The Global Business Travel Association (GBTA) released its annual forecast at its Convention in San Diego yesterday, predicting a 7.1 per cent increase in business travel spend in 2018.
The GBTA BTI Outlook – Annual Global Report & Forecast, showed a 5.8 per cent increase in global business travel spend in 2017 to US$1.33 trillion. The organisation predicts this will rise to US$1.7 trillion by 2022.
Michael McCormick, executive director and COO of the GBTA, commented: “This pick-up in growth could signify an end to the ‘Era of Uncertainty’ in global business travel, but rising protectionism is coming at precisely the wrong time. The direction of trade policy is far and away the biggest wild card that could impact our forecast for global business, creating uncertainty that could derail the recovery.”
Past reports show growth in business travel spend has been within the 3-5 per cent range since 2012, while the figures for 2017-18 are the biggest since the world began recovering from the recession in 2010 and 2011. The GBTA expects 18 out of the 20 top business travel markets to outpace their average growth over the last five years.
GBTA says growth has been fuelled by improving economies around the world, as well as monetary and fiscal stimulus, which the organisation believes is likely to lead to policy changes and slower economic growth in the future.
Risks facing the industry for 2019 include rising interest rates in the US causing increased debt payments for global borrowers, maturing business cycles in developed markets leading to slower growth, rising budget deficits in both developed and emerging markets, and rising protectionism sparking potential trade wars.
GBTA says the potential for trade wars is the risk it is watching the closest, with increasing tariffs posing a threat to global economies and therefore business travel. Data shows 60 per cent of the variability of corporate travel spend can be explained by trade volumes.
Brexit is also causing uncertainty in Western Europe, with the UK seeing a decline in travel spend – down 0.7 per cent in 2017 as compared to a 6.3 per cent increase in Spain, 5.6 per cent boost in Germany and 3.9 per cent growth in France. GBTA predicts Britain will continue to be a drag on European figures, with Germany, France and Spain all expected to grow their markets within the 4-6 per cent range.
However, there’s good news for emerging markets, with India and Indonesia expected to grow their business travel spend by 11.3 per cent and 8.7 per cent. In fact, GBTA has placed India and Indonesia – once considered emerging markets – into their own category with China, with that segment expected to overtake the stalwarts (which includes the UK, US, Germany and Canada, among others) by 2035, gaining US$164 billion in annual spend by 2022.
The Asia Pacific region picked up 1 per cent of market share in 2017 and is expected to gain another 2 per cent by 2022, while North America is expected to lose an additional 1 per cent.