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GBTA BTI™ Economic Outlook andBusiness Travel Forecast
Joe BatesVice President, ResearchGBTA Foundation
Research Sponsored by:
2
Agenda
• Who is GBTA
• Why Business Travel Matters– Travel Drivers: Exports, Profits, Employment
• Global Economic Health– Still a Two-Speed World
– Four Principal Economic Challenges
• Global Business Travel Outlook– Global Overview
– Top Tier Markets: Some Struggle, Some Soar
– US Overview
• Q&A
3
Global Business Travel Association
• GBTA is the world’s premier business travel and meetings organization
• Collectively, GBTA’s 5,000-plus members manage over $340 billion of global business travel and meetings expenditures annually
• GBTA provides its network of 21,000 business and government travel and meetings managers, as well as travel service providers, with networking events, news, education & professional development, research and advocacy
4
Canada
Mexico
South America
Europe
Asia
Australia / New Zealand
Our (Current) Global Footprint
South Africa
5
Rapid Expansion Continues
2010-2011
- Europe
- Latin America
2012
- Asia
- Africa
2013
- India
- Russia
- Middle East
6
GBTA Membership
7
GBTA BTI™ Global Outlookand Forecast 2012-2016
Comprehensive report covering global economy, business travel trends/challenges, and 5-year projections
Data Cube (75 Countries)
Domestic
BTS
Professional & Business Services (48 Sectors)
Business
Travel Spend
(in $USD)
Annual Metrics
2000
For more information contact GBTA Foundation Research or
visit The Hub
Global GBTA BTI™ Data “Cube” -detailed database of industry sales and business travel spending:
for 75 countries by 48 industries
covering 2000-2016
country breakouts for domestic and IOB
Selection of pivot tables & graphs
8
GBTA BTI™ Outlook – Unites States 2012 Q3
• The GBTA BTI™ Outlook – United States projects aggregate business travel trends over the next eight quarters. The report includes key buy-side metrics such as total business travel volume and spending, plus supply-side projections of changes in costs, across both transient (individual) and meetings travel.
• The Q9 2012 report is the ninth in the series.
• Quarterly reports are released the second Tuesday of each quarter. Webcasts are usually held the third Thursday of each quarter.
99
Why Business Travel Matters
Travel Drivers: Exports & Employment
10
GBTA BTI™ andUS Employment
2005
Q2
2005
Q4
2006
Q2
2006
Q4
2007
Q2
2007
Q4
2008
Q2
2008
Q4
2009
Q2
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q295
100
105
110
115
120
125
137
139
141
143
145
147
US Employment
GBTA BTI™
GB
TA B
TI™
US
Em
plo
yme
nt (
mill
ion
s)
Sources: GBTA BTI ™ Outlook – United States, GBTA Foundation (October 2012) Bureau of Labor Statistics, United States (October 2012)
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Domestic Business Travel Highly Correlated With Employment
2001Q12001Q4
2002Q32003Q2
2004Q12004Q4
2005Q32006Q2
2007Q12007Q4
2008Q32009Q2
2010Q12010Q4
2011Q3-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
French Domestic Business Travel Highly Correlated With Job Growth
Domestic Business Travel (left) Employment (right)
Yr-t
o-Yr
% C
hang
e
Source: OECD, IATA, Rockport Analytics
12
International Outbound Travel Highly Correlated With Exports
1313
Global Economic Health
Still a Two-Speed World
14
20002001200220032004200520062007200820092010201120122013201420152016-12
-7
-2
3
8
13
Real GDP Industrial Production
Source: IMF, IHS Global Insight, Wells Fargo Securities, Rockport Analytics
Yr/Yr % Change
Global Growth Slows Against Rising Uncertainty
Global Economy: Historical Perspective
15
Global Recovery is Still Moving at Two Different Speeds
20002001200220032004200520062007200820092010201120122013201420152016-4
-2
0
2
4
6
8
10
World Advanced Countries Emerging Markets
Forecast
Source: IMF, IHS Global Insight, Rockport Analytics
Real
GD
P %
Elephants & Gazelles Are Still Running, But Both Are Slower in 2012-2013
16
U.S., Europe, & Japan Struggle While Asia, LatAm, and MEA Soar
North America
Latin America
Western Europe
Emerging Europe
Mideast-N. Africa
Sub-Saha-ran
Africa
Japan Other Asia-
Pacific
-2
0
2
4
6
8
10
Europe & Japan Struggle, U.S. Slowly Moves Ahead, Asia Paces World Growth
2010 2011 2012 2013 2014-2016
Yr/Y
r % C
hang
e in
Rea
l GD
P
Source: IMF, IHS Global Insight, Rockport Analytics
17
Global Recovery 2012-2013: Driving Fhrough the Fog
• European debt crisis and mini-recession are hitting global growth hard
• China’s expansion has slowed in the wake of flagging export markets
• Fiscal imbalances in most advanced economies are reducing domestic demand through austerity programs and tax hikes
• Oil prices remain elevated
• Inflation remains in check despite central banks keeping their feet on the monetary accelerator
1818
Global Economic Health
Four Principle Economic Challenges
19
The European Recession is the Primary Economic Challenge Facing the World1
20
European Debt Woes Have Pulled the Region Into a Mild Recession
Germany France United Kingdom
Italy Spain-2
-1
0
1
2
3
4
2010 2011 2012 2013 2014-2016
GD
P - Y
r/Yr
% C
hang
e
Source: OECD, IMF, Rockport Analytics
North Vs. South
Southern Europe Pulls Euro Area Into Mild Recession
20
21
China’s Growth is Slowing: Fear of Hard Landing
China Real GDP Growth Global slowdown has hurt Chinese exports
Up until recently China was reducing loan growth in an attempt to cool real estate prices
Fear of outsized knock-on effects of slowing exports will hurt employment and consumption –a hard landing
2
22
Silver Lining: China’s Economy is Shifting From Exports Towards Consumption
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q10.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
China Real Retail Sales
Year
-on-
Year
% C
hang
e
Source: National Bureau of Statistics China, IMF, Moodys Analytics, Rockport Analytics
Forecast
23
Combination of HeadwindsDrain U.S. Recovery
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
2016-6
-4
-2
0
2
4
6U.S. Real GDP Growth to Struggle Through 2013
Yr/Y
r % C
hang
e
European woes, persistent unem-ployment, and 2013 fiscal cliff com-
bining to slow economic growth
Source: Bureau of Economic Analysis, Moodys Analytics, Rockport Analytics
3
24
Lackluster Job Growth
25
Persistently High Unemployment
26
The Fiscal Cliff is LoomingFiscal Cliff:
CBO Estimates of Policy ChangesFY 2013(in Bils $)
Impacts
REVENUE
Expiration of Bush Tax Cuts $221
Rise in tax rate for top 4 brackets (top bracket from 35% to 40%), increase in cap gains from 15% to 20%, increase in tax rate of first $7k from 10% to %15
Expiration of 2011 Payroll Tax Cut
$95 Reduces take-home pay by about 2%
Tax Increases from Affordable Health Care Act
$18 Additional 3.8% capital gains tax
Other Expiring Provisions $65Marriage penalty returns, Education benefits reduced, child tax credit reduced…
SPENDING
Sequestration from Budget Control Act
-$65 DoD cuts particularly egregious
Expiration of 2011 Emergency Unemployment Benefits
-$26Reduces federal obligations beginning in 2012
Reduction in Medicare Payments to Physicians
-$11 Over and above Affordable HC Act
Source: Congressional Budget Office, Wells Fargo Securities
27
Global Inflation Also Growing at Two Different Speeds
North America
Latin America
Western Europe
Emerging Europe
Mideast-N. Africa
Sub-Sa-haran Africa
Japan Asia-Pa-cific (less
Japan)
-2
0
2
4
6
8
10
2010 2011 2012 2013 2014-2016
Source: IMF, IHS Global Insight, Wells Fargo Securities, Rockport Analytics
Consumer Price InflationYr/Yr % Change
4
28
Inflation Should Moderate With Lower Oil and Weaker Demand
1899
1905
1911
1917
1923
1929
1935
1941
1947
1953
1959
1965
1971
1977
1983
1989
1995
2001
2007
2013
$0
$20
$40
$60
$80
$100
$120
$140
Source: Energy Information Administration, IHS Global Insight, IMF, Rockport Analytics
Brent Crude in USD$ per barrel
Forecast
Still well north of $100/bbl…
29
Giving Central Banks the Slack to Keep Their Feet on the Monetary Accelerator
Central Bank Policy Rates Policy rates near
zero
Quantitative easing programs in U.S. & U.K.
ECB loans to troubled banks
Operation Twist in the U.S.
China’s administrative policy to lower credit standards
Atypical cyclical response…so far
3030
Global Business Travel Outlook
Global Overview
31
Global GBTA BTI™
• Global GBTA BTI™- derived from business travel spending, is a holistic measure of the health of any given business travel market.
• Highly correlated with Global Sales, although BTI™ is increasingly growing at a slower rate, as biz travel’s productivity improves.
GBTA BTI™ Global Growth 2011 – 9.3% 1.026 Trillion USD2012 – 4.6% 1.074 Trillion USD2013 – 8.2% 1.162 Trillion USD2014 – 7.5% 1.249 Trillion USD2015 – 7.8% 1.347 Trillion USD2016 – 7.2% 1.445 Trillion USD
32
Business Travel Spending: Dominated by The U.S., China & Western Europe
Total Business Travel Spending: Top 15 Markets - 2011
2011 Total BTS ($
Billions USD)United States $251.0 China $173.2 Japan $66.0 Germany $50.0 UK $40.2 France $36.5 Italy $35.3 South Korea $29.6 Brazil $27.6 Canada $21.7 India $20.8 Australia $20.5 Russia $19.9 Spain $19.4 Netherlands $18.6 World $1,026.2
33
Global BTS At a Glance…
Global Business Travel Spending Reached $1.02T USD in 2011 up 9.3% from
$939B in 2010
Source: Rockport Analytics, GBTA Foundation
Business Travel Spending Report Card: How Did We Do Last Year?
Asia Pacific36%
Emerging Europe5%
Latin America
4%
Middle East& Africa
2%
North Amer-ica
27%
Western Europe26%
2011 Business Travel Spending By RegionDomestic plus Outbound International
2011 Business Travel Spending Growth
Top 15 Markets
2011 Report 2011
Projection
2012 Report 2011
ActualDiff
United States 6.9% 7.2% 0.3%China 14.7% 16.7% 2.0%Japan 2.8% 4.8% 2.0%Germany 7.6% 4.0% -3.6%United Kingdom 9.1% 3.8% -5.3%France 5.2% 2.4% -2.9%Italy 2.9% 3.0% 0.1%South Korea 15.5% 13.4% -2.1%Brazil 16.8% 17.3% 0.5%Canada 9.8% 7.2% -2.6%India 10.7% 15.5% 4.8%Australia 5.4% 6.5% 1.1%Russia 13.7% 17.8% 4.1%Spain 4.8% -2.6% -7.4%Netherlands 5.6% 8.0% 2.4% World 9.2% 9.3% 0.0%
3434
Global Business Travel Outlook
Top Tier Markets: Some Struggle, Some Soar
35
Many Trends Remain: BTS Growth Still Moving at Two Different Speeds
2012 2013 2014 2015 20160.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
0.4%
3.1% 3.4%
5.1% 5.2%
8.6%
14.1%
11.1%
9.8%9.0%
Average BTS Growth Rates: Developed vs. Emerging Markets*
Developed Market BTS Emerging Market BTS
*Developed: W. Europe, US, Canada, Australia;
Emerging: China, India, Brazil, Indonesia
• BTS growth in emerging markets continues to dwarf growth in the developed world
• Growth gap closes towards the end of the outlook’s horizon – growth multiple of < 2x by 2015
GBTA BTI™ 2007 2011 2016
US 117 115 135China 167 312 660Germany 125 127 158Brazil 153 228 372India 148 228 482Australia 129 158 190
36
High-Flying Growth Markets Continue to Add Mass to Their BTS
Global Total 7.7%
37
Growth in Business Travel Spend: $ Gain
Top 15 Markets Ranked by 2011-2016 $ Growth
In Millions of US $
Country BTS 2011 BTS 20162011-2016
CAGRChange in BTS
2011-2016 Rank
China 173,223 365,806 16.1% 192,582 1
United States 250,985 296,168 3.4% 45,182 2
India 20,850 44,077 16.2% 23,227 3
Brazil 27,553 44,931 10.3% 17,377 4
South Korea 29,619 41,940 7.2% 12,321 5
Germany 49,976 62,129 4.4% 12,153 6
Russia 19,917 29,684 8.3% 9,767 7
United Kingdom 40,162 49,278 4.2% 9,116 8
France 36,494 45,526 4.5% 9,032 9
Indonesia 14,070 22,502 9.8% 8,433 10
Japan 65,961 72,602 1.9% 6,641 11
Italy 35,324 39,979 2.5% 4,655 12
Turkey 12,726 17,282 6.3% 4,556 13
Australia 20,502 24,733 3.8% 4,231 14
Netherlands 18,650 22,033 3.4% 3,384 15
World $1,026,194 $1,444,601 7.1% $418,408
3838
Business Travel Outlook
United States Overview
39
40
GBTA BTI™ RevealsUS Business Travel Challenges in 2012
4141
Global Business Travel Outlook
International Outbound
42
Spending on International Outbound (IOB) Business Travel is Growing
CountryInternational BTS
Share Domestic BTS Share
United States 13% 87%China 4% 96%Japan 10% 90%Germany 21% 79%United Kingdom 35% 65%France 39% 61%Italy 11% 89%South Korea 21% 79%Brazil 20% 80%Canada 28% 72%India 11% 89%Australia 11% 89%Russia 2% 98%Spain 23% 77%Netherlands 20% 80%
World 18% 82%
Top 15 BTS Markets: Domestic vs IOB Shares
IOB as a share of total global BTS has grown from 14% in 2000 to 18% in 2011
43
International Outbound from USHas Flat-Lined in 2011 and 2012
44
Business Travel ChallengesShort Term –Taking Off or Grounded for Low Visibility?European Crisis is the largest downside risk to global business travel
The European mess is compounded by a slowdown in China & anemic growth in the US
Volatile and uncertain global economy have shaken business confidence delaying purchases and putting pressure on travel budgets
With stable oil and slower demand, travel prices should moderate over the next year. Some price uncertainty remains, however.
Medium Term –Continued Two-Speed Growth WorldSlower recovery, particularly in developed markets, suggest some resource reallocation
Travel suppliers must continue to entice travelers to front of cabin and add hotel stars
Advanced economies: Europe’s challenges continue; US needs to make progress on unemployment and deficits; Japan struggles with debt and demographics
Emerging economies: Political stability, infrastructure improvements, growing domestic consumer base, competitiveness diminishes as incomes rise
Long Term –Travel Remains a Critical Business Input Elephants and Gazelles continue to alter global market mix.
Infrastructure challenges, air traffic control, fleet management, hotel supply, meetings technology… –drive for greater efficiency
Regulation, security, energy, climate change,…
