GBTA: Domestic, group travel will buoy biz travel spending

By Michelle Baran

Business travel is expected to continue to climb in 2013 and 2014, with domestic corporate travel and group travel leading the charge, according to a report by the Global Business Travel Association (GBTA).

Business travel spending for 2013 is now expected to reach $273.3 billion, up from last quarter's forecast of $268.5 billion for the year, according to the GBTA. The revised forecast represents a 4.3% increase in spend over 2012, or 1.3% after accounting for travel cost inflation, which is a marked improvement over the 0.3% increase in 2012 over 2011.

And according to the GBTA, the growth is being largely driven by domestic rather than international travel, with U.S. business travel spending predicted to increase by 4.3% in 2013 and by 6.9% in 2014.

"It took [the business travel industry] about four-and-a-half years or so to recover fully," said Joe Bates, GBTA vice president of research. "We did, as of 2012, recover to where we were at the height of before the recession.

"Consumer confidence is up right now, and that's really helping drive the overall U.S. economy and its recovery," he added.

But Bates noted that businesses still remain tentative in committing money to expenses despite improvements in corporate profits, especially as certain factors such as the global economic climate and the U.S. government sequester continue to fuel a level of ongoing uncertainty.

Travel and expense management provider Concur found that companies spent 4.5% less overall, per traveler, per quarter, in 2012 than in 2011, according to a report released last month analyzing more than $50 billion in corporate travel and entertainment spend.

Robert Mahowald, vice president of cloud services at International Data Corp., said in a statement about Concur's findings that "2012 was generally a year of tighter budgets for U.S. travelers," but he noted a "sudden and extreme decline in Q4 T&E spend," calling it "a bit of an outlier."

According to Mahowald, the dip was likely due to macroeconomic events such as the impact of Hurricane Sandy, uncertainty surrounding the November U.S. presidential election and fiscal cliff negotiations "rather than any broad corporate efforts to cut back on T&E spend."

However fragile the business travel industry's recovery still might be, several positive indicators point to a continued rebound in corporate travel, according to the GBTA's Bates.

"We're seeing this year a much stronger improvement in group travel [for] meetings and conferences," Bates said. "This year, we're finally seeing group travel increase at a faster rate than transient travel." And, he added, group travel is "a much larger expense."

The GBTA predicts that group travel spending will grow 5.3% in 2013, to $117.1 billion.

While the association noted a strengthening of domestic business travel, it lowered its projection for increased outbound international business travel spending to 3%, or $33.1 billion, down from $33.3 billion, due in part to economic softening in China and the eurozone.

"Travelers are regaining confidence in our own economy and reinvesting in the growth of their businesses," said Tad Fordyce, head of global commercial solutions at Visa, which sponsored the GBTA report. "We hope to see these increases have a ripple effect on international travel in key markets in the coming future."

Follow Michelle Baran on Twitter @mbtravelweekly. 

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