Business Travel Spending Expected to Advance 6.2%
U.S. business travel ended 2014 on a high note, with record spending reaching $292.2 billion. The projection for 2015 also remains strong. Overall,åÊU.S. Business Travel Spending is expected to advanceåÊ6.2% toåÊ$310.2 billionåÊin 2015, while total person-trip volume is expected to increaseåÊ1.7% toåÊ490.4 million tripsåÊfor the year.
The projection for 2015 also remains strong, as lower oil prices are expected to lead to increased consumer spending, boosting economic projects. This strong domestic economic news comes despite an overall weak global economic outlook, with trouble in Europe, Asia and Russia, according to theåÊGBTA BTIã¢ Outlook ÛÒ United States 2014 Q4, a report from the GBTA Foundation, the education and research arm of the Global Business Travel Association, and sponsored by Visa, Inc.
"2014 was a stabilizing year for U.S. business travel, with continuous, sustained growth, despite a plethora of external issues internationally that have weighted down economies in Europe, Russia and Asia,Û said Michael W. McCormick, GBTA executive director and COO. ÛÏThis is a significant and encouraging sign of confidence in the strength of the U.S. economy."
The reportÛªs key findings include:
- An estimated 482.4 million trips were taken in 2014, representing a 1.4% growth over 2013 and higher expectations than the previous quarter, driven by accelerating performance during the second half of the year.
- During Q3, an estimated 121 million trips were taken, spending $73.8 billion. This represents a 1.6% increase in volume and 6.5% increase in spending.
- 2014 proved to be a comeback year for international outbound business travel, growing 6% in volume year-over-year, after falling 1% in 2012 and rising only 1.1% in 2013. This gain in volume amounts to an estimated $35.6 billion for 2014, a growth of 8.9% year-over-year.
- Transient volume performed well in 2014, with an estimated 298.6 million trips taken, representing growth of 3.5% year-over-year. Volume will likely fall off pace slightly in 2015, although spending should continue, increasing from $130.4 billion projected in 2014 to an estimated $137.1 billion in 2015.
- Group trip volume will likely finish down 2.2% year-over-year, stabilizing after extraordinary growth in 2013. Group spend-per-trip, however, is on pace to rise to $715 in 2014, up from $660 in 2013. Both volume and spending are expected to rise in 2015 by 1.5% and 6.7%, respectively.
"With U.S. business travel spending forecast to hit record levels in 2015, corporate travel managers have more need to improve business travel expense reporting and tracking,Û said Tad Fordyce, SVP, global commercial solutions, Visa Inc. ÛÏVisa helps corporate clients manage and improve business travel reconciliation through reporting and automated solutions.
Despite Weak Global Climate, U.S. Prevails
Global economic growth remains in a weakened state. Europe ÛÒ especially Russia ÛÒ is barely treading water, ChinaÛªs growth is moderating, JapanÛªs challenges continue and emerging markets are awaiting more robust performance from the developed world. Despite this, the U.S. economy remains healthy with international outbound business travel seeing little to no negative impact.
Plummeting Oil Prices Temper Travel Price Inflation
Oil prices have plunged since June, creating favorable conditions. The effect is particularly impactful on airfares ÛÒ signified by an expected decline of 0.9% in prices next year, down from an expectation of a 4% increase in last quarterÛªs report. Additionally, consumer spending is expected to increase by 2.6%, as lower gas prices often lead to a boost in discretionary income.
GBTA BTIã¢ Progresses Upward
The GBTA BTIã¢, a proprietary index of business travel activity, is estimated to reachåÊ137åÊto round out 2014, bolstered by a strengthening domestic economy and an increase in spending.åÊThis represents a 6‑point year-over-year gain.
The BTI is expected to continue rising in 2015, reachingåÊ146åÊby the end of next year. Momentum should continue into 2016 as the index gains another seven points on its way to 153.
"The BTI forecast continues to be a strong indicator of the state of business travel, adept at predicting trouble spots and growth signals,Û explained Joseph Bates, GBTA Foundation Vice President of Research. ÛÏBased on what weÛªre seeing, business travel will continuing growing as our road warriors take to the skies and streets in 2015 and beyond."
Just how should advertisers reach the frequent business traveler? 76.5% took action after seeing an ad in a magazine (print, online, mobile or on tablet) in the past year, according to AudienceSCAN. And newspaperåÊ(print, online, mobile or tablet) advertising works on 75.6% of frequent business travelers. Interestingly, this audience is 250% more likely than average consumers to have read a press release in the past month that led them to start online searches.
AudienceSCAN data is available as part of a subscription to AdMall for Agencies. Media companies can access AudienceSCAN data through the Audience Intelligence Reports inåÊAdMall.