US business travel sector likely to maintain upward trajectory
Tuesday, July 9, 2013
As the economy has gradually stabilized during the past 12 months, many analysts and financial experts have assessed their initial estimates in terms of how the business travel sector will rebound. Some believe that forecasts have been conservative and that additional expansion is possible, and according to the Global Business Travel Association, these predictions are likely to remain accurate for the coming months.
Recent data gathered and analyzed by the GBTA indicates that the U.S. business travel sector should continue to see growth and improvement throughout 2013. A more optimistic domestic outlook and gradually increasing consumer confidence are the two primary reasons for the renewed assessment, and, according to the GBTA, the future looks promising for the corporate travel sector.
"With the U.S. economy moving into a more stable growth mode, companies are seizing on opportunities closer to home," said Michael W. McCormick, executive director and chief operating officer of the GBTA. "The rise in domestic business travel spending is a positive sign of increasing business confidence and bodes well for future employment growth."
Initial estimates placed the predicted level of business travel spending in the U.S. at approximately $268.5 billion for 2013. However, in light of recent financial and economic recovery, the GBTA predicts that the sector will see overall expenditure of $273.3 billion, a substantial increase of more than 4 percent over original forecasts. In addition, per-trip spending is also expected to rise, from initial estimates of 0.3 percent to a revised prediction of 1.3 percent, incorporating the inflation of travel costs.
However, forecasts for international outbound corporate travel spending have been revised to align with overall market conditions, and the outlook is slightly less promising than initially thought. The GBTA believes this vertical will see revenues of $33.1 billion, marginally lower than the $33.3 billion originally projected at the beginning of the year.
To further facilitate growth in the business travel sector, senior executives from the GBTA recently gathered at a symposium in Washington, D.C., to meet with members of Congress and policymakers to discuss challenges facing the sector and how they could be overcome.
Expansion of the Transportation Security Administration's Pre-Check traveler verification program was among the topics discussed at the event, which took place on Capitol Hill in June. Although maintaining current levels of security at the nation's airports was agreed upon unanimously, certain initiatives such as the visa waiver program were also high on many attendees' agendas, including Mazie Hirono, a Democratic senator representing Hawaii. She said that "international visitors are essential to growing my state's economy and we need to do what we can to support easy and safe entrance to our country."
Hirono's comments were echoed by Claire McCaskill, a Democratic senator from Missouri, who added that strong security infrastructure and traveler pre-screening initiatives were vital to balancing security with ease of travel. Mike Quigley, a Democratic representative of Illinois, said pending reforms to the Jobs Originating through Launching Travel, or JOLT, Act could enable more countries to join the visa waiver program and simplify the visa application and issuance process, which would likely have a positive effect on inbound international business travel.
Other topics that were discussed at the symposium included easing restrictions on the taxation of rental vehicles for business travelers. Such initiatives could prove popular with professionals who take frequent out-of-state business trips, as these taxes can substantially increase the cost of domestic corporate travel.
With emphasis being placed squarely on devising new ways to increase both domestic and international business travel, the hospitality industry could benefit from heightened demand. Alternatives to corporate suites at chain hotels, such as serviced apartments and furnished extended stay rental units, have proven strong in recent years, and efforts to facilitate business travel in the coming months could further drive the need for cost-effective accommodations from frequent business travelers.