Economic
uncertainty in Europe will dramatically slow the growth
of business travel in the United
States through the end of the year, according to
the latest report from the Global Business
Travel Association (GBTA).
According
to the report; GBTA BTI™ Outlook – United States sponsored
by VISA, ongoing concern in the U.S. economy, including low job
growth, falling consumer confidence and retail sales, and slowing
corporate profits, have created significant headwinds for
business travel in the near term. Finally, there
is increasing evidence that businesses may be entering into a holding
pattern as they wait for the economic environment to solidify.
GBTA
has significantly downgraded its outlook for U.S.-initiated business
travel since last quarter. Despite the higher prices and
relatively strong demand that have led to solid growth in business
travel spend in the last few quarters; growth will moderate for
the remainder of the year. GBTA now expects total business
travel spending to grow just 2.2% for 2012, reaching $256.5
billion by the end of the year. This represents a downgrade of 1.4%
since last quarter, when GBTA estimated growth would be 3.6%.
"We're
entering a period of time in which many companies could overact and
make significant changes to their travel budgets," he added.
"Our research has shown that businesses that slash their travel
budgets end up weakening their competitive position,
particularly when the economy improves" said Michael W.
McCormick, GBTA executive director
and COO.
Looking
ahead to 2013, GBTA research suggests a slight drop (-0.7%) to 435
million total person trips. On the other hand, business
travel spend for 2013 is forecast to grow 4.7% to $268.5
billion. GBTA forecasts 3.6% growth in transient spend, 5.1% growth
in group spend, and 7.2% growth in international outbound spend for
2013. However, if the situation in Europe worsens further, the
forecast for 2013 will necessarily be downgraded, as detailed in our
European Shock Scenario from earlier this year.