Election Year Unlike Any Other & Global Uncertainty Resulting In Sluggish Biz Travel
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 GBTA Foundation’s latest business travel forecast.
Total business travel volume is expected to advance 1.0% in 2016, while spending is projected to fall by 0.6%, according to the GBTA BTI™ Outlook – United States 2016 Q3. For 2017, GBTA predicts spending will increase 3.8% reaching $293.1 billion, although that will largely be driven by price inflation.
The report also cites 3 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 5th consecutive quarter in 2016 Q2, and although they appear poised to return to the plus side during the 2nd 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.
Indicators point to a better, but still-modest 2017 for the U.S. economy with 2.4% GDP growth. American businesses are hiring, the labour market is doing well, consumer confidence is rising, consumption spending is robust and the housing sector is improving, yet capital equipment, bricks and mortar and business travel spending remain low. Rising uncertainty and weak labour productivity are to blame, resulting in more caution and a wait-and-see attitude, particularly with decisions that have longer-term implications.
“Businesses are hiring and paying better wages, but business travel spending is stalled – something we rarely see happen,” said Michael W. McCormick, GBTA Executive Director & 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.”