Emerging global markets experienced rapid growth in business travel last year while travel to developed economies grew at a much slower pace – a trend expected to continue for the next two years, according to a new report by the Global Business Travel Association (GBTA).
The travel association’s fourth-annual report on global business travel indicates business travel in developed economies, like the United States and Western Europe, has slowed significantly since 2005. Only Germany, with a 27 percent growth rate in business travel, and the United States, with a 15 percent growth rate since 2005, have posted moderate annual gains among developed nations since 2005. By comparison, business travel to China tripled while business travel to India more than doubled since 2005.
The association forecasts continued rapid business travel growth through 2016 in emerging economies while developed nations should maintain a relatively sluggish pace.
“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,” said Michael W. McCormick, executive director, GBTA. “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.”
The GBTA Foundation, the travel association’s research and education unit, recently released its fourth annual comprehensive report analyzing the current state of global business travel spend and growth projections for the next five years. The outlook for 2012 is for global business travel spending to grow at 4.6 percent to $1.07 trillion, followed by significant growth in 2013, advancing another 8.1 percent. Notably, China will surpass the United States in total business travel spending by 2014 – a year earlier than previously forecast.
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.
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, a 4.6 percent increase from 2011. GBTA expects spending to advance another 8.1 percent 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 percent.
