This is a notable shift from prior years when companies had to look abroad for business opportunities in the face of a sagging U.S. economy. Now, signs of a healthier domestic economy, including steady job gains and higher consumer confidence, are encouraging companies to increase their investment in domestic travel.
Overall, business travel spending for 2013 is now expected to reach $273.3 billion – an upgrade from last quarter’s forecast of $268.5 billion for the year, according to the GBTA BTI™ Outlook – United States 2013 Q2, a report from the Global Business Travel Association, sponsored by Visa, Inc. This would be a 4.3% increase in spend over 2012.
“With the U.S. economy moving into a more stable growth mode, companies are seizing on opportunities closer to home,” said Michael W. McCormick, GBTA executive director and COO. “The rise in domestic business travel spending is a positive sign of increasing business confidence and bodes well for future employment growth.”
Importantly, solid growth in travel spending is not being driven by rising prices alone. The GBTA report finds that “real” travel spending growth per trip (the increase after accounting for travel price inflation) is projected to hit 1.3% this year – in contrast with 0.3% in 2012. (See Graph One in Key Metrics section.)
“It’s encouraging to see the return and increase of domestic business travel,” said Tad Fordyce, head of Global Commercial Solutions at Visa, Inc. “These increases are positive reinforcements that travelers are regaining confidence in our own economy and re-investing in the growth of their businesses. We hope to see these increases have a ripple effect on international travel in key markets in the coming future.”
Steady Global Outbound and Group Travel Growth
International outbound business travel spending is expected to grow by 3.0% in 2013 to $33.1 billion – a slight decline from last quarter’s projection of $33.3 billion. This is due in part to a softening in the economies of key U.S. export markets, including China and the Euro-zone.
Group travel spending should also continue to grow in 2013, rising by 5.3% to $117.1 billion. However, GBTA expects group travel volume to fall slightly by (0.3%) in 2013 to 166 million person-trips, driven by some continued corporate constraints on meetings activity.
GBTA BTI: Trending Slowly Upwards
The GBTA BTI™ is a proprietary index of business travel activity. Due to the relatively slow pace of economic recovery in the U.S., the BTI’s rise has been measured but steady. This quarter it reached 124, a two point gain over last quarter.
It is expected to continue its rise through 2013, reaching 127 by the end of the year.