Oil Prices and Risks Abroad Dampen Business Travel Growth in 2015

business travel

U.S. businesses will increasingly spend more on travel this year and next, but growth in spending is softening due to the drop in oil prices and global economic conditions, according to the latest Global Business Travel Association (GBTA) BTI Outlook for the third quarter of 2015.

Overall business travel spending is expected to grow 3.1% in 2015. Next year, that growth is predicted to rise 3.7%, the report said. The report projects a slower growth rate than the GBTA’s outlook released in July, when it predicted business travel spend would grow 4.9% in 2015 and 5.4% in 2016.

“While the number of trips are up, total spending per trip is down,” Michael W. McCormick, executive director and COO of the GBTA, said in a press release. “That can be linked to growing uncertainty and risk associated with the global economy, especially in China, Russia and the Middle East and the global collapse in oil prices. This should sound a clear note of caution for the overall U.S. economy.”

Uncertainty abroad, specifically in China, Russia and the Middle East, is making companies think twice before sending employees on a business trip. The report said that while a 5.4% growth rate in international business travel is expected for 2015, spending growth rates are predicted to increase only 3.4% from 2014 — that’s down more than 50% from last year’s spending growth rate.

Additional findings from the report include:

  • Inflation for the business travel sector will grow 0.5% in 2013 and 3% in 2016. The nearly flat rate of growth this year is due to the drop in oil prices.
  • Air travel spending is expected to decrease 3.4% in 2015 and ground transportation is expected to fall 7.7% compared with 2014.
  • Average airfare for domestic roundtrip flights is $379 this year. In 2014, it was $392.
  • Group business travel spending in 2014 exceeded individual business travel spending for the first time since 2008. Group travel totalled $126.5 billion last year.

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