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GBTA forecasts overall fall in business travel spend across major European markets in 2012

Report finds strong correlation between job growth, exports, and business travel spend across Western European markets.

LONDON – The Global Business Travel Association (“GBTA”) announces the results of its second GBTA BTI Outlook – Western Europe report, a semi-annual analysis of the five most critical business travel markets in Europe: Germany, the UK, France, Italy and Spain. These five markets together form the lion’s share of business travel in Europe, nearly 70%, and provide a barometer for the health of the entire European business travel market. The report, sponsored by Visa Inc., includes the GBTA BTI™, an index of business travel spending that distills market performance over a period of time.

Highlights

  • Germany, France and the UK are expected to see positive GDP growth in 2012, albeit under the 1.0% level
  • Interdependencies in trade, banking, and distribution have cast a shadow over the region. As such, 2012 GDP growth expectation for the Euro Area (17 country definition) has been downgraded following the Spring 2012 report to -0.4%
  • Italy and Spain are currently in recession and expected to remain so until 2014
  • Overall business travel spend among major European markets will fall 2.2% in 2012 to $177 billion USD before bouncing back by 1.4% in 2013
  • German business travel spend is expected to rise 1.6% to hit $50.8 billion USD in 2012, before growing 3.3% in 2013
  • UK business travel spend is expected to remain flat in 2012 ($40.2 billion USD) before growing 2.8% in 2013
  • France business travel spend will fall -2.2% to $17.9 billion USD in 2012, before growing 1.1% in 2013
  • Spain business travel spend will decline -7.8% in 2012 to $17.9 billion USD before falling another 1.6% in 2013
  • Italian business travel spend will fall -6.9% in 2012 to $32.9 billion USD and will shed another -1.2% in 2013

Paul Tilstone, managing director of GBTA Europe, commented: “Europe has unfolded pretty much as we expected in our inaugural Spring 2012 report. However, as a result of weaker first half prospects in Spain, Italy, France and the UK, our 2012 GDP growth expectation for the entire Euro Area has been downgraded slightly in the Fall report to -0.4%, from -0.3%. We are confident that the second analysis of the region, in our semi-annual report series, continues to provide strong, accurate insights into both short- and long-term trends in domestic and international outbound business travel activity.”

Tilstone continued, “However, with lingering debt challenges and continued austerity measures, the European economy will likely continue to be challenged for years to come. The GBTA’s fall report therefore remains cautious, with overall business travel spend forecast to increase by 1.4% in Western Europe in 2013.”

Domestic business travel and job growth

European unemployment is arguably one of the Continent’s key social and economic concerns. Only Germany has succeeded in bringing down unemployment since the Great Recession, but even its progress has slowed through 2011 and 2012. Spain’s unemployment rate has risen to nearly 25%, Greece is at 22% and Portugal at 15%. Despite modest GDP growth expectations, even France and the United Kingdom are not expected to make progress on unemployment until 2014 or beyond.

The GBTA report highlights a strong correlation between job growth and travel spend, with correlation analysis over the entire historical period suggesting that domestic business travel spend tends to lead job gains by about one quarter. This correlation holds, to varying degrees, among all five European countries profiled. This trend has also been observed in the US and Brazil.

International outbound business travel and exports

Export growth logged a welcome surprise in Q2-2012 for Germany and Spain. Germany’s trade position is more globally diversified with larger export proportions going to the world’s most dynamic emerging markets, which is not the case for most other Euro Area countries whose trade is more dependent on intraregional relationships.

The GBTA analysis of international outbound travel found that one of the strongest correlations across European countries is with exports.

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