The Global Business Travel Association (GBTA), the voice of the global business travel industry, announces the results of its latest GBTA BTI™ Outlook - Western Europe report, a semi-annual analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain. These five markets together form the lion’s share of business travel in the region, nearly 70%, and act as a good barometer of the health of the entire European business travel market. The report, sponsored by Visa Inc., includes the GBTA BTI™, an index of business travel spending that distills market performance over a period of time. Key highlights of the report include:
• Business travel spending among the five markets is expected to hit $183 billion USD, (€144.7 billion) 3.3% growth over 2013. This projected gain would be the largest in Western Europe since the Great Recession.
• Germany remains the largest business travel market in Europe reaching $50.5 billion USD in 2012. This is expected to increase 5% in 2013 to $53 billion USD.
• The UK has the second highest level of spending on business travel in Western Europe - $40.6 billion USD in 2012 – expected to advance 1.6% in 2013 to $41.3 billion USD.
• Spain, Italy and France will all see their business travel markets contract in 2013 by -6.7%, -3.9% and -2.3% respectively.
• In 2013, domestic business travel will fare better than international outbound in all five markets except for the UK.
Catherine McGavock, Regional Director for Europe for GBTA, said:
“After six consecutive quarters of decline, Europe has finally turned the corner. Challenges remain but we cannot ignore the economic progress that has been made and the impact that this will have on both domestic and international travel across Western Europe. Next year we can expect to see the largest annual growth in business travel spending in more than 6 years.”
“The upsurge in business travel spending, as noted by the BTI™, reinforces the fact that the Western Europe economy is stabilizing,” said Tad Fordyce, head of global commercial solutions at Visa Inc. “Although the recession took a toll on these markets, we are very optimistic this upward movement will continue the momentum into 2014.”
North South Divide Still Very Evident
European economic growth remains a two-speed story with the Northern markets showing positive growth that has not yet been enough to compensate for the still-negative performance of the Southern tier.
Last year proved to be a challenging one for the Western European economy and for business travel. Business travel policies were tightened and budgets were reduced or frozen. Total travel spend across all five key country markets combined to register a decline of 2.2% in 2012, to $177.4 billion USD. However, while Germany and the UK eked out small positive growth rates for the year, negative performance in Italy, Spain and France overwhelmed the slight growth in the North. The Southern countries are expected to continue to decline for the remainder of the year and into early 2014, but with Germany and the UK gathering momentum, the region will see a return to growth in 2014. The GBTA Foundation expects travel spending to be essentially flat in 2013 then rise by 3.4% the following year.
Eurozone Corporate Profits
Business travel is very closely tied to corporate profit performance, another indicator that is beginning to turn around in Europe. Corporate profits in Northern tier countries are beginning to show positive growth over year-ago levels. The expectation for the rest of 2013 and 2014 is for operating surpluses to stabilize and begin to improve, driven finally by some top-line revenue growth to combine with cost-cutting programs that have been in force since 2011. All of this bodes well for both domestic and international overseas business travel.
Country-Level Business Travel Outlooks
• GBTA forecasts growth in total business travel spending to hit 5% in 2013. 2014 will be another strong period for German business travel, which will grow 6.1% to $56.3 billion USD.
• Spending on domestic business travel is expected to end the year up 5.7% over 2012. Even more growth is in store in 2014 as domestic business travel spending is projected to surge 7.7% to $46.4 billion USD.
• GBTA expects international outbound travel to increase 2% in 2013, but fall again slightly in 2014.
• GBTA expects total business travel spending to hit $41.3 billion USD in 2013, up 1.6% from 2012. Spending will continue to pick up pace in 2014, advancing 2.9%.
• Domestic spending is projected to grow 0.8% and 4.0% in 2013 and 2014, respectively.
• International outbound business travel is likely to outperform domestic spending in 2013 but that trend will reverse in 2014, mostly due to exchange rate effects. Total international outbound business travel spend is projected to grow 3.0% and 0.8% in 2013 and 2014, respectively.
• GBTA forecasts total business travel spending to fall by -2.3% in 2013 to $34.9 billion USD. Business travel spending will see small gains in 2014, expanding by 2.7% to $35.8 billion USD.
• Domestic business travel spending continues to stagnate in 2013 with annual growth of 0.3%. 2014 is expected to be a much better year for domestic business travel in France where spending is projected to grow to 4.6%.
• International outbound spending will fare significantly worse with expected declines of -6.7%. Losses are expected to slow in 2014 with total international outbound spending falling -0.9%.
• Spanish business travel spending is set to decrease in 2013 Q2 – its ninth straight quarter of decline, falling -6.7%. Quarterly growth will resume by the last quarter of the year and continue through 2014 with total business travel spending expected to grow by 1.6% in 2014 to $17 billion USD.
• Both domestic and international outbound business travel will see significant declines in 2013, falling -5.8% and -9.9%, respectively. Domestic business travel will lead growth in 2014, rising 2.1% as international outbound travel falls another -0.6%.
• GBTA expects a business travel spending loss in Italy amounting to -3.9% in 2013 with total spending gains for 2014 projected at 1.2%.
• Spending on domestic business travel in Italy will fall -3.6% in 2013 before expanding 1.4% in 2014.
• Spending on international outbound business travel will fall -7.2% in 2013 and another -0.3% in 2014.