The Global Business Travel Association (GBTA) has released its latest GBTA BTI™ Outlook report on Western Europe as part of its semi-annual series.
Key highlights of the report, which is sponsored by Visa, include:
• Business travel spending will grow throughout 2013, across most of developed Europe, with overall business travel spending being fuelled by domestic business travel spending growth
• Germany will record Europe’s highest business travel spending growth rate at 5% in 2013
• The UK will also record business travel spending growth in 2013, of 1.9%
• Positive recoveries in business travel spending levels in Spain and Italy will remain elusive, with both set to experience further declines in 2013 of -6.2% and -2.9% respectively
• France’s exposure to the economies of Southern Europe will cause a fall in its business travel spending of -1.4% in 2013
• In 2014, GBTA forecasts a return to a stable environment for business travel in Western Europe, with the five most critical business travel markets Germany, the UK, France, Italy and Spain returning to growth
• Growth in 2014 will be underpinned by more international outbound travel as trade levels recover, unlike 2013 which is more domestically focused
Catherine McGavock, Regional Director for Europe for GBTA, said, “In the context of the struggling European economy our expectations for business travel spending in Western Europe are relatively positive for 2013. There are signs of recovery in Germany and the UK, with both expected to experience growth in business travel spending this year. We believe that this is the beginning of a wider trend in the region and expect growth in business travel spending to accelerate in 2014 to the levels we saw before the Eurozone crisis.”
“The results show that businesses throughout Europe are forecast to spend more on travel in 2013, starting a recovery that is projected to continue into 2014,” said Tad Fordyce, head of Global Commercial Solutions, Visa Inc. “Travel is a key driver of economic growth. The World Travel and Tourism Council estimates that the travel industry contributed nine percent of global GDP and more than $6 trillion in 2012. As more businesses around the world return to travel for work, it will only bode well for helping to improve that global economic outlook.”
Return to growth but challenges remain
GBTA forecasts an improvement in business travel spending growth throughout 2013 across most of developed Europe. Germany, in particular, is set to remain one of the leading economies, with both its economy and business travel market expected to achieve the highest levels of growth in the region. German business travel spending is forecast to expand by 5% over 2013. The UK will also undergo some improvements with 1.9% growth in business travel spend in 2013.
The southern economies of Spain and Italy however continue to experience a challenging recovery. Total business travel spending is expected to experience a significant fall, with Spain and Italy recording negative growth rates of -6.2% and -2.9%, respectively. This decline is having a domino effect on other European countries. France’s exposure to these southern economies, combined with structural economic issues, is set to cause a weakening of -1.4% in business travel spend in 2013.
The report shows that a key factor in the performance of a country’s overall business travel spending in 2013 is domestic travel. Its importance is illustrated by the fact that those countries forecast to experience positive growth in total business travel spending are also expected to have strong domestic business travel growth. Spending on domestic travel in Germany, for example, is set to grow by 5.7%, while its international outbound spending growth will be 2%. The significance of domestic business travel is partly due to the impact that reduced trade will have on international outbound travel in 2013.
2014: The importance of international outbound travel
In 2014 GBTA forecasts a return to an improved and stable environment for business travel in Western Europe, with the five most critical business travel markets Germany, the UK, France, Italy and Spain returning to growth. A key factor of this recovery is international outbound travel, with all countries achieving positive growth in the sector as trade prospects improve. It will be the southern economies in particular that will experience the highest level of growth in international outbound travel. Overall GBTA expects total business travel spending among the five countries to hit $184 billion in 2014.
Country-Level Business Travel Outlooks
- GBTA forecasts German business travel spending to grow by 5% in 2013 to $53 billion and it is expected to grow an additional 5% in 2014 to $55.7 billion
- Domestic travel spending will grow an estimated 5.7% in 2013, followed by an additional 6% in 2014
- GBTA predicts international outbound business travel to bounce back to 2% in 2013 and another 0.6% in 2014
- GBTA forecasts that business travel spending will pick up pace in 2013, expanding 1.9% to $41 billion
- Domestic business travel will outperform international outbound travel in 2013
- Growth in both domestic and international outbound travel spending will accelerate in 2014, with international outbound growth doubling to 3% reaching $13.7 billion and domestic travel will grow at a rate of 4.4% to $28.3 billion
- GBTA expects that business travel in France will continue to slow in the short-run, with spending forecast to fall by -1.4% to $35.2 billion in 2013
- As the economies of two of France’s key trading partners, Italy and Spain, continue to weaken in 2013, international outbound travel will drop by -4.6%, while domestic travel remains relatively flat at 0.5%
- GBTA forecast a positive outlook for 2014, with international outbound growing by 3.3% to $13 billion and domestic travel spending growing 5.4% to $23.8 billion
- Recovery in Spain continues to be elusive, which is reflected by the forecast of a decline of -6.2% in business travel spending in 2013
- Both domestic and international outbound business travel will decline in 2013, falling -5.4% and -9.4% respectively
- Growth in 2014 will mainly be driven by domestic business travel, which is projected to grow by 2.2%, while international outbound travel will remain flat in 2014
- GBTA’s forecast for 2013 has been significantly downgraded due to prolonged economic uncertainty, and it is expected that total business travel spend will fall by -2.9% in 2013
- Spending on both domestic and international outbound travel will fall in 2013 by -2.8% and -3.8% respectively
- In the context of decreasing borrowing costs and lower budget deficits, GBTA forecasts growth of 1.4% in domestic travel spending and a rise of 1.9% in international outbound travel spending in 2014