Business travel is showing signs of moderate but stable growth for the coming year, according to the latest Business Travel Quarterly Outlook – United States from the Global Business Travel Association (GBTA), sponsored by Visa.  The report shows that the business travel market has stabilized, but the outlook for international outbound travel is troubling due to the ongoing uncertainty of the European debt crisis and rising oil prices.

GBTA continues to believe business travel will reach its pre-recession levels by the middle of 2012, with measured growth throughout the year as economic headwinds persist.  GBTA forecasts that business travel spend will increase by 4.6% in 2012 on a slight (0.8%) decline in person-trips.  As an economic indicator, the steady growth of business travel spend has continued to track accurately against job growth in the U.S. over the last twelve months. 

"It seems like we can start to breathe a sigh of relief about business travel," said Michael W. McCormick, GBTA executive director and COO. "The continued stability of business travel bodes well for the economy as a whole and for continued recovery in the employment market as business travel is a leading indicator of both. While the outlook for Europe is cloudy and economic growth in Asia is slowing, things still look much better than they did twelve months ago."

"Whether for business or pleasure, Visa account holders spent more than $235 billion on travel related purchases in 2011—a 14 percent increase from 2010," said Tad Fordyce, head of global commercial solutions at Visa Inc. "As a leader in the corporate travel market, Visa is committed to providing best-in-class solutions to our financial institution customers and their clients in the public and private sectors."

GBTA research demonstrates that 2011 was a year of growth for business travel. Total spending on U.S.-initiated business travel hit $251 billion in 2011 – up from $234 billion in 2010.  This included $111.7 billion spent on transient business travel,$107.7 billion spent on group business travel, and $31.6 billion spent on international outbound travel.

Total Person-Trip volume reached 445 million in 2011, up from 437 million in 2010.  This figure will fall slightly to 440.4 million Person-Trips in 2012. 

A Decade of Fewer Trips and Greater Spend

GBTA research demonstrates that since 2000, the number of business trips taken has declined, while the amount spent on business travel has increased and not due solely to price inflation. In 2000 576.06 million trips were taken with a spend of$242.9 billion, 2011 saw the number of trips decrease to 445.0 million (decrease of 22.7%) and spend increase 3.3% to $251.0 billion. In 2012 the trend will continue, as the number of trips dips 1% while spend increases 3.6%. In fact, GBTA research shows that the average spend on a trip in 2000 was $422 and in 2011 it's grown by 33.6% to $564. While inflation alone accounts for 64% of the increase in average spend, the real increases in spending account for 36% of the total increase.

McCormick explained: "Aside from the boost in 2010 and 2011 when we were starting to get back on track after the worst of the recession, this trend makes perfect sense. We're seeing road warriors taking fewer trips, but making the most of them, making more stops and spending more on the road. The productivity explosion is a huge factor and it's being brought on by better travel management, better technology and making the most of their time on their road. In the past, a road warrior may make two trips rather than just spending an extra night, or three travelers would go out on a trip together, where now it's fewer. This is a remarkable trend that we don't see ceasing."

GBTA Business Travel Index™ -- En Route to Pre-Recession Highs

The GBTA Business Travel Index™ (GBTA BTI™) for Q4 2011 came in at 116, two points lower than the projected value in GBTA's last outlook. The GBTA BTI™ is expected to see stable growth over the forecast horizon, reaching its pre-recession high of 120 in 2012 Q3. The index is expected to grow roughly one point per quarter through 2012 before picking up pace in the second half of 2013.

This slightly lower index value has been driven by continued uncertainty in the Eurozone, higher global energy prices, and continued slow growth in the domestic economy. Business travel had a relatively good 2011, but Q4 GBTA BTI™ finishes just one point above 2010 Q4's 115, as international economic risks and slow domestic growth have challenged robust recovery.

The GBTA BTI™ provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time. 

International Travel – Fears Abound

After growing 8.5% in 2011, international outbound travel spend is expected to slow to only 3% growth in 2012. Weaker demand in Europe and Asia has led to the slowdown. The number of total U.S.-initiated international business trips hit 6.78 million in 2011, 3.1% growth over 2010.  GBTA expects growth in the number of trips to slow to 1.2% in 2012, followed by more a robust advance of 4.8% in 2013.

"International travel has been a major driver for business travel during the recovery, but the outlook is troubling," McCormick said. "The Eurozone crisis is creating too much uncertainty for many businesses and causing many to rethink where they send their travelers. We don't expect anyone to make drastic changes, because they won't want to give up the advantage of the face-to-face meeting, but we do think those trips will become less frequent."

Group Travel Spend – Modest Growth Continues

Transient business travel spend finished 2011 very strongly – ending the year up 6.7%, after falling -0.4% in 2010. But this rate won't continue as GBTA expects growth to be far more modest in 2012 and 2013 (3.7% and 3.9% respectfully), staying in line with the slow-growth pattern of the economic recovery.

Group travel will keep pace with transient growth as long as no significant economic shocks take place. Economic shocks disproportionately impacts group travel compared to transient travel. Spending on group business trips in 2011 was up 7.2% over 2010.  GBTA projects group travel spending will slow to 3.3% in 2012 as uncertainty in Europe and higher energy prices continue to impact the overall economy.