U.S. business travel ended 2014 on a high note, with record spending expected to reach $292.2 billion. 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.
Overall, U.S. business travel spending is expected to advance 6.2 percent to $310.2 billion in 2015, while total person-trip volume is expected to increase 1.7 percent to 490.4 million trips for the year, according to the GBTA BTI™ Outlook, a report from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA), 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,” said Michael W. McCormick, GBTA executive director and COO. “This is a significant and encouraging sign of confidence in the strength of the U.S. economy.”
The report’s key findings include:
- An estimated 482.4 million trips were taken in 2014, representing a 1.4 percent 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 percent increase in volume and 6.5 percent increase in spending.
- 2014 proved to be a comeback year for international outbound business travel, growing 6 percent in volume year-over-year, after falling 1.0 percent in 2012 and rising only 1.1 percent in 2013. This gain in volume amounts to an estimated $35.6 billion for 2014, a growth of 8.9 percent year-over-year.
- Transient volume performed well in 2014, with an estimated 298.6 million trips taken, representing growth of 3.5 percent 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 percent 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 percent and 6.7 percent, respectively.
“With US business travel spending forecast to hit record levels in 2015, corporate travel managers have more need to improve business travel expense reporting and tracking,” said Tad Fordyce, SVP, global commercial solutions, Visa Inc. “Visa 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 – especially Russia – is barely treading water, China’s growth is moderating, Japan’s 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 – signified by an expected decline of 0.9 percent in prices next year, down from an expectation of a four percent increase in last quarter’s report. Additionally, consumer spending is expected to increase by 2.6 percent, as lower gas prices often lead to a boost in discretionary income.
