Growth in business travel spending is slowing in developed economies but surging in emerging markets – a disparity highlighted by the projection that China will surpass the US in total business travel spending by 2014, according to research by the Global Business Travel Association (GBTA).
“The continued growth in emerging markets should continue to generate significant expansion in business travel, as more people will need to meet face to face to make deals benefiting their companies,” Michael W. McCormick, GBTA executive director, said in a statement. “Conditions are more uncertain in the developed markets, in part due to the ongoing European debt crisis.”
Since the turn of the millennium, spending on global business travel has grown at an annual rate of 4.5% to $1.02 trillion in 2011, according to the GBTA, which measured domestic and international outbound traffic on a per-country basis. In 2011, emerging markets such as Brazil, China, India and Russia each experienced growth rates of more than 15%.
In developed regions such as the United States and Western Europe, drivers of domestic and international outbound business travel have slowed as business confidence has dipped. Companies have taken on a more cautious stance on hiring, equipment purchases and business travel.
The GBTA still expects global spending on business travel to hit $1.07 trillion this year, up 4.6% from 2011. And by 2016, GBTA expects total spending on business travel to hit $1.4 trillion.
The main risk to that projection: the direction and severity of the crisis in the euro zone.
“Until that crisis is resolved, business travel is unlikely to grow at its pre-recession rate,” McCormick said.
—Jack Hagel (jhagel@aicpa.org) is the editorial director of CGMA Magazine.