Buoyed by a strengthening economy, U.S. businesses spent a record amount on corporate travel in 2014 and are expected to spend even more this year, according to the latest forecast from the Global Business Travel Association.
U.S. companies spent an estimated $292.2 billion last year on an increased number of business trips. And they are forecast to spend over $310 billion — 6.2% more — in 2015.
“We’re at a really solid point in the economic recovery right now, so businesses are feeling comfortable sending their business travelers on the road,” says Joe Bates, GBTA’s vice president of research. “In some cases we’re seeing businesses start to relax their travel policies a little bit, allowing travelers to have premium economy seating, spending those extra dollars for that higher level of comfort.”
Even as economies throughout Europe and Asia were struggling, U.S. businesses increased their trips abroad by 6% in 2014 compared with the previous year. And in 2015, the amount spent on business trips to destinations outside of the U.S. is expected to rise 7.9% compared with last year.
“There’s pent-up demand,” Bates says. He noted that international corporate travel from the U.S. dipped in 2012, and barely rose the following year, but is likely rebounding because companies see the need to tap into a global marketplace to boost profits.
Also, Bates says, “It’s probably not a coincidence that it happened in conjunction with a stronger dollar. I think that just added to the confidence of businesses to say now really is the right time to get on the road internationally.”
Though the price of fuel has plummeted, airlines, so far, haven’t passed their savings onto consumers in the form of lower fares. But GBTA is forecasting that cheaper fuel will lead to airline ticket prices dropping 0.9% this year.
“All it takes is one airline to cut their prices and say, ‘Look we’re recognizing great revenues. We’re saving money because fuel costs have gone down. … We’re going to cut our fares as a result,” Bates says. “As soon as one does that, the others will follow suit.”
The lower fuel prices should also spur an estimated 2.6% uptick in consumer spending in 2015, he says, since less price pressure at the pump means more cash left to spend on other items.
“The consumer (is) … saving a lot of money on gasoline right now, so they’re spending that money on goods and services and products,” Bates says. “Therefore, the companies will have more money overall and use some of that for business travel spending.”
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