Meeting Mentor Magazine

December 2018

GBTA 2013 Projection…and Warning

Going Over ‘Fiscal Cliff’ Will Set Back
Travel and Group Spending for 2+ Years

While the Global Business Travel Association projects 3.9 percent growth in transient spending in 2013, it’s forecasting more robust group spending — 5.5 percent growth next year compared to just 2.3 percent by the end of this year. GBTA also predicts that international outbound spending will rise 7.7 percent in 2013, but that’s a softening from last year’s prediction for 2012. Meanwhile, the slow recovery is not giving business travel its usual bounce from employment growth because new jobs are coming in sectors where there is less travel.

More dire is the GBTA Foundation’s analysis of the impact on travel of the “fiscal cliff” — the confluence of expiring tax cuts and automatic spending sequestration. If the Obama administration and Congress take no action, the U.S. economy would enter a recession, GBTA predicted, which would lead to a total loss of $20 billion in spending on U.S. business travel over the next nine quarters — a 2.5 percent decline — and the loss of 32 million business trips. There is an upside long-term: reduced deficits and lower interest rates, which will enable business travel spending and the overall economy to grow more quickly after the fiscal cliff’s “shock.”

On the other hand, eliminating or delaying indefinitely all provisions of the fiscal cliff would lead to a cumulative loss of only 300,000 business trips and a gain of $5.5 billion in total business travel spending over the next nine quarters. Ultimately, though, larger budget deficits and growing debt will slow business travel spending growth.

If a compromise eliminated some but not all of the tax cuts, businesses would be expected to remain in a holding pattern. Trip volume would fall 1.8 percent, and business travel spending growth would fall from 2.6 to 2.4 percent. These outcomes could vary depending on which elements are cut or reduced.

The bottomline for GBTA: “Business travel is a key economic indicator that speaks to business confidence and to employment and economic growth. Looking towards 2013, companies need a sense of clarity to go forward — and that’s what our government needs to provide.” — Maxine Golding


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