Global Business Travel Association (GBTA) recently announced the results of its second GBTA BTI Outlook – Western Europe, which suggests a drop in travel during 2012 that will rebound slightly next year.
The study is a semi-annual analysis of the five most critical business travel markets in Europe – Germany, the U.K., France, Italy and Spain. The five markets form nearly 70 percent of business travel in Europe.
“Europe has unfolded pretty much as we expected in our inaugural Spring 2012 report,” said Paul Tilstone, managing director, GBTA Europe. “However, as a result of weaker first half prospects in Spain, Italy, France and the U.K., our 2012 GDP growth expectation for the entire Euro area has been downgraded slightly.”
The report found that overall business travel spend among major European markets will fall 2.2 percent in 2012 to $177 billion before bouncing back by 1.4 percent in 2013. The only market that is expected to show growth in business travel spend is Germany, with a 1.6 percent increase to $50.8 billion in 2012. Growth in 2013 is expected to rise to 3.3 percent.
“With lingering debt challenges and continued austerity measures, the European economy will likely continue to be challenged for years to come,” said Tilstone. “The GBTA’s fall report therefore remains cautious, with overall business travel spend forecast to increase by 1.4 percent in Western Europe in 2013.”
According to the research, U.K. business travel spend is expected to remain flat in 2012 at $40.2 billion before growing 2.8 percent in 2013. France, Spain and Italy are expected see a decrease in business travel spend for 2012. Of the three, only France is expected to bounce back with positive numbers is 2013. France business travel spend will fall 2.2 percent to $35.7 billion in 2012, before growing 1.1 percent in 2013.
The GBTA analysis indicated that both Spain and Italy are in a recession that they are unlikely to get out of until 2014. Spain’s business travel spend is expected to decline 7.8 percent in 2012 to $17.9 billion before falling another 1.6 percent in 2013. Italy’s business travel spend will fall 6.9 percent in 2012 to $32.9 billion and will shed another 1.2 percent in 2013.
“We are confident that the second analysis of the region, in our semi-annual report series, continues to provide strong, accurate insights into both short- and long-term trends in domestic and international outbound business travel activity,” said Tilstone.
European unemployment is arguably one of the continent’s key social and economic concerns. Only Germany has succeeded in bringing down unemployment since the Great Recession, but even its progress has slowed through 2011 and 2012. Spain’s unemployment, on the contrary, has risen to nearly 25 percent.
Despite modest GDP growth expectations, even France and the U.K. are not expected to make progress on unemployment until 2014 or beyond.
The GBTA report highlights a strong correlation between job growth and travel spend, with correlation analysis over the entire historical period suggesting that domestic business travel spend tends to lead job gains by about one quarter. This correlation holds, to varying degrees, among all five European countries profiled. This trend has also been observed in the U.S. and Brazil.
The GBTA analysis of international outbound travel found that one of the strongest correlations across European countries is with exports. Historically, spending on business travel tends to lead exports by a quarter or two. The GBTA BTI 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.
