the results of its inaugural "GBTA Business Travel Index (BTI)(TM) Outlook - Western Europe" economic analysis, sponsored by Visa Inc.
This semi-annual series includes the GBTA BTI which provides a method for distilling market performance and the outlook for business travel into a single metric to be tracked over time. "GBTA BTI(TM) Outlook - Western Europe" includes an analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain.
- Growth in business travel spending ("BTS") in the three major European
economies: Germany, the UK and France will be nearly flat in 2012:
- UK is forecast to grow BTS by 0.7%
- Germany is forecast to grow BTS by 0.6%
- French BTS is forecast to decline by 0.6%
- Forecast levels of 2012 BTS in Germany, UK and France all exhibit growth
in domestic travel, but declines in international outbound spending ("IOB"):
- UK domestic BTS is forecast to grow by 2.7% but IOB is forecast to fall by
- German domestic BTS is forecast to grow by 1.1% but IOB is forecast to
fall by 1.4%
- French domestic BTS is forecast to grow by 0.7% but IOB is forecast to
fall by 2.7%
- Growth levels in 2013 BTS in Germany, the UK and France will be much
stronger with both domestic BTS and IOB showing increases:
- Germany is forecast to grow overall BTS by 5.4%
- France is forecast to grow overall BTS by 5.1%
- The UK is forecast to grow overall BTS by 4.0%
- Southern European countries, Spain and Italy will experience even steeper
declines in BTS due to slower economic growth rates and austerity measures. 2012 is
forecast to see declines of 4.1% and 5.0% for Spain and Italy, respectively
- Overall, the European economic situation will weigh heavily on countries'
economic growth levels. In 2012, GDP in Germany, France and the UK are forecast to
grow by 0.5%, 0.6% and 0.7% respectively. This will be due more to the indirect impact
of Southern Europe rather than domestic weaknesses
- Sovereign debt crises in Italy and Spain will lead to 1.8% and 1.9%
declines in 2012 GDP, respectively
Executive Director and COO of GBTA, commented:
"We are delighted
to produce our inaugural analysis for Western Europe assessing likely
business travel spend and economic growth levels for one of the world's
most important trading zones. We found that economic growth across
Europe will be constrained in 2012 with weakness in the first half
giving way to improving prospects later in the year. Increasing
economic growth in Germany, France and the UK will be offset by
declines in many Southern European economies. Business travel is a
leading indicator of the economy, so we're expecting a challenging
scenario over the next year."
Managing Director of GBTA Europe, commented:
"As for business
travel; all five of the countries in the report are relatively mature
and together form nearly 70% of Europe's business travel market. As
such, the results are highly indicative of the Continent's overall
performance. Forecasts for 2013 are very positive but 2012 shows a
significant disconnect between Northern and Southern economies and
domestic and international business travel spend."
business or pleasure, Visa account holders spent more than $235 billion
on travel related purchases in 2011-a 14 percent increase from 2010,"
said Tad Fordyce, head of global commercial solutions at Visa Inc. "Our
relationship with the GBTA and our support for research such as the BTI
provides us with an opportunity to understand the key trends in the
business travel industry and ensure that the solutions we provide to
financial institution customers and their clients in the public and
private sectors continue to be best-in-class."
business travel in Germany totaled $50.0 billion in 2011, down 4.2%
from its 2008 peak. Germany has a relatively strong and
well-diversified domestic economy that helps to somewhat insulate it
from the regional impacts of the sovereign debt crisis to the south.
Historically, spending on German domestic business travel comprises a
large percentage of total German business travel (79%).
forecasts that German business travel will grow slightly in 2012 with
total spending on business travel growing 0.6% to $50.3 billion. Slow
growth is mainly the result of the expectation for a Eurozone recession
over the first couple of quarters of 2012.
spending will increase during 2013 as the Euro Area begins to recover
and will grow an estimated 5.4% to $52.9 billion. Putting this slower
growth performance in perspective, it will take until the third quarter
of 2013 for German business travel spending to regain its previous
cyclical peak (Q3 2008).
domestic business travel in 2011 was up 4.9% and will grow an estimated
1.1% in 2012 as regional woes will lead to firms cutting out more
discretionary business trips and moving executives into lower hotel and
air classes through the year. This trend will ease toward the end of
2012 and into 2013 with spending on domestic business travel expected
to rise another 5.6% in 2013.
IOB spending in
Germany will decline 1.4% in 2012 as result of weakened trade activity
in the region and abroad. It is expected that this will improve in
2013, on the assumption that the European continent can avoid an
all-out banking crisis. A rebound of 4.6% is expected in spending on
international outbound business travel.
The UK has the
second highest level of spending on business travel in Western Europe
measured at $40.2 billion in 2011. While the UK suffers from the same
regional problems as Continental Europe, its diversified economy and
the flexibility of having its own currency and monetary policy have led
to a relatively healthier environment for business travel.
The "GBTA BTI(TM)
Outlook - Western Europe" economic analysis forecasts that spending on
business travel in the UK will advance slightly, 0.7%, in 2012. Total
spending on domestic business travel is expected to grow 2.7% in 2012,
after advancing 3.2% in 2011.
outbound travel from the UK will fall 2.8% in 2012, as debt troubles in
Southern Europe will more than offset any benefit that British business
travelers will gain in purchasing power in the Eurozone from the
relative strength of the British Pound. The Olympics are set to
displace some business travel, although we expect much of it to be
rescheduled later in the year."
In 2013, we expects
a full recovery in British business travel with spending projected to
advance 4.0% to $42.1 billion with spending on domestic business travel
gaining 5.0% and spending on international outbound business travel
travel spending peaked at $36.6 billion in 2008, before suffering a
steep decline of 10.6% due to the recession in 2009. Spending
experienced an equally strong recovery in 2010, bouncing back 9.0% to
$35.6 billion USD. The recovery has flat lined in 2011 as the French
economy continues to suffer the same woes as those of Germany and the
UK - a weakened environment due to spillover effects of the sovereign
debt crisis to the south.
The expectation is
that French business travel will suffer a small loss in 2012 with total
spending on business travel falling 0.6% to $36.3 billion, a result of
the expectation for a Eurozone recession over the first couple of
quarters of 2012. Business travel spending in France will begin to
recover along with the broader European economy in 2013 and will grow
an estimated 3.3% to $37.4 billion. The recovery in French business
travel spending will mainly be driven by domestic travel, which is
expected to expand 0.7% in 2012 followed by growth of 5.1% in 2013.
Outbound international travel from France is expected to fall 2.7% in
2012 and struggling to recover in 2013 with projected growth of 0.3%.
business travel in Italy totaled $35.3 billion in 2011, down 6.6% from
a peak of $37.8 billion in 2008. The majority of business travel
spending in Italy is on domestic travel, with only 9% allocated to
international outbound in 2011. Domestic business travel in Italy is
mainly centered on the more industrialized northern part of the
business travel in Italy snapped back sharply after the Great Recession
but has since entered into another period of decline. Thus far,
austerity measures and ECB bailouts have kept the troubled economy
afloat but slow growth and high bond yields confirm that the Italian
economy is a long way from entirely escaping default.
The report predicts
a number of quarters of negative economic growth that will undoubtedly
take their toll on business travel. The expectation is that Italian
business travel will fall in line with broader expectations for the
Italian economy with total spending on business travel falling 5.0% in
2012 and continue to decline into 2013, by another 0.8% to $33.3
billion. Spending on domestic business travel will fall 5.2% in 2012,
followed by another 0.6% drop in 2013. Spending on international
outbound business travel will fare slightly better in 2013, falling
3.2%, but will see another drop of 1.9% in 2013.
Business travel in
Spain totaled $19.4 billion in 2011, down 7.7% from a peak of $21.0
billion in 2008. Spain represents a small proportion of European
business travel but growth over the last decade has been nothing short
of impressive. Liberalizing its economy since the beginning of the
century contributed to a more economically diverse and globally
oriented economy - one more in line with its developed neighbors.
Spanish economy has been one of the most challenged. As Spain has
recovered from the Global Recession in 2009, its overheated real estate
market has begun to correct itself after years of steep price
increases, unemployment has soared to nearly 25%, Spanish inflation is
the highest on the European continent, and, not surprisingly,
government bond yields continue to rise. Recent data have shown that
the Spanish economy fell back into recession in 2012 Q1.
It is expected that
spending on Spanish business travel will decrease by 4.1% in 2012,
falling to $18.6 billion. Trip volume, as well as the amount spent per
business trip, is expected to fall, as Spanish travelers will be pushed
into more economical air and hotel classes. Total domestic business
travel spending in Spain will drop by 4.1% in 2012 followed by a slight
gain of 1.9% in 2013. International outbound business travel from Spain
will fall at an even greater rate than domestic, 4.3% in 2012 and 1.1%
The "GBTA BTI(TM)
Outlook - Western Europe," includes the GBTA Business Travel Index(TM)
(GBTA BTI(TM)) for each of the five countries reviewed. The GBTA
BTI(TM) provides a way to distill market performance and the outlook
for business travel into a single metric that can be tracked over time.
The GBTA BTI(TM) in each country has been derived from total business
travel spending and an index base year of 2005 was chosen for
consistency with GBTA BTI(TM) in other countries. Specifically, the
GBTA BTI(TM) in each country is set equal to 100 in 2005 Q2.
The Great Recession
hit German business travel hard in 2009 Q1, as the GBTA BTI(TM) in
Germany plummeted to 110, only 10% above the index quarter of 2005 Q2.
The drop comes after the GBTA BTI(TM) in Germany peaked at 136 in the
third quarter of 2008. The 2011 Q4 GBTA BTI(TM) in Germany came in at
128, four points down from its Q3 value of 132. This reflects the
deteriorating economic environment on the European continent. GBTA's
expectation is for two more periods of declines in the level of the
GBTA BTI(TM) in Germany before finally seeing a bit of growth towards
the end of the year. The GBTA BTI(TM) in Germany will continue on its
slow growth pattern through the forecast horizon where it will finally
eclipse its former peak of 136.
The GBTA BTI(TM) in
the UK began to recover from the Great Recession, with a seven-point
jump to 108 in 2010 Q1. Since then the recovery has been slow and
steady with GBTA BTI(TM) in the UK taking a two-step-forward,
one-step-back approach as it has gained roughly a half a point per
quarter over the last two years. The 2011 Q4 GBTA BTI(TM) in the UK
came in at 112, showing no growth from 2011 Q3. GBTA expects the GBTA
BTI(TM) in the UK to drop to 111 in 2012 Q1 and stay there before
getting a push from the Summer Olympics in Q3. We expect growth in the
GBTA BTI(TM) in the UK to really pick up steam in 2013 - ending at 117
in Q4 as the European economy stabilizes.
The GBTA BTI(TM) in
France saw a strong snapback from the Great Recession. The 2011 Q4 GBTA
BTI(TM) in France came in at 134, where it has been for the last three
quarters. This stagnation reflects the uncertain economic environment
in Europe. GBTA expects the GBTA BTI(TM) in France to continue to
stagnate through 2012, before finally picking up some steam through
2013 when it will eclipse its former peak of 136.
The GBTA BTI(TM) in
Spain experienced robust growth leading up to its peak of 148 in 2008
Q3 - nearly 50% above its 2005 Q2 base value before plummeting to a low
of 124 in 2009 Q3. The 2011 Q4 GBTA BTI(TM) in Spain came in at 131,
three points down from its Q3 value of 134, again reflecting an
unstable economic environment in Spain. GBTA expects that GBTA BTI(TM)
in Spain will continue to decline through 2012 before finally seeing
some growth in 2013. GBTA expects the GBTA BTI(TM) in Spain to reach
133 by the end of our forecast horizon, two points higher than its
The GBTA BTI(TM) in
Italy has struggled to grow since early 2010 as economic uncertainty
has taken its toll on Italian business travel. The 2011 Q4 GBTA BTI(TM)
in Italy came in at 120, three points down from its Q3 value of 123.
Our expectation is for three more periods of declines in the level of
the GBTA BTI(TM) in Italy before it finally levels off at a value of
116 and remains there for the remainder of the forecast period.
About the GBTA BTI(TM) Outlook - Western Europe
The GBTA BTI(TM) Outlook projects aggregate business travel trends over the next eight quarters. The report tracks business travel spending in total and by domestic and outbound segments. It relates unfolding economic events at home and abroad to their resulting impacts on Europe's business travel market. GBTA BTI(TM) Outlook -Western Europe - Spring 2012 is the inaugural report in the semiannual series. Releases are planned for April and October.
The GBTA BTI(TM)
Outlook uses an econometric model to better inform the forecast
process. The model explicitly relates measures of business travel
spending, uniquely sourced from other GBTA Foundation research, to key
economic and market drivers of business travel including: Gross
Domestic Product (GDP) and its components; employment and unemployment;
measures of business and consumer confidence; international trade,
foreign direct investment and exchange rates; commodity and oil prices;
inflation measures; productivity rates for business travel;
International Air Transport Association (IATA) Passenger and Revenue
Performance and Smith Travel Research (STR) Global Hotel Performance.
The GBTA BTI(TM)
Outlook - Western Europe is free of charge to all GBTA Members by clicking
here. Non-members may purchase the report through the GBTA
Foundation by emailing email@example.com.
The GBTA Foundation is the education and research foundation of the Global Business Travel Association (GBTA), the world's premier business travel and corporate meetings organization.
Collectively, GBTA's 5,000-plus members manage over $340 billion of global business travel and meetings expenditures annually. GBTA provides its network of 17,000 business and government travel and meetings managers, as well as travel service providers, with networking events, news, education & professional development, research, and advocacy. The foundation was established in 1997 to support GBTA's members and the industry as a whole. As the leading education and research foundation in the business travel industry, the GBTA Foundation seeks to fund initiatives to advance the business travel profession. The GBTA Foundation is a nonprofit organization. For more information, see gbta.org and gbtafoundation.org.
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