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Election, Global Uncertainty Contribute to Sluggish Business Travel Spending

According to the Global Business Travel Association, total business travel volume for the U.S. is expected to advance only 1% in 2016 while spending is projected to fall by 0.6%.

by Staff
October 21, 2016
Election, Global Uncertainty Contribute to Sluggish Business Travel Spending

Photo via Wikimedia/Rene Ehrhardt

3 min to read


Photo via Wikimedia/Rene Ehrhardt

An uncertain upcoming presidential election, sluggish global expansion, low inflation, weak investment, and choppy geopolitical conditions continue to shackle business travel volume and spending growth, according to the Global Business Travel Association (GBTA) Foundation’s latest business travel forecast for the United States.

Total business travel volume is expected to advance 1% percent in 2016 while spending is projected to fall by 0.6%, according to the “GBTA BTI Outlook – United States 2016 Q3,” a report released by the GBTA Foundation.

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In 2017, GBTA predicts spending will increase 3.8% reaching $293.1 billion, although that will largely be driven by price inflation, according to the report.

The report also cites three critical macro drivers of business travel that continue to provide mixed signals:

• Business confidence: In general, indicators of management confidence remain weak, but narrowly positive suggesting a definitive lack of enthusiasm for the near-term outlook.

• Corporate profits: After-tax profits fell for the fifth consecutive quarter in Q2 2016, and although they appear poised to return to the plus side during the second half of 2016, expect the continuation of tighter expense controls, lethargic capital spending, and constrained business travel growth for at least the rest of the year.

• International trade: Weakness among key U.S. trading partners combined with a strong currency continues to plague export performance.

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Indicators point to a better, but still-modest 2017 for the U.S. economy with 2.4% GDP growth, according to the report.

“Businesses are hiring and paying better wages, but business travel spending is stalled — something we rarely see happen,” said Michael W. McCormick, GBTA’s executive director and COO. “The ongoing global uncertainty and added heartburn from a presidential election unlike any we have ever seen are causing many businesses to stay in a holding pattern, taking an extremely cautious wait-and-see approach bordering on paranoia. This begs the question of whether many of these companies will be ready when growth does re-accelerate. To be prepared for lasting business growth, companies must be ready with the newest technologies, the most productive workforce, and the critical customer relationships necessary to take full advantage.”

Here are some other highlights from the GBTA report:

• Total U.S. business travel spending is projected to fall 0.6% in 2016 to $282.3 billion with trip volume increasing 1% to 520.8 million trips.

• Total U.S. business travel spending is projected to grow 3.8% in 2017 to $293.1 billion with trip volume increasing 2.7% to 534.8 million trips.

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• Real travel spending growth per trip will fall by 3% in 2016 and 2.6% in 2017 as travel price inflation rises continuing to outpace the growth in spend per business trip.

• Group business travel volume will remain positive in 2016, growing 1.3%, before accelerating to 2.5% in 2017, while spending will fall 2.3% this year before picking up 5.3% in 2017.

• Individual business travel volume will grow by just 0.9% in 2016, followed by a more positive growth rate of 2.8% in 2017, while spending is projected to grow 1.1% and 3%, respectively, in 2016 and 2017.

International outbound business (IOB) travel continues to be a weak point for the U.S. business travel market with IOB volume expected to grow by only 0.6% this year and another 0.6% again in 2017, according to the report. Spending will barely advance this year growing 0.1% in 2016 before gaining 1.7% in 2017.


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