U.S. Business Travel Spending to Hit $299.9 Billion in 2016, $310.4 Billion in 2017
ALEXANDRIA, Va.–January 13, 2016–U.S. business travel will continue to grow at stable and steady rates over the next two years, despite significant headwinds from Asia Pacific, Latin America and the Middle East. These findings are part of the GBTA BTI™ Outlook – United States 2015 Q4, a report by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), sponsored by Visa, Inc.
“The U.S. business travel market is an island of stability in a sea of global volatility,” said Michael W. McCormick, GBTA Executive Director and COO. “Over the next two years, U.S. business travel spending will grow at just above 3 percent, but this is largely driven by price, not transaction level increases. In this environment of modest transaction growth, low inflation levels and global uncertainty – we can expect continued consolidation in the business travel industry.”
Overall, the GBTA Foundation business travel forecast found that the U.S. economy has returned to pre-Great Recession footing, but without the same speculative dangers that existed in 2007 and 2008. This bodes well for future U.S. business travel spending, which the GBTA Foundation predicts will grow at 3.2 percent in 2016 and 3.5 percent in 2017, reaching $299.9 billion and $310.4 billion, respectively.
Two key factors will limit further growth during this time:
- Business travel inflation in the United States has been at historically low levels due to a stronger dollar and plummeting oil prices. In 2015, price growth was the lowest witnessed since the Great Recession. In 2016 and 2017, price growth will return to normal – 2.6 percent and 3.0 percent respectively – but breakout potential will be limited.
- Business travel to international destinations will continue to face challenges from poor global macroeconomic fundamentals. While North America and Western Europe were two of the most stable regions in the world in 2015, Asia-Pacific, Latin America, the Middle East and Africa were a drag on global growth. This trend will likely continue in 2016 as well.
“The forecasted growth for the U.S. business travel market is good news for travel industry buyers and suppliers,” said David Henstock, VP, Global Commercial Solutions at Visa, Inc. “No matter where employees travel, organizations that use electronic payments have a convenient and secure way to pay for business travel.”
Price Growth According to the forecast, price growth is expected across key travel goods and services in 2016 with the exception of airfares. Even if airfares drop slightly, however, rising ancillary fees will likely will result in higher total cost of air travel.
Group vs. Individual Business Travel Group business travel slightly outperformed individual travel activity in 2015. Average spending on group business travel, however, declined slightly from $700 in 2014 to $694 per group business trip in 2015. Volume growth will pick up the pace over the next two years, growing in the 3 percent range, but spending growth will remain restrained for group business travel through 2016 before loosening up in 2017.
Individual business travel volume took a hit in 2015, only growing at a projected 0.4 percent, but GBTA forecasts it to return to an above average pace in 2016 and 2017, growing 2.9 percent and 3.0 percent, respectively. Individual business travel spending is projected to grow 4.9 percent in 2016 and another 2.4 percent in 2017.
The GBTA BTI™ Outlook – United States 2015 Q4 report is available exclusively to GBTA members by clicking here and non-members may purchase the report through the GBTA Foundation by emailing [email protected]. To view an abstract of this research, please click here.
GBTA will be hosting a webinar on January 14 at 2pm (ET) to further discuss this study and its findings. Learn more and register now.