GBTA downgrades forecast for Europe spending on business travel

The ongoing economic challenges facing Europe prompted the Global Business Travel Association (GBTA) to generally downgrade from its earlier projections business travel spending forecasts across five major markets.

For Spain and Italy, 2012 spending will decline at greater rates than GBTA forecast in the spring of this year, and both countries now are expected to see deeper cutbacks next year than the association previously projected. In France, meanwhile, business travel spending this year will be down more than initially expected and next year will grow at a slower pace than the earlier forecast.

Prospects in United Kingdom and Germany are mixed. According to GBTA, 2012 U.K. business travel spending will be flat versus last year, but in 2013 will grow more quickly than it predicted in the spring.

In Germany, where performance has been strongest among the five examined markets, business travel spending this year will grow more quickly than GBTA first projected, but more modestly in 2013 than the earlier forecast.

"As a result of weaker first-half prospects in Spain, Italy, France and the United Kingdom, our 2012 GDP growth expectation for the entire euro area has been downgraded slightly in the fall report to -0.4 percent from -0.3 percent," according to GBTA Europe managing director Paul Tilstone.

"With lingering debt challenges and continued austerity measures, the European economy will likely continue to be challenged for years to come. The GBTA's fall report therefore remains cautious."

Among the five covered major markets, Spain appears most troubling, with an expected business travel spending decline this year of 7.8 percent — more severe than the 4.1 percent cut the association previously projected. The forecast calls for a 1.6 percent decline next year. International outbound business travel will be hardest hit, down by a projected 14.4 percent this year and 6.2 percent in 2013.

"Much like Spain, although to a lesser degree, the situation in Italy continues to get worse rather than better," according to GBTA. "It is expected that austerity measures will continue to take their toll on the corporate sector and corporate travel budgets though the rest of 2012." Total Italian business travel spending now is projected to drop back 6.9 percent this year and 1.2 percent next year.

In France, 2012 spending is expected to retreat 2.2 percent this year and "will continue to recover along with the broader European economy in 2013 and will grow an estimated 1.1 percent," GBTA wrote. "Any recovery in French business travel spending will be driven by domestic travel, which is expected to be flat in 2012 followed by growth of 4.5 percent in 2013."

After not changing much in 2012, U.K. business travel spending in 2013 will rebound by 2.8 percent, according to GBTA, driven by 3.9 percent higher international outbound spending.

The association projected that Germany — "supported by relatively strong industrial and service sectors" and "spread across a number of large commercial hubs including Frankfurt, Munich and Berlin" — would be the only market of the five to see spending growth this year, rising about 1.6 percent from 2011 to about $50.8 billion.

International outbound, however, is projected to drop 3 percent. For 2013, GBTA predicted total German spending would increase 3.3 percent.

Overall, GBTA's report pointed to correlations between travel spending and both job growth and exports. On the former, "domestic business travel spend tends to lead job gains by about one quarter," according to the report. On the latter, international outbound business travel "tends to lead exports by a quarter or two."

Source: Business Travel News

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