Global business travel spending is expected to hit a record $1.18 trillion in 2014, a 6.9% growth over last year.

 

So says the GBTA Foundation – the education and research arm of the Global Business Travel Association in its GBTA BTI Outlook Annual Global Report & Forecast, sponsored by Visa, Inc.

 

The report says that China leads the way, driven by infrastructure investments, exports and service development and business travel spending there alone has grown from $32bn in 2000 to $225bn in 2013, an average of 16.2% for each year. By comparison, growth in business travel spending from the US has grown at an annual rate of just 1.1% since 2000.

 

The report covers travel spending in 75 countries, along with the top industries, economic factors and characteristics that influence business travel and finds that record high business travel spending is driven by a few dominant markets – namely the US, China and Western Europe.

 

Hardly surprisingly, the report also suggests that spending in the US and Western Europe will grow more slowly compared to Asia. It estimates that currently Asia Pacific owns the largest share of the business travel spend market with 38%, followed by North America (21%) and Western Europe (24%). GBTA expects that by 2018, Asia Pacific will have gained another 5% market share, while the US and Western Europe will lose 3% and 2% respectively.

 

“This report underscores that China, along with the other BRIC countries of Brazil, Russia and India are leveraging their business travel expenditures into more economic opportunities,” said GBTA Executive Director and COO Michael W. McCormick. “We expect to see this shift in business travel spending to continue.”

 

REPORT’S OTHER KEY FINDINGS:

 

• 89% percent of total business spending around the world – totalling $984bn – originated from traffic in Asia Pacific, Western Europe or North America;

 

• Even accounting for concerns over an economic slowdown in the country, GBTA expects China to surpass the US in business travel spending by 2016;

 

• Italy and Spain continue to slip in GBTA’s annual rankings of the top 15 countries by travel spend. In contrast, BRIC countries – Brazil, Russia, India and China – continue to rise in the growth rankings, representing four of the top six countries in terms of business travel spending growth.

 

• GBTA expects business travel spending in Russia will fall more than five percent in 2014.

 

 

“This year’s global BTI™ predicts single-digit expansion of global spending on business travel and the emersion of the Asia Pacific region as the world’s largest travel market, comprising 38% of global business travel with two-thirds of that activity coming from China and Japan,” said Tad Fordyce, head of Global Commercial Solutions at Visa, Inc. “As global business travel is expected to continue growing in the coming years, China is projected to surpass the U.S. as the top business travel market in the world by 2016.”

 

 

The Annual Global Report & Forecast identified other key trends that could impact business travel over the next year, including political activity in emerging Europe and the cost of oil.

 

Instability in Ukraine is currently the biggest impediment to business travel growth in emerging Europe and poses a major risk to both the Russian and European economic outlook. An escalating Ukrainian crisis could push Europe and Russia into a recession.

 

The Kremlin in Moscow.

 

 

CONCERNS OVER RUSSIA

 

Moreover, Russia – a country that has been on the rise in recent years in terms of business travel spending – could see plummeting business travel activity if the crisis continues. Sanctions from the West aimed at Russia’s top officials, businessmen and a few banks are already taking their toll on the Russian economy. GBTA expects business travel spending in Russia will fall more than five percent in 2014.

 

The report adds: “Oil prices have been stable since mid-2011 at around $100 per barrel. Despite geopolitical risk and crises in the Middle East and Ukraine, supply of crude and refined product has readily kept pace with slowly growing global demand. As jet fuel prices tend to move in lock step with crude oil, this is good news for both carrier profits and air fares.

 

“With this in mind, oil price shocks are always a threat to global growth and business travel. Travel buyers should keep contingency plans close, however, given the ever-present potential for geopolitical crises and their almost instantaneous impact on oil prices.”

 

The report identified the top 15 business travel markets, ranked by spending in 2013. The largest growth was seen in three of the BRIC countries – China (15.1%), India (10.4%) and Russia (8.7%).

 

The GBTA BTI Outlook – Annual Global Report & Forecast report is available exclusively to GBTA members and non-members can purchase the report through the GBTA Foundation by emailing [email protected]. This claims to represent an exhaustive study of business travel spending and growth covering 75 countries across 48 industries and projects aggregate business travel trends over the next year.

 

The report includes key buy-side metrics such as total business travel volume and spending, plus supply-side projections of changes in costs, across both transient and meetings travel.