Global Business Travel Spending to Rise Throughout 2013
Global spending on business travel is forecast to reach $1.12 trillion in 2013, a 5.4% increase from 2012, with travel spend stabilizing after a year rocked by worldwide economic and political uncertainty.
Global business travel spending is expected to rise throughout 2013 and continue its ascent over the next several years, according to the latest installment of the GBTA BTI™ Outlook – Annual Global Report & Forecast, sponsored by Visa, Inc. Global spending on business travel is forecast to reach $1.12 trillion in 2013, a 5.4% increase from 2012, with travel spend stabilizing after a year rocked by worldwide economic and political uncertainty.
Steady business travel spending in the second half of 2013 is expected to lay the foundation for 8.2% growth in 2014, followed by 7.6%, 7.2% and 7.1% growth in 2015, 2016 and 2017 respectively.
The report, which details travel spending in 75 countries, along with the top industries, economic factors and characteristics that influence business travel, finds that developing markets around the world – particularly countries in the Asia Pacific and Latin America regions – will permanently reshape the business travel landscape.
“Travel is indispensable to trade, commerce and business expansion in a global economy,” said Michael W. McCormick, GBTA executive director and COO. “This report shows that new opportunities are opening up in markets around the world for companies willing to invest in business travel to drive growth. It also serves as yet another wake-up call for the U.S. and Europe to improve aging infrastructure, establish fiscal order and stay competitive, because emerging economies are increasingly focused on meeting their own fast-growing business travel needs.”
A Rapidly Changing Global Order
In the wake of a lopsided economic recovery – with stalled growth in the developed world but economic expansion approaching or exceeding double digits in many emerging economies – the business travel landscape is set to change significantly over the next five years. Rapidly growing markets like China, India and Brazil are in prime position to become major global players in business travel.
“This year’s global BTI™ shows the importance that emerging markets like China, Brazil and India play in the global business travel marketplace,” said Tad Fordyce, head of global commercial solutions at Visa Inc. “With global business travel expected to experience continued growth in the next few years, China is projected to overcome the U.S. as the top business travel market in the world by 2016.”
– Business travel spending in the Asia Pacific region has grown 8% annually since 2000, more than doubling in size and totaling $393 billion in 2012. China is moving towards global dominance of the business travel market, and GBTA now expects that it will surpass the U.S. as the largest business travel market in the world by 2016 (although this is two years later than we projected in last year’s Outlook, largely due to a stronger-than-expected business travel revival in the U.S.) Spending in China has grown from $32 billion at the start of the millennium to $196 billion in 2012, and China’s meteoric growth is expected to continue, doubling to $375 billion by 2017.
– India is quickly becoming a major global business travel market. In 2012, India surpassed Canada to become the 10th largest business travel market in the world, spending a total of $22.1 billion on business travel. Over the next five years, GBTA expects India’s business travel spend will grow at a compound rate of 13.5%, making it one of the fastest growing markets in the world.
– Latin American business travel totaled $49 billion in 2012. Brazil is by far the largest business travel market in Latin America, with total business travel spending of $30 billion in 2012. Brazil has the potential to become a major business travel market over the next decade, but will need to re-establish more robust economic growth to do so. Total spending on Brazilian business travel is expected to grow 7.3%, on average, over the next five years, becoming the 6th largest business travel market in 2014, advancing past Italy and France. It is expected to reach $45 billion in 2017.
GBTA expects Mexico to experience the highest growth in business travel spending in North America over the next five years as economic reforms are put into place that should grow its economy faster than those of its neighbors to the north. Total spending in Mexico was $6.8 billion in 2012, and spending is projected to grow another 9.8% in 2013, reaching $7 billion.
Business Travel Growing Faster in BRICs Vs. Developed Economies
There are clear signs of rising business travel spending across developed markets as well. Total spending on business travel in the U.S. reached $262 billion in 2012, and growth remains steady, despite a shaky economic recovery. In 2013, total business travel spending is expected to reach $273 billion.
Business travelers in Western Europe generated $260 billion in total business travel spending in 2012.
While European business travel has been severely hampered over the last couple of years, GBTA expects that the worst in Europe is over. The next five years should see a bounce back in business travel among all of Western Europe’s major markets.
However, while it is clear that business travel spending is expected to grow across the globe, BRIC nations can generally expect to see much stronger growth in business travel spending compared with more established markets like the U.S. and Western Europe. (The one exception among the BRIC nations is Brazil, where robust growth in 2013 and 2014 is expected to slow in the following years.)