Why Your Travel Spend Will Increase This Year

It’s only February, but business travel spend is surging ahead of projections, budgets and approved levels thanks to a booming domestic economy.

A record number of business travelers are taking a record number of trips and spending record amounts on sales calls, training meetings and corporate events, said Joe Bates, vice president of research at the Global Business Travel Association Foundation.

Bates recommended that travel managers consider easing up slightly on policy enforcement.

Record breaking
U.S. business travel is projected to top $310 billion this year, a record 6.2% increase on top of a record-breaking 2014.

“Business travel is surging, but overall, we don’t expect travel to be squeezed,” Bates told Travel Market Report.

“We see a little weakening on travel policy, a bit more business class travel on longer flights and a few more hotel upgrades as business increases its investment in travel.”

Continuing the trend from 2014
US business travel ended 2014 on an upward trend with a 1.4% increase in individual trip volume for the year compared to 2013. Business travel spending hit a record $292.2 billion, according to the Global Business Travel Association’s (GBTA) BTI Outlook – United States 2014 Q4 report.

The uptick continues through 2015 with a projected 1.7% increase in trip volume generating a 6.2% increase in travel spending. The booming 2015 projection comes despite weak economic growth outside the U.S.

“2014 was a stabilizing year for U.S. business travel, with continuous sustained growth despite a plethora of external issues internationally that have weighed down economics in Europe, Russia, and Asia,” said Michael McCormick, GBTA executive director and CEO. McCormick.

“This is a significant and encouraging sign of confidence in the strength of the US economy.”

Getting down to business
Every leading economic indicator is heading up, Bates said. The business cycle is in an upswing, employment is rising, real incomes are rising, corporate sales are rising and corporate profits are rising.

Bates also believes the post-election finger-pointing in Washington is nothing more than partisan politics and not a tangible threat to the economy.

“Companies are confident that revenues will continue to grow,” he said. “Companies are continuing to invest in business travel.”

International outlook
The economic outlook, however, is more mixed for the rest of the world.

Europe, for example, remains mired in the after effects of recession. Bates credited the differing economic climates on the two sides of the Atlantic to different economic policies.

In Asia, China continues to lead the pack with solid economic growth in the 7%t range. The problem, Bates said, is that 7% looks anemic compared to the double digit annual increases China has racked up over recent decades.

“Seven percent is very solid, it’s just not 10% or 20%,” he explained. “Double digits aren’t sustainable in the long term. It’s not bad that growth is slowing somewhat.”

Bad news abroad is good news in America
For U.S. business, slower growth in the rest of the world economy is a positive development.

Last year was a comeback year for outbound international business travel. Last year’s 6% increase in outbound international volume followed a 1% drop in 2012 and a meager 1.1% increase in 2013.

The new year will be an interesting year on the international side.

The dollar has gained significantly against most other currencies, which makes international travel less expensive for American companies.

“Things are looking very positive for business travel, travel managers, travel agents and travelers,” said Bates.

At the same time, the stronger dollar raises the price of U.S. goods on foreign markets which makes selling tougher. But falling oil prices are driving airlines to drop fuel surcharges which could moderate air fares.

“Based on what we’re seeing, we expect business travel to keep growing as road warriors take off in record numbers through 2015 and beyond,” Bates said.

“We don’t expect any significant pushback as long as companies continue to see solid returns on their business travel investments.”