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US business travel spending growth slows in 2015

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US business travel spending growth slows in 2015

Airfares drop due to plunge in oil prices, but rising ancillary fees negate savings.

According to an annual report issued by the Global Business Travel Association, US business travel spending will increase by 3.1% in 2015 and 3.7% in 2016, yet the global oil price collapse and economic weakness in China, Russia and the Middle East dampen the outlook for growth this year and next.

"Growth in US business travel spending is softening as result of the uncertain macro-economic environment," said Michael W. McCormick, Executive Director and COO of the Global Business Travel Association. "While the number of trips are up, total spending per trip is down. 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 US economy."

This should sound a clear note of caution for the overall US economy."

The report released today represents a downward revision from the one released in July, when growth was projected to grow at 4.9% in 2015 and 5.4% in 2016. The revision can be attributed to three key factors:

  1. US companies are becoming far more selective in authorizing business travel abroad as a result of global economic uncertainty and risk. While we expect 5.4% growth in International outbound business travel volume this year, spending growth rates will be slashed by more than 50% from 2014 (from 8.6 to 3.4%).
  2. Inflation in the business travel sector will be nearly flat in 2015 and modest (3.0%) in 2016, primarily due to the collapse of global oil prices. While the volume of US-originated trips will increase 0.7% from 495.8 million in 2014 to 499.2 million in 2015 and 514.8 million in 2016, the total growth rate for spend is actually down. This is especially true in two areas – air travel spending, which will decrease by 3.4% in 2015, and ground transportation spending, which will decrease by 7.7%.
  3. Actual (as opposed to projected) business travel figures, which were revised to indicate higher trip numbers and lower spending figures for 2014 (see note below).

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