The GBTA Business Travel Outlook
The Global Business Travel Association (GBTA), the world’s premier business travel and corporate meetings organization, recently announced the results of its inaugural “GBTA Business Travel Index (BTI)™ Outlook – Western Europe” economic analysis, sponsored by Visa Inc. It predicted a recovery in North Europe and continued trouble in the South during 2012, but higher levels of business travel spend across all Europe in 2013. But what does this mean for Southern Europe in particular?
This semi-annual series includes the GBTA BTI which provides a method for distilling market performance and the outlook for business travel into a single metric to be tracked over time. “GBTA BTI™ Outlook – Western Europe” includes an analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain.
Growth in business travel spending (“BTS”) in the three major European economies: Germany, the UK and France) will be nearly flat in 2012:
- UK is forecast to grow BTS by 0.7%
- Germany is forecast to grow BTS by 0.6%
- French BTS is forecast to decline by 0.6%
Forecast levels of 2012 BTS in Germany, UK and France all exhibit growth in domestic travel, but declines in international outbound spending (“IOB”):
- UK domestic BTS is forecast to grow by 2.7% but IOB is forecast to fall by 2.8%
- German domestic BTS is forecast to grow by 1.1% but IOB is forecast to fall by 1.4%
- French domestic BTS is forecast to grow by 0.7% but IOB is forecast to fall by 2.7%
Growth levels in 2013 BTS in Germany, the UK and France will be much stronger with both domestic BTS and IOB showing increases:
- Germany is forecast to grow overall BTS by 5.4%
- France is forecast to grow overall BTS by 5.1%
- The UK is forecast to grow overall BTS by 4.0%
Southern European countries, Spain and Italy will experience even steeper declines in BTS due to slower economic growth rates and austerity measures. 2012 is forecast to see declines of 4.1% and 5.0% for Spain and Italy, respectively
Overall, the European economic situation will weigh heavily on countries’ economic growth levels. In 2012, GDP in Germany, France and the UK are forecast to grow by 0.5%, 0.6% and 0.7% respectively. This will be due more to the indirect impact of Southern Europe rather than domestic weaknesses
Sovereign debt crises in Italy and Spain will lead to 1.8% and 1.9% declines in 2012 GDP, respectively
Business travel in Spain totaled $19.4 billion in 2011, down 7.7% from a peak of $21.0 billion in 2008. Spain represents a small proportion of European business travel but its growth in business travel over the last decade has been nothing short of impressive due to liberalizing its economy since the beginning of the century which contributed to a more economically diverse and globally oriented economy – one more in line with its developed neighbors.
However, the Spanish economy has been one of the most challenged. As Spain has recovered from the Global Recession in 2009, its overheated real estate market has begun to correct itself after years of steep price increases, unemployment has soared to nearly 25%, Spanish inflation is the highest on the European continent, and, not surprisingly, government bond yields continue to rise. Recent data have shown that the Spanish economy fell back into recession in 2012 Q1.
It is expected that spending on Spanish business travel will decrease by 4.1% in 2012, falling to $18.6 billion. Trip volume, as well as the amount spent per business trip, is expected to fall, as Spanish travelers will be pushed into more economical air and hotel classes. Total domestic business travel spending in Spain will drop by 4.1% in 2012 followed by a slight gain of 1.9% in 2013. International outbound business travel from Spain will fall at an even greater rate than domestic, 4.3% in 2012 and 1.1% in 2013.