The outlook for business travel continues to brighten, with companies sending more workers overseas, and feeling confident enough to spend on group meetings, according to a report being released Tuesday.
The Global Business Travel Association says that the number of business trips by U.S. companies rose nearly 3% in the first three months of the year as compared to that same period in 2013. The amount businesses spent on those trips rose 7.6% to $71.2 billion.
“I think largely there’s a growing or sustained confidence in making those expenditures and seeing the result coming in new business,” says Mike McCormick, the GBTA’s executive director and COO.
U.S. business trekkers are expected to spend $292.3 billion this year, 6.8% more than in 2013. And a key factor in the uptick has been an increase in the amount spent on group meetings or conventions, with a 7.1% increase expected for such travel compared to last year.
“Those are usually expenditures you plan further in advance,” McCormick says of group business trips, so “when you’re putting together larger groups of employees … sending people to conventions, it means you have a more positive outlook about the economy at large.”
GBTA doesn’t expect travel this year to be significantly more expensive than in 2013, predicting that the price tag will inch up around 2%. Right now, the increasing cost of food, along with rising rental car and hotel room rates are the biggest reasons for slightly costlier travel.
But in the wake of a flurry of airline mergers, there may be more sticker shock in 2015, with fares possibly rising because of shrinking competition and carriers continuing to be disciplined in matching their supply of flights and seats to passenger demand.
Business trips abroad are also predicted to keep increasing, growing 6.6% this year, with the amount spent rising 10.3% as compared to 2013.
Despite current unrest in the Middle East and Ukraine, McCormick doesn’t foresee those events dampening the business travel upswing.
“Most companies … made the investment in putting systems and controls and policies in place to make sure the companies are spending travel dollars wisely,” he says. “So now it’s about the continued investment … And when you’re doing business in a global economy, nothing replaces face to face. It has to happen.”