Business Travel Growth Lagging Due to Global Concerns
Dip in share prices and bond yields, along with the upcoming election has had an impact on the state of the global economy, causing a setback in business travel growth.
By Carly Okyle •
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The uncertainty around the globe -- including decrease in share prices and bond yields, along with the upcoming election -- has had an impact on growth in the business travel industry.
A report released recently from the Global Business Travel Association Foundation, the research arm of the Global Business Travel Association, shows that business travel has slowed down in the first quarter of 2016. In a press release the GBTA said this was the second consecutive report that required GBTA to lower its initial forecasts for U.S.-based business travel.
The key findings in the report are a mixture of good and bad news. GBTA predicts business travel volume will see a slight year-over-year increase -- 1.8 percent -- in the first quarter of 2016, while it forecasts a 2.1 percent rise in business travel volume, equating to 508.6 million trips, for the entire year. The organization also predicts 2016 will see a 1.9 percent increase in U.S travel spending, bringing in around $295.7 billion. Previously, the GBTA forecasted that business travel spending would grow 3.2 percent in 2016 to nearly $300 billion and that there would be an estimated 514 million trips this year, an increase of 3.1 percent.
Related: The Reasons Why Business Travel Isn't Up to Modern Trends
Yet, while there is growth in the business travel industry, the speed of that growth has slowed. "The biggest change is the slowing of the international outbound business travel," said Michael McCormick, the GBTA's executive director and COO.
Don't worry just yet, though. McCormick called business travel strong, saying, "resilience just keeps coming through, because people need to meet face to face to do business."
He also pointed out that the industry's ability to rebound might be connected to its ability to support innovation. "Travel continues to be an industry where there's continued innovation and a lot of entrepreneurial activity and money flows in from investment and that will continue," McCormick says. "That's another factor for why the industry is as strong as it is."
Related: What Stresses Out Business Travelers the Most?
So, what does this exactly mean for business travelers and the future? "You should expect that there'll be continued price increases happening," McCormick says, explaining the health of the underlying economy is good and the market is able to allow for the rising costs.
He also points out that business travelers are considered sought-after customers and companies will compete for their patronage, sometimes through loyalty programs. "What we'll be seeing more and more of is that as the suppliers [businesses] have gotten more sophisticated in understanding the market, they're looking for ways to customize offers and even price points," he said.
Related: Why You Should Take Vacation Days While on Business Trips
Even as companies navigate offering deals and discounts while still keeping an eye on the bottom line, those on the road have a bigger concern than cost-cutting and profits. "The big issue for business travel is always cost, but it's really time," McCormick says. "It's not about flying from New York to Chicago, it's about going all over the world and being able to be effective, efficient, connected while you're traveling. Business travel is not a perk, it's a necessity."
